Article Trading Breakouts vs Trading Pullbacks

T2W Bot

Staff member
1,448 52
Trading breakouts or pullbacks, which is better? This is a hotly contested debate, even among professional traders – but it shouldn’t be!
 As a quick reminder: – Buying a breakout is buying when the price is moving up and above an area of resistance. – Buying a pullback is buying when the price is moving down towards support, typically sometime after a breakout higher – Vice versa for selling.
There are advantages and disadvantages to both of these approaches. As traders we need to fully UNDERSTAND and ACCEPT the range of possible outcomes from our strategy. Only then can we feel comfortable executing it again and again over time.
Let’s look at an example.
Chart 1: USDJPY 1hr candlestick chart
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In Chart 1, a trader is analysing a chart of USDJPY at the ‘You are here’ point in time. The trader has decided the trend is down and is anticipating the move lower shaded in green before it happened. Let’s go...
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foroom lluzers

Veteren member
3,611 135
I always theoretically avoid the first two breakouts , the area of breakouts are often violent zones of supports and resistances, I just wait for price action ,inter market correlations and "extreme " weakness or strength of hourly candles.Look for high probability trades backed by fundamentals.
 

tomorton

Legendary member
7,262 970
Nice illustration of simple trading. Surely, nobody can interpret the chart in any other way at each point, and from that the course of action is clear. I like that Jasper's stops are at rational levels based on prior TA, while there is no mention of profit targets.
 

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