Pullback - As an Entry Timing Technique

[TheBramble]

Trying to pin down the way traders in TT forum use pullback to time their entry into trades.

If you're setting up a directional trade, say a 52wk HIGH, you wait for a pullback from that 52wk high level to a lower level...

(determined by some esoteric means and/or LII [as if LII wasn't esoteric enough])

...and then enter your trade when the price reverses back up through or bounces off that lower level?

Am I getting this right?

 

[TheBramble]

On the same topic, is there any way, short of taking a specific LII training, that I'm going to able to understand how by looking at the LII depth, you guys can so easily decide what pullback level you're looking for to go into a trade?

 

[triplepack]

If I remember correctly, I think what grey/paul are watching for is a pullback on the chart and using the Level II to watch further down on the bids for an accumulation of buy orders. Also keeping a watch on the ecns to see if they are sneaking orders by the back door. Then placing a position in the midst of this before the rest of the party jumps in.

The trick is to watch the stop loss , just in case the market decides, " no we'll pullback a bit further".

When following the paltalk in the afternoons I noticed that the stochastics on 1 min coincided with a good rebound up.

Triplepack

 

[Trader333]

Triplepack is right, the key thing is to watch and see if more bidders enter with size below the entry I have determined on the Level II screen. If they do I pull my order if not then when the price reaches my level I get filled. It is still possible to get stopped out but much less likely.



Paul

 

[BBB]

I doubt this will be that useful to you as it's not related to this particular style, but I have a simple rule that has consistently made me money and works in ANY time frame:

Uptrend - I look to enter on the breakout of the high. I try to enter on any corrective bar after the high for up to 3 bars. After 3 bars, then the likelyhood is that the trend has changed direction, so I seek a short entry on the low of the 3rd bar of correction. The stop is either a function of volatility or placed at the other end of the bar, depending on conditions.

The filters being the bar that made the high. If it is an extended or long bar, the likely hood is that a consolidation will follow - so I stay out - unless that high is taken. The second is that there must be room between the entry on the pull back and the high to sell some of the position guaranteeing a small profit. The remainder of the position I ride like a cowboy! YEEEE HAAAA!

 

[TheBramble]

Triplepack is right, the key thing is to watch and see if more bidders enter with size below the entry I have determined on the Level II screen. If they do I pull my order [...]

Paul, if there is sizable support below your bid on a LONG position, why would you pull your order?

 

[Trader333]

Because the price is likely to go down to the price at which the support (with size) is sitting so I may as well get in at a lower price as well.


Paul

 

[TheBramble]

Aah..OK.

I read it as you 'pull your order' as in kill it, not as in getting in at a lower price.

 

[Trader333]

I would pull it at the price it was originally at and if more and more bidders came in at lower and lower prices then I wouldnt enter at all.


Paul

 

[TheBramble]

Re-reading New Market Wizards last night I came across the interview with William Eckhardt.

One of the issues discussed was retracements (and why he didn't trade them).

Got me thinking about this particular aspect of Grey1's entry timing again.

Although more focused on LevelII aspects than charting or TA aspects, isn't it like trying to pick tops and bottoms?

I remember during the live trading sessions, there were a number of instances where trades weren't taken (both directional and pair) because the calculated retracement level wasn't reached.

Has anyone analysed if this strategy is better (i.e. more profitable overall) than taking the trade purely on it's vwap/52 wk hi/lo merit alone?

 

[Newtron Bomb]

A pullback to new highs for the day or new lows is all i trade atm as an entry. even if there are other patterns i wait for a pullback as this is being the most reliable pattern for me at the moment.

However the reliability of it as it does fail can be overcome by adding a reversal entry when a certain reversal pattern i like arises. essentially trading the failed BO if other factors confirm a move could be likely.

Happy Trading
NB

 

[Trader333]

Tony,

I have found that the technique used to enter a stock trade by the likes of Grey1 is far superior to taking just the breakout on its own merits. Bear in mind that the entry technique is designed to reduce risk at entry and not a technique that specifically improves trading success percentages. The issue here being that if you are wrong then your losses will be less than just taking the breakout itself.

I have had good success using this to determine the price at which to enter sometimes being within 1c of where the market retraced to before taking off again. Of course I have also had losing trades but in general using this Level II technique I am able to tell very quickly if I have got it wrong.


Paul

 

[TheBramble]

Thanks Paul. It's sometimes easy to lose sight of the goal.

 

[BBB]

Good to see this is still running.

Whats up with Grey1? Things do seem to have gone quiet here.