Best Tips For Trading Bullish Pullbacks
Pullbacks after breakouts
A breakout is the movement of the price of an asset through an identified level of support or resistance and a pull back is the move that happens after the impulse move to try and correct the movement.
Tried and Tested
I started trading in 2018 and as a trader in Zimbabwe most of the staff you find online is far fetched and might not apply to instruments on our disposal, that is the same case in most countries in the southern African region that are trying Forex as a stable career. Over the years of trying hustling battling for the breakthrough i came across quite a number of strategies. Some worked on very well and others did not but the most important thing i have learned is that every strategy works well when a trader is aware of its technicalities. Coming below are tips that can help you as they have proven to be useful in this particular strategy.
1.Key price resistance
When a break out happens in the market, you have to wait for it before you ride along. Your perfect entry point will be on the pullback, the million dollar question is how do you know that the price has retraced enough to accommodate your entry with a good risk reward ratio. You have to know and understand the key price resistance levels that is where the the turnover of the pullback normally happens. Buying a breakout without knowing this key resistance level is not a good idea.
2. Overbought price Levels
When indicators that help traders with analysis like the oscillator is suggesting that the instrument has been overbought and its now in a sell zone, the breakout can happen yes probing for a buy. Normally these are false breakouts to lure traders and trap them into loses, so get it from me when a breakout happens into an overbought price zone its bad trade don not go for it.
Breakouts do not go always according to your anticipations you have to quickly come to terms with it when it happen. When you buy a breakout and it fails and falls back through the lows of the previous day, it is time to get out. If the lows of the breakout day are held, there is a good chance of a new range and new trend. Traders have gone into deep losses due to the fact that they do not notice that the trend has changed.
4. Always go with the trend
The overall trend of the market is a force on its own that you do not want to oppose at all cost. When swimming in a big river you better go with the flow it will help you to use less energy. Buying breakouts against the current market trend usually does not work its a bad idea. Buying them in the direction of the overall trend has better odds of success.
5. Wait for the breakout
When trading never be in a hurry to gain more money you might end up losing it all, especially entering a trade because you assume the breakout is imminent, markets sometimes they consolidates for days others for weeks. Buying on the anticipation of a breakout before it actually happens is usually not a good idea. Wait for a confirmed breakout for better odds of success.
6. If a trade moves wait for another setup
Chasing a break out after a multiple day move is not a good idea. You need a profit cushion to enable a longer term hold, if your entry is poor then expect no miracle but to be kicked out of the trade you will be stopped out