When buying on pullback goes bad

M

mad_badger

Scenario:
Intraday trading equities. A strong rally starts to lose steam, pulls back to MA and trendline for the first time.
Pull the trigger on the LONG side at or near MA/trendline.
Instead of bouncing off and continuing uptrend, it tanks.

Questions:
1) Before going LONG at pullback to support/MA/trendline, should one look for confirmation or other signals? What clues hint whether trend will break or likely to continue?

2) Once already in the LONG position, after failing to bounce at support, what exit strategies should be considered? Could this be a fakeout, and trend will continue? Just head for the exit, because the trade did not go as planned? Wait for (how long?) retracement to minimize losses?
 
That is the risk you face trying to get in early. The reward is obviously that you got in early before the next leg up and that your stop is more limited to just below the swing low. If you are looking for higher probable trades then you can do what many do which is wait for price to break past the last swing high and then place a stop just below that high bar.



Quote from mad_badger:

Scenario:
Intraday trading equities. A strong rally starts to lose steam, pulls back to MA and trendline for the first time.
Pull the trigger on the LONG side at or near MA/trendline.
Instead of bouncing off and continuing uptrend, it tanks.

Questions:
1) Before going LONG at pullback to support/MA/trendline, should one look for confirmation or other signals? What clues hint whether trend will break or likely to continue?

2) Once already in the LONG position, after failing to bounce at support, what exit strategies should be considered? Could this be a fakeout, and trend will continue? Just head for the exit, because the trade did not go as planned? Wait for (how long?) retracement to minimize losses?
More...
 
Quote from suedeuno:

That is the risk you face trying to get in early. The reward is obviously that you got in early before the next leg up and that your stop is more limited to just below the swing low. If you are looking for higher probable trades then you can do what many do which is wait for price to break past the last swing high and then place a stop just below that high bar.
More...
I dont get what you are saying. In the last sentence you say "wait for it to break past the swing high" do you mean swing low? if you dont mind can i get an example? thx alot jim
 
what hes saying is that by getting in early you can have a smaller stop

by requiring additional confirmation, you will get in later and you have to pay a premium for that which is a larger stop

and the same phenomenon still apply, you have no guarantee it will continue your way.
 
Quote from mad_badger:

Scenario:
Intraday trading equities. A strong rally starts to lose steam, pulls back to MA and trendline for the first time.
Pull the trigger on the LONG side at or near MA/trendline.
Instead of bouncing off and continuing uptrend, it tanks.
More...

You may have noticed that we are in a bear market?

If you are going to trade bounces off a trendline, however you define it, then trade WITH the longer term trend, which in your case would be daily charts.

Trading long off a trendline isn't a bad strategy (with tight stops) in an uptrending market. But this isn't it.

At present, there is little buying interest in weakness. There is, however, plenty of seller interest in rallies. So turn your charts (or your monitor) upside down.
 
Yes, in this market you should be trading pullbacks for continuation lower. Just reverse your strategy and short or use your buy strategy with inverse ETF's.
 
Quote from mad_badger:

Scenario:
Intraday trading equities. A strong rally starts to lose steam, pulls back to MA and trendline for the first time.
Pull the trigger on the LONG side at or near MA/trendline.
Instead of bouncing off and continuing uptrend, it tanks.

Questions:
1) Before going LONG at pullback to support/MA/trendline, should one look for confirmation or other signals? What clues hint whether trend will break or likely to continue?

2) Once already in the LONG position, after failing to bounce at support, what exit strategies should be considered? Could this be a fakeout, and trend will continue? Just head for the exit, because the trade did not go as planned?
More...
================
1]Ma _Ba;
You may have noticed many sectors are in a bear[downtrending trend]. Hint /clue-good way to lose lots on longs.

Hint ,trend=friend .Not really much support in a good bear;
not really much resistance in a good bull market.

2]Coal ,oil/gas related sectors are nicely uptrending [bull trend][ Hint/clue , note uptrending 50 & 200 day moving averages;
cool:

Hint clue- have stop loss already figured before entering;
wisdom is profitable to direct.
 
Heard an old trader's saying, "Bottom Pickers become Cotton Pickers!" ie - are out of the business at some point

Only buy on pullbacks in an uptrending market, and never buy new lows. I wait for strength and a good trend up first, even if that means giving up a good stretch of return first. Beats buying the dead cat bounce before the new low.
 
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