Best Way to Buy Pullback or Sell Retracement
– Best Times to Buy Pullback or Sell Retracement
– What is this?
o Pullback is made with new higher highs and then we come down off those highs
o We also call these ‘swing highs’
o Retracement is made with new lower lows and then price rises off those lows
o We also call this a ‘swing low’
– We need to be careful because of the following:
o What happens if this pullback actually becomes a reversal?
o I want to avoid getting into the trade room late (don’t chase)
o And also want to avoid getting in too early
o Don’t trade these with FLAT trigger lines
– Why do we like these patterns?
o Most efficient way of trading
o Gets you into the best price, with the most amount of support/resistance to help the trade succeed.
o Tight stops and wide targets make for very HIG % trades on the wave
– Buy Pullbacks, whats the best way to enter them long?
o Nothing in my way, no overhead resistance
o Stay away from big round numbers
o Need a swing high, this will give you the green light to buy a retracement
o Make sure you have enough room for the trade to work out
o Place your final target at the swing high of this pullback
o Need to make sure the trigger line is NOT flat, must have a steep slope
o Momentum is oversold
o Big Money Buyers alongside increasing speed to confirm the trade I enter.
o Speed should ALWAYS be rising when you enter long after a pullback
– Sell Retracements, it’s the same, but the opposite
o Make sure you have enough room
o No BRN’s
o Swing Low is key, then sell retracement
o Enough room for the trade to work out
o Trigger slope cannot be flat, we want a steel downward slope to this trigger line ( tells us it’s a moving market)
o Momentum must be overbought
o Lots of Big Money Sellers and speed to go along with it
– Don’t forget about the SPEED of the orders during the retracement/pullback
– See the included illustration of how speed is used in the Wave Pattern
– With every successful pullback pattern these is also a failure pattern (is also the same as a 2-step reversal pattern for us)
MISC QUESTIONS:
– 3 Signs of Price Reversal
o How do you know when to tight your stop?
o When do we take profit?
o When do we skip a trade?
o Answer: when we see signs of a price reversal
o This may be to enter a long trade after a big drop
o This may be to take profit after you’ve made money on the trade
o This may be to tighten your stop when you are worried the market may reverse
When do you go from 1 contract to 2 contracts:
– $1000 in new equity
– Or 2 weeks of consistent winning daily results
