Butterfly Pattern Webcast starts at 8:30 EST Leslie Jouflas Founder of www.TradingLiveOnline.com Presents The Butterfly Pattern ©2010 Trading Live Online, LLC. All Rights Reserved www.tradingliveonline.com

Disclaimer – Please Read THE RISK OF LOSS IN TRADING COMMODITIES CAN BE SUBSTANTIAL. YOU SHOULD THEREFORE CAREFULLY CONSIDER WHETHER SUCH TRADING IS SUITABLE FOR YOU IN LIGHT OF YOUR FINANCIAL CONDITION. IN CONSIDERING WHETHER TO TRADE OR TO AUTHORIZE SOMEONE ELSE TO TRADE FOR YOU, YOU SHOULD BE AWARE OF THE FOLLOWING: (1) IF YOU PURCHASE A COMMODITY OPTION, YOU MAY SUSTAIN A TOTAL LOSS OF THE PREMIUM AND OF ALL TRANSACTION COSTS. (2) IF YOU PURCHASE OR SELL A COMMODITY FUTURE OR SELL A COMMODITY OPTION, YOU MAY SUSTAIN A TOTAL LOSS OF THE INITIAL MARGIN FUNDS AND ANY ADDITIONAL FUNDS THAT YOU DEPOSIT WITH YOUR BROKER TO ESTABLISH OR MAINTAIN YOUR POSITION. IF THE MARKET MOVES AGAINST YOUR POSITION, YOU MAY BE CALLED UPON BY YOUR BROKER TO DEPOSIT A SUBSTANTIAL AMOUNT OF ADDITIONAL MARGIN FUNDS, ON SHORT NOTICE, IN ORDER TO MAINTAIN YOUR POSITION. IF YOU DO NOT PROVIDE THE REQUIRED FUNDS WITHIN THE PRESCRIBED TIME, YOUR POSITION MAY BE LIQUIDATED AT A LOSS, AND YOU WILL BE LIABLE FOR ANY RESULTING DEFICIT IN YOUR ACCOUNT. (3) UNDER CERTAIN MARKET CONDITIONS, YOU MAY FIND IT DIFFICULT OR IMPOSSIBLE TO LIQUIDATE A POSITION. THIS CAN OCCUR, FOR EXAMPLE, WHEN THE MARKET MAKES A "LIMIT MOVE." (4) THE PLACEMENT OF CONTINGENT ORDERS BY YOU OR YOUR TRADING ADVISOR, SUCH AS A "STOP-LOSS" OR "STOP-LIMIT" ORDER, WILL NOT NECESSARILY LIMIT YOUR LOSSES TO THE INTENDED AMOUNTS, SINCE MARKET CONDITIONS MAY MAKE IT IMPOSSIBLE TO EXECUTE SUCH ORDERS. (5) A "SPREAD" POSITION MAY NOT BE LESS RISKY THAN A SIMPLE "LONG" OR "SHORT" POSITION. (6) THE HIGH DEGREE OF LEVERAGE THAT IS OFTEN OBTAINABLE IN COMMODITY TRADING CAN WORK AGAINST YOU AS WELL AS FOR YOU. THE USE OF LEVERAGE CAN LEAD TO LARGE LOSSES AS WELL AS GAINS. IN SOME CASES, MANAGED COMMODITY ACCOUNTS ARE SUBJECT TO SUBSTANTIAL CHARGES FOR MANAGEMENT AND ADVISORY FEES. IT MAY BE NECESSARY FOR THOSE ACCOUNTS THAT ARE SUBJECT TO THESE CHARGES TO MAKE SUBSTANTIAL TRADING PROFITS TO AVOID DEPLETION OR EXHAUSTION OF THEIR ASSETS. THIS BRIEF STATEMENT CANNOT DISCLOSE ALL THE RISKS AND OTHER SIGNIFICANT ASPECTS OF THE COMMODITY MARKETS. YOU SHOULD THEREFORE CAREFULLY STUDY COMMODITY TRADING BEFORE YOU TRADE. Please read this carefully www.tradingliveonline.com www.tradingliveonline.com

Books By Leslie Jouflas “Larry Pesavento and Leslie Jouflas, the quintessential traders of chart patterns and the techniques of past masters of technical trading, have put together a compilation of their studies. Their experience extends over forty years. This book covers the essence of chart patterns trading plus the mental preparation necessary for successful trading. There is something in this book for both the beginner and experienced trader, Highly recommended.” - John Hill, President, Futures Truth Co. Now available in 4 languages – English, Japanese, Chinese and Italian. TRADE What You SEE How to Profit from Pattern Recognition www.tradingliveonline.com www.tradingliveonline.com

Books By Leslie Jouflas Essentials of Trading: It’s Not WHAT You Think It’s How You Think Great motivational book for traders! www.tradingliveonline.com www.tradingliveonline.com

What we will cover in the Butterfly Pattern Presentation History of the Butterfly Pattern: where did it come from? Butterfly Pattern Structure: how it forms Chart Examples Characteristics of the Butterfly Pattern www.tradingliveonline.com

Butterfly Pattern The Butterfly pattern is an Extension Pattern First named “Butterfly” by Larry Pesavento Found in all markets and in all time frames Tend to occur at major tops and bottoms Reversal Pattern When this pattern fails – it usually fails big www.tradingliveonline.com

History of the Butterfly Pattern The Butterfly pattern was “born” in 1992 when Larry Pesavento was sitting with Bryce Gilmore watching a pattern form from a program Bryce Gilmore developed called the Wave Trader. The Wave Trader Program calculated each swing and ratio using the Fibonacci summation series. The program analyzed and labeled patterns from 1 to 10. The highest level, ten, was the level when 10 swings and ratios came together at the same time and price. Larry Pesavento was watching as a Wave 10 pattern formed. It appeared in many colors and as two colorful right triangles. Larry commented that it looked like a butterfly and the rest is history. www.tradingliveonline.com

Butterfly Pattern Structure Should have symmetry The structure has 4 legs Must have an AB=CD leg in the extension The C - D leg extends beyond “X” The completion point is generally determined by the extension of the X - A leg This pattern takes some time to identify and learn, but well worth the effort! www.tradingliveonline.com

Butterfly Buy and Sell Patterns Two Triangles The Structure of this pattern will form triangles; first the XAB leg then the BCD, these two components will form 2 right triangles. The market will always be moving higher to form a sell pattern. The market will always be moving lower to form a buy pattern. www.tradingliveonline.com

Butterfly Pattern Basic Structure Butterfly Buy outline Left is a buy pattern and the right is a sell pattern. This is basic outline showing the labeled “legs” of the pattern. There are 4 legs to this pattern…The X point will be found using swing highs and lows. Butterfly Sell Outline AB is a retracement of the XA leg BC is a retracement of the AB leg The final leg, C to D will extend above (sell) or below (buy) the starting point of X www.tradingliveonline.com

Fibonacci Retracements Used .382 .50. .618 .786 .886 1.27 extension 1.618 extension The retracements can be measured using Fibonacci ratios. These are the most common Fibonacci ratios for the retracements, all are acceptable for a valid pattern. There are 2 retracements that will occur with this pattern; 1. AB and 2. BC www.tradingliveonline.com

Fibonacci Extensions Used for Pattern Completion areas Once the second retracement, BC leg, completes and turns up or down, you will either have an AB=CD pattern that does not exceed the X point or it will exceed the X point and will be a Butterfly pattern. It is only when the X point is exceeded with the final leg that there will be a butterfly pattern. To find the potential completion points, use the XA swing and the AB=CD extended leg completion points. I find this is the easiest way to look for completion areas. The extension beyond X can also go beyond the 1.27 and can go to the 1.618. It can also fall short of either of these….. www.tradingliveonline.com

Calculating the Extension 1.27 Ratio 1.618 Ratio Most software programs have Fibonacci tools, but you can calculate easily by hand if you don’t have access to one. Walk through the example on left…Always a good idea to do a few by hand to get the feel of it and to understand the extension ratios. X = 1012, A = 1003.25, Total length of swing = 8.75 points. 8.75 x 1.27 (or 1.618) = 11.11. Add that number to the low of A (or subtract from the high of A if it is a buy pattern). 11.11 + 1003.25 = 1014.25 Always start the swing measurement for the 1.27 or 1.618 extensions at X. www.tradingliveonline.com

Butterfly Pattern Structure Tips Look for symmetry The final leg, or 4th leg, is “extended” beyond the previous swing high or low which is labeled “X”. Final leg is the CD leg. The extension will usually be a 1.27 or 1.618, but you may see other ratios. The BC leg will also be extended, but the completion point is usually determined with the X – A leg and the AB=CD completion areas. The AB and BC legs of the pattern will usually be the .618 or .786 retracement. The pattern is valid if a .382 or .50 retracement of the AB leg or the BC leg. The B retracement can not exceed X and the C retracement can not exceed A. There may be other AB=CD patterns within the legs of the pattern www.tradingliveonline.com

Comparison Asymmetrical Symmetrical Very good comparison for study of patterns. www.tradingliveonline.com

Structure of the Butterfly Pattern on a price chart Use this chart to study the pattern structure from slide 13. Smaller ab=cd within the larger swings www.tradingliveonline.com

Butterfly Pattern Structure SP Emini Butterfly SP Emini Butterfly butterfly pattern in the SP 500 Emini, it completed on the close one day and opened with a large gap down. www.tradingliveonline.com

Extended CD Leg AB=CD in Extended leg Extended Leg Notice the extended leg above the previous swing high contains an AB=CD. It must have the AB=CD to be a butterfly pattern. If you are measuring from High to Low swing then the extension will be High. If you are measuring Low to High then the extension will be Low. Note: the CD leg often times will be longer than the AB leg www.tradingliveonline.com

5 Items that Invalidate the Butterfly Pattern No AB=CD Pattern Extension move beyond the 1.618 of X to A. The 1.618 is generally the maximum risk B can not be below X in a buy pattern formation. B can not be above X in a sell pattern formation C can not be above A for a buy pattern or below A for a sell pattern. Failure of D to extend beyond X www.tradingliveonline.com

Failed Butterfly Pattern From #2 of invalidated items, beyond the 1.618. When they fail, they can move much further in the direction of the original trend. You must use pre determined stop loss orders. Only D Extends beyond X www.tradingliveonline.com

“B” Can not be below “X” – but you may still have a valid AB=CD Pattern (Can you find the butterfly sell?) D x B C A Red dashed line shows that B is just below the X. Technically not a butterfly pattern, but there is a valid AB=CD Buy pattern. www.tradingliveonline.com

Make sure you have a valid AB=CD Pattern C Can not exceed A B Can not exceed X Take time to study the structure of the pattern, such as C can’t exceed A and B can’t exceed X www.tradingliveonline.com

Series of Butterfly Patterns SP 500 Emini formed a series of butterfly patterns. Notice how each one was a profitable trade, they do not always get a entire reversal of trend, even the ones that do not can be very good trades. www.tradingliveonline.com

2 Butterfly Patterns within an AB=CD There are 2 Butterfly Sell patterns in this chart. One begins where the “B” is and would be labeled X in the blue rectangle. The second is in the yellow highlight. www.tradingliveonline.com

Euro 2 Butterfly Sells Not unusual to see multiple butterfly patterns form near major highs and lows www.tradingliveonline.com

Butterfly Sell Pattern Use Retracements Butterfly Sell to retracement Butterfly Sell Pattern Not all butterflly patterns will be major reversals. Sometimes they will yield a retracement and of course they can always fail www.tradingliveonline.com

Euro Butterfly Buy Example of a powerful reversal after a Butterfly buy pattern. www.tradingliveonline.com

AAPL Stock Butterfly Sell Pattern Market and news was very bullish on AAPL when this pattern formed. This is a true contrarian trading pattern, you must learn to “Trade What You See”. www.tradingliveonline.com

Multiple Indexes with Butterfly Sells Example of the DOW, SP 500 Emini, NAZDAQ and Russell Indexes all forming Butterfly patterns simultaneously Example of the indexes; Dow, Nazdaq, Russell and SP 500 all forming butterfly patterns simultaneously Sp Emini www.tradingliveonline.com

March 2009 Butterfly Buy Pattern Great example of a major Butterfly Buy Pattern that formed as the market was extremely bearish. www.tradingliveonline.com

Introducing the New TLO Live Trades Series. Order Here http://www *Trading Live Online is pleased to introduce the new TLO Live Trades Series! “I created the TLO Live Trades Series for traders as something I wish I had found when I was learning trading!” Live trades recorded over several trading sessions. This package includes Butterfly pattern setups with a special bonus recording of the 3 Drive pattern managed in a trend. Invaluable insights as the patterns are forming in real time. The TLO Live Trade recordings answer all the questions traders come across in live markets to help them to make important trading decisions. Trading tips and nuances are covered for entries and how to re-enter a trade, profit targets, stop loss placement and trader psychology such as dealing with head chatter like taking profit targets too soon. Valuable information for high probability trade setups by reading support and resistance areas, using index divergences, tick charts and bar charts. REFUND POLICY: Due to the educational nature of these educational materials, Trading Live Online, LLC is unable to offer any kind of refund on this product. We will promptly repair any defective link This is a great companion study for this pattern.These recordings are going to help traders make decisions as price is moving. The Trading Live Online Live Trade Series Butterfly Patterns covers multiple patterns and how to handle choosing and entry area, what to do when the trade is going against you, using indexes as divergences, managing stop losses and profit targets and much more. These recordings will strengthen and improve the trading skills. Traders can watch these trades over and over to learn how to manage trades using these patterns. www.tradingliveonline.com www.tradingliveonline.com

Special Price Offer Special price of only $79 Regular Price for the Butterfly Pattern Package TLO Live Trades Package is $127 Special price of only $79 Over 2 ½ hours of viewing live trades with trade management on the butterfly pattern; entries, stop loss placement and profit targets Butterfly Pattern Quick Tips recording Butterfly Pattern with 3 Part Profit target exits Butterfly pattern at larger resistance area (combining time frames) Butterfly pattern in the Euro market Bonus – using tick charts vs bar charts comparison with the AB=CD pattern Webinar recording of the "Powerful Butterfly Reversal Pattern Butterfly Power Point presentation including my notes to help you understand this trading pattern Order Here http://www.tradingliveonline.com/butterfly-pattern REFUND POLICY: Due to the educational nature of these educational materials, Trading Live Online, LLC is unable to offer any kind of refund on this product. We will promptly repair any defective link ©Copyright 2009 – 2010 Trading Live Online, LLC All rights reserved. Trading Live Online, LLC This is a great product for traders who like to study on their own. Traders have access to this for 2 years and any trader who would like longer just needs to email us at products@tradingliveonline.com and let us know. www.tradingliveonline.com www.tradingliveonline.com