Pullback Trading

Discussion in 'General Forex Discussion' started by pipexch, Jul 31, 2020.

  1. pipexch

    pipexch ECZ Member

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    A pullback is a short dip or slight reversal in the prevailing trend.

    This strategy is used when there is a brief market dip in a longer-term trend.

    Pullback traders aim to capitalize on these pauses in the market.

    The idea behind the pullback strategy is this:

    • For long trades, to buy low and sell high before a market briefly dips, and then to buy again at the new low.
    • For short trades, to sell high and buy low before a market briefly rallies, and then to sell again at the new high.
    If executed successfully, a trader can not only profit from a long-term trend but avoid possible market losses by:

    1. Selling high and buying the dips (for long trades).
    2. Buying low and selling the rips (for short trades).
    To help identify potential pullbacks, you can use retracement indicators, like the Fibonacci retracement.
     
  2. RH-Calvin

    RH-Calvin ECZ Member

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    As its name suggests, a pullback is a stock's short-term move in the opposite direction of the longer-term trend—which can offer an opportunity to join an uptrend at a relatively advantageous price.