Episodic Pivot Explained

Episodic Pivot is the term for the stock trading pattern when the price changes or moves. It is a term in marketing when an episode or event forms a pivot. 

Traders and new investors can easily maximize profitability on stock markets once they understand the episodic pivot and how the patterns work. 

If you are curious, read on and learn the pattern and how Qullmaggie benefited from it:

Brief Explanation of Episodic Pivot

Episodic pivot is an actual change of at least 10% or higher in the price or the story. It is referred to as a story changer. If something new happens and it catches the market significantly, it is an episodic pivot point that is worth the study.

Meanwhile, PEAD or post-earnings announcement drift is the movement of the stocks heading to the earnings surprise sixty days after the announcement. This was the subject that Pradeep Bonde of Stockbee studied when he created a specific setup resulting in the Qullamaggie’s fame.

Episodic Pivot works in the Markets All the Time. Why?

When announcements of unexpected earnings come in, most institutions affected by the change will update their discounted cash flow model if they use one. If the price is higher than the current price, this will be a sign to buy new stocks quickly.

The big challenge that huge institutions face is the need for big purchases of stocks to cover a month-long allocation for their retail investors. It also works for low-floating stocks.

Learning about the episodic pivot will be more comprehensive for traders if they know how to identify the pattern. Here’s how:

Episodic Pivot, How to Identify the Pattern

A valid pattern of an episodic pivot requires the following points:

  • The price gap is 10% or more.
  • The average daily volume of stocks is traded within 20 minutes.
  • There is a change in the story or event. For example, the price movement is heading in the opposite direction, whether in a long-term trend or outside the long-term consolidation.

To cite an example, Tesla had a daily chart on October 24, 2019, reporting shares soared high from 5.29% to 19.7%. There was an evident significant change in the story. 

As explained, an episodic pivot is all about the big changes and such a remarkable earning preceding a stellar forecast.

With comprehending episodic pivots and how to identify one, another thing to understand is the optimal trading strategy. How can a trader profit from the pattern?

Trading Episodic Pivots

In extended-hours trading or buying episodic pivots, traders commonly wait for the market to open after the release of positive earnings, or they will use services like briefing.com. However, certain risks are associated with extended-hours trading. Thus, traders focus more on regular-hours trading.

There are two ways to enter trading once the episodic pivot is identified.

Opening Range Breakout Entry

The first way to trade is the opening range breakout entry. This idea was popularized by Pradeep and Kristjan, wherein the logic is to enter the breakout as soon as the EP is identified. There is a greater risk-reward dynamic, too. 

The daily average is different from overnight gaps. A breakout may occur in a minute, which is known as the 1-minute candle. 

When the volume seems slow, the best move is to wait for a break of at least 5 to 60 minutes.

Fishhook Entry

Another way to enter the trade is the fishhook entry. It is developed by Scot1land and aimed as a strategy taking advantage of the movement of earnings.  The continuation of earnings and the reduction of the profit-taking reaction confirm traders.

The earnings EP in a significant huge volume tend to retrace low in one instance because of profit taking but recover again to a new and significant height, thus creating a fishhook pattern.

Profit-taking in Episodic Pivot

Profit-taking is a move wherein the trader depends more on the market regime and on the position size. One will also consider other factors like moving averages in 10 and 20-day profit-taking.

Examples of Episodic Pivot

EP Upstart Example dated 03-17-2021

A perfect example of an EP upstart was the one dated March 17, 2021, which shows the downward movement of prices averaging 12 and 26 exponential. In just a few hours of extended sales, the company saw great sales growth, and then they traded more volumes. It was such a big move in trading. It netted 40% and more in profit as post-earnings for 17 days after the moving average sales.

EP Upstart Example dated 08-11-2021

Another example of EP upstart was the one dated August 11, 2021. There was a large move-up in moving averages for almost a quarter. Traders in the position reported a post-earning of more than 100% in just 53 days.

Scanning Episodic Pivots

Aside from identifying episodic pivots, it is also important to know how to scan EP. There are scanning software and tools in the market designed and programmed to scan and find qualified stocks based on certain criteria. Also, the “Wall Street Journal’s Extended Hours Stocks” website can be useful.

Price-Earnings Gaps and Episodic Pivots Compared

Some trading gurus mistakenly thought that price-earnings gaps or PEG are the same as episodic pivots. Even if stocks have PEG, it does not mean that the event is an episodic pivot. To be considered EP, there must be a significant change or a remarkable announcement of price movement. For a company aiming for profit, it is not just a simple price-earnings gap but a new episode that yields high profitability, much higher than the average daily earnings.

Tips for Successful Episodic Pivot Trading 

Most trading practices are studied and researched, whether it is in trading for the stock markets or in selling goods and assets. Even before the episodic pivots became popular, there were things that researchers and experts did not disclose and discuss. To help you gain more in your episodic pivots, learn these helpful tips and ideas in trading:

1. Execute and Carry out the Plan Quickly

The movement of a price or an event can be too hard to hook and maximize if the action is slow. As a trader who wants the biggest catch, there should always be an urgency in carrying out the plan. The only way to enter into the stock markets earlier than others is to set up an order right at the break of any opening once the EP is identified. The tip is never just to sit down and wait for the opportunity. Take advantage of the episodic pivot and aim for stocks already in the trend early on.

2. Increase and Boost Up The Volume

High volume is the main source of earnings breakouts. This is the reason why analyzing volumes is important. It allows traders to get ideas and, at the same time, identify the type of volume necessary for stocks to be in equilibrium. Liquid stocks trading above the ideal daily volumes increase the chances of gaining high yields or a better position for earnings for fewer risks.

Why the volume?

Look at the volumes like they are your chart of high and low stock prices. The chart will look clean and comprehensible if you focus more on the high-volume, stronger stocks. It is also easier to position them in an organized chart and manage the risks. 

3. Use Algorithmic Codes

Algorithmic execution is the most convenient and easiest part of managing trading transactions. The automated codes based on algorithms provide guides and instructions for executing the trade. Through computerized programs and advanced mathematics, traders can easily assess and manage the market situation to drive profitable trade.

4. Be Aware, So You Don’t Choke

Awareness of the market situation is the key to the stock trade. Whether it is short-term or long-term trading, being aware of what happened and what will happen will allow you to get the perfect timing for entry and exit.


To sum it up, an episodic pivot is about a story that happens and changes from time to time. When the story changes, all you want is to get the first spot and be the first one to move.

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