Strategies
Pullback / Retracement Strategy
Enter in the direction of the trend after a counter-trend pullback — better risk-reward than chasing breakouts.
Key rules
- Trade in the direction of the established trend only
- Wait for pullback to a key level — S/R, FVG, or major Fibonacci retracement
- Require a reversal candle or pattern at the entry zone
- Stop below pullback low (longs) or above pullback high (shorts)
- Target the prior swing high (longs) or prior swing low (shorts) at minimum
A pullback strategy waits for price to temporarily move against the prevailing trend before entering in the trend's direction. This provides a better entry price than chasing a breakout and typically offers a superior risk-reward ratio.
**Finding the Trend** First, confirm the trend on your trading timeframe (and ideally the higher timeframe): - Uptrend: series of higher highs and higher lows - Downtrend: series of lower highs and lower lows
**Identifying the Pullback** - In an uptrend, price pulls back to a support zone (prior resistance, moving average, Fibonacci level, FVG) - In a downtrend, price pulls back to a resistance zone
**Entry Triggers** Wait for a reversal signal at the pullback zone: - Pin bar or engulfing candle at support/resistance - Inside bar breakout - Volume divergence (declining volume on pullback, expansion on resumption)
**Stop Placement** Stop goes below the pullback low (in an uptrend) or above the pullback high (in a downtrend). Position sizing is based on this stop distance.