Why wait for a pullback?

It depends on how we’re looking at a pullback. For instance, if I’m getting on board with a trend from the daily TF, my idea of a pullback may be a small countermove on the 1H chart. I’ve found that if I wait for a pullback on the higher TF, then I’m essentially waiting for something that’s probably not going to happen. Or, if it did happen, the market is now in reversal mode.
 
Blitzjoker said:
It seems the prevailing wisdom is that when a market starts to move in one direction, you should wait for a pullback before you hop on board the trend. I suppose the idea is that if you buy a rising market at a lower price, that is in some sense a ‘bargain’.

I have never really understood this. Why does waiting for a sign that the market may be starting to move against a trend make that trend more attractive? It seems to me you would be better just jumping on board while the market is still moving up.

Unsurprisingly to me, none of the backtesting research I have done on various systems over the last five years or so suggests that waiting for a pullback is a good strategy. And yet it is commonplace to see it recommended. Am I missing something?
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5 year back test is largely meaningless, that sample is too small for the strategy you outlined.
 
Blitzjoker said:
Why does waiting for a sign that the market may be starting to move against a trend make that trend more attractive?
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According to the Dow theory (which you can observe in every financial instrument), markets move almost NEVER in one straight line up or down, instead every time in a trend-move followed by a (weaker) counter-move.

When you're entering the market is up to you, but as I'm using leveraged positions, I've got to place a very tight SL. Entering on the primary move would kick my position out as soon as the pullback sets in.
 
Money Trust said:
It depends on how we’re looking at a pullback. For instance, if I’m getting on board with a trend from the daily TF, my idea of a pullback may be a small countermove on the 1H chart. I’ve found that if I wait for a pullback on the higher TF, then I’m essentially waiting for something that’s probably not going to happen. Or, if it did happen, the market is now in reversal mode.
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Yes.
Right now it's technically possible/reasonable that a bear market rally has been completed at the "50% retracement level". If that turns out to be the case, chasing now or even "buying the dip" will lead to losses. If the 50% level breaks and tests the 62% retracement, same possible scenario. If the 62% level clears and holds, most likely ATH will be tested.

Proper way to play the market now is to play the 50% and 62% levels as "pivots".... long above, short below. And if ATH is tested, play that as a pivot also.... it would be (at least temporarily) a large "double top". That's Price TA.

KISS, baby. :)

SPX Fib.PNG
 
Just anecdotal evidence but I find that my best performers rarely pull back from my entry. If I wait for a pullback I wouldn't get in the trade.
 
deaddog said:
Just anecdotal evidence but I find that my best performers rarely pull back from my entry. If I wait for a pullback I wouldn't get in the trade.
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Yes I agree with you. The data seems to support that, but maybe others have found otherwise?
 
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