Pull Back Trading Strategy

 

The Pull Back Trading Strategy is for trading stocks that are extremely strong and trading on high relative volume.

In our Trading Courses you will learn all the details of this trading strategy. In our Chat Room, you will get my live alerts as I call out my positions and stops.

When I see a stock that has extremely high volume I look to get in on the first or second pull back.  Pull backs should take the form of a Breakout Chart Pattern such as Bull Flags or Flat Tops.

 

Stocks to consider:

Stocks that made a big move up (5+ green candles) then pulled back to the 9ema or VWAP
Ideal stocks will be running up on a catalyst, News, Earnings, etc.

 

Chart Patterns:

MUST have at least 5-10 candles in a row on the up ramp or very big candles out of the gates (1-2)
MUST have pulled back to the 9ema and forming a flag pattern
How to find stocks:

Find these stocks by simply watching the top 5 relative volume leaders and/or biggest gainers, and waiting for the pull backs.

 

How to Buy (Summary, details for Trading Course Students)

• Buy the first 5min candle to make a new high
• Buy the first 1min candle to make a new high if you are confident, typically 1min is too choppy.
• Look to double up on the break to high of day. Also adjust stop to breakeven when you double up.

Stop Price

• Always stop down 20 cents for typical position sizes
• Setting stops at the low of the pull back is the proper place.
• Hold unless that stop is hit.

 

How to Sell

For stocks over 50.00 per share

• Adjust stop to breakeven when you double up on high of day break.
• Look to sell into the high of day squeeze. This may only be 10-20 cents for the shares doubled up, but a nice winner for original shares.
• Hold a ¼ position with stop at Break Even but move this stop up to the low of the last 5min candle.

 

Position Sizing

• Using a 20 cent stop I’m risking not more than $200/trade.   Max initial size of 1k.
• Use 400 shares – 1k as base position size, double if it’s strong to 1k-2k, triple to 4k if really good and stop is breakeven.