Setups › Episodic pivot

Episodic pivot

From Qullamaggie. In one line: gapped up 5%+ on 3x+ normal volume, usually on news.

About the names. The famous names are credit for publicly described ideas. Every test here uses our own simplified, fully coded version of the idea, so the numbers show how our code behaved on past prices, not how the named person trades or traded. No affiliation with, or endorsement by, any named person.

183

trades tested

46%

win rate

-0.02R

average result

+0.14%

vs Nifty per trade

What it looks like

A stock that has been quiet for weeks or months suddenly opens far above yesterday's high on news: strong quarterly results, a large order, a new contract, a change in the industry. Volume explodes to several times normal. Kristjan Kullamägi ("Qullamaggie") calls this an episodic pivot: an event that can change how the market values the company, not just a good day.

Why traders use it

Big funds cannot buy everything they want in one day. If the news really changes the story, they keep buying for days or weeks, and the gap is the first step of a new trend. The huge volume is the clue that large buyers, not just a few retail traders, are involved.

The exact rule we tested

Today's open is at least 5% above yesterday's high (a real gap, not just a rise from the close).
Today's volume is at least 3 times the 50-day average.
The stock closes in the upper half of today's range: buyers held the gap.
No 200-day-average rule: these stocks are often coming out of a long sleep.

We also recorded Qullamaggie's own stricter size, a gap of 10%+, as a separate test. On the backtest it had far fewer trades but a better average result; see the backtest page.

Mistakes to avoid

Buying a gap with no news. Without a reason, a gap often fills.
Chasing far above the opening range. The stop then sits far away and the reward shrinks.
Ignoring the size of the news. A small beat on results is not a business change.
Holding through the next results without a plan: the next number can undo the first.

How we tested it

Every day from 05 Nov 2024 to 05 Nov 2026, every main-board NSE stock (price ≥ ₹50, turnover ≥ ₹5 crore a day) that showed this setup was bought the next day above its last high, with a stop 1.5 ATR below and a target 2.5 ATR above, and sold after 10 trading days if neither was hit; 0.1% costs per trade. Traders usually hold this setup 3-5 days.

The maths behind the result

Average winner +0.97R, average loser −0.87R, win rate 46%. Expectancy = 46% × 0.97 − 54% × 0.87 = -0.03R per trade. To break even with this payoff you need to win at least 47% of trades. How expectancy works.

A historical simulation, not live trading and not a recommendation.