Pullbacks Versus Reversals — Points To Note
Updated
In this video, I talked about the misconception that Traders have on Pullbacks and Reversals. How to spot and identify them and What they signify.
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Cheers!
Luchi.
If you loved this, be sure to follow up for more on Trading related content.
Cheers!
Luchi.
Note
WHY PULLBACKS ARE NECESSARY FOR TRADINGthe pullback is in layman's terms a move against the main trend (practically a correction).
the most convenient way in trading in relation to the trend
is by implementing a pullback strategy. it is basically a trend-following setup.
basically,
pullbacks are identified with the help of the market structure. so when the higher high isn't exceeded and the price instead creates a lower high, you can call that a pullback for a downtrend.
what I'm saying is, the price has to break a previous "s" or "r" to spot a valid pullback. trading is all about preparation. when a pullback is missed, you have to wait for the next because there's nothing you can do about it.
as a PB trader, you have to think like a sniper. there are several advantages and fewer disadvantages of trading pullbacks.
If becoming a pullback trader is what you want, then this will be beneficial. the only important disadvantage of trading pullbacks is that you might have to miss some moves. which is okay!
PROS.
- pullbacks will allow you to enter the market at the top or bottom and get in just when a new trend is about to start.
- it ensures optimal stop loss and fewer trades than over-trading.
- they give room for higher probability trades.
- they help with a better risk to reward.
- pullbacks are easier on our psychology as we know the popular "buy low and sell high"
in summary, pullback helps a trader in finding optimal entries by managing risk as well as possible, while also increasing returns.
What have you learnt about trading pullbacks?
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