< Previous (Trend Trading) | Next (S/R Strategy) >
Pullback Strategy: a "stupid simple" way of getting a better entry price for your setup while also giving you a "buffer" against false signals. This "delayed entry" strategy lets the price go against the forecasted direction for a set amount of pips before entering. For example if a bullish candlestick signal occured at 1.2050 a trader might wait for a 50 pip "pullback" and buy at 1.2000.
Example of Pullback Strategy
with Candlesticks:
Example of Pullback Strategy
with Support and Resistance:
CandlePRO (part of the PipHut PRO suite of trading tools) makes trading candlesticks + pullback strategy drop-dead simple: the pullback strategy is built in complete with TP and SL data! All you have to do is click the "Backtesting" button on any candlestick signal and you'll see extensive backtesting for multiple pullback levels to help you enter quickly and confidently!
Take a look at this AUDUSD CandlePRO 1h "Bullish Engulfing" signal:
Notice the "Pullback Strategy" category, complete with TP and SL data? The top result shows TP = 62 pips, SL = 16 pips and Pullback Entry = 18 pips.
Here's a look at the chart for this signal:
The pair retraced 24 pips before making its big move upward - with our pullback entry of 18 pips and our TP/SL of 62/16 this signal would have resulted in a quick 62 pips for you!
SummaryThe pullback method is great because the markets naturally have an up and down, ebb and flow to them, and pullbacks are very easy way to take advantage of that natural flow. If no pullback occurs then no trade is entered and you keep your equity for another trade!
Using CandlePRO
- Trend Trading
- Pullback Strategy
- S/R Strategy
- More CP Strategies
January 27, 2012 at 18:25
Comment left on:
January 27, 2012 at 18:14
saharaview says:
A question @Mark: (will try to be clear for strategy )If you have a candle (bearish example) has closed …… 1.3150 sl 12 and pull back ….. 32 does it mean if price “rise” or “go” to 1.3182 ! we can entry if we see ” a bearish situation” in this area with a SL in 1.3194??
January 27, 2012 at 18:27
Yes, in your example it would mean entry at 3182 with SL at 3194 (depending on your broker’s spread).
January 27, 2012 at 18:32
Great @Mark see it with charts here !!
February 3, 2012 at 19:17
hi @Mark another question please for pulback strategy : when you said for example : a 30 mn candle (bearish ex) closing 3130 and pulback ….28 pips and sl 17 … 28 is after a new 30 candle or you mean only price ..??
February 3, 2012 at 20:49
Pullbacks are triggered on price only (nothing to do with number of candles that had passed). So in your example if a bearish candlestick closed at 3130 with a 28 pip pullback then a short would be triggered at 3102 – regardless of what candle it occurred.
Keep in mind all backtesting is done on the 10 candles that follow a signal so if a pullback does not occur within 10 candles the trade is invalid.
February 6, 2012 at 18:31
I am confused on your backtesting strategy. Usually there are 5-6 different pullbacks to enter on in Backtesting. For example on Feb 6, 2012, 15 mt timeframe pullback to entry is 24,19,3,14,9. Now where should i put my order. If I wait for 24 pull back, you may send another signal in opposite direction or it may not even go up to 24 pull back but returns from 9. So can you clarify for how long or for how many candles should I wait for pull back to happen and then enter?
February 6, 2012 at 19:26
Hi @prince1 – if you take a look at the sample backtest above ( http://piphut.com/wp-content/uploads/2010/08/pullback_strategy.gif ) you’ll see that backtesting checks 5 different pullback/TP/SL levels and shows you the results. You are then able to choose which one best fits within your strategy. Each signal is backtested using 10 candles after the signal, therefor each is valid for up to 10 candles after the signal (so a 15m candle would be valid for 150 minutes or 2.5 hours). You are correct that the larger the pullback the less likely the trade is to be triggered – if you read the above article we discuss the pullback tradeoff: less trades but you get a better entry price. (This question was moved from (http://piphut.com/trade-with-piphut/).
February 7, 2012 at 22:46
I placed an entry order on a 46 pip pullback based off of backtesting. It has not reached there yet to trigger my trade after 6 candles. How many candles do you think I should wait? Too much longer and I think it might not have time acheive take profit target. I appreciate your help. Thanks.
February 7, 2012 at 23:14
Backtesting is based off of entry any time within 10 candles after the signal. So to achieve results similar to backtesting you would wait four more candles if you have waited six already and then close the position after 10 total candles (10 from signal) whether the SL or TP has been reached or not.
As we mentioned above pullbacks greatly increase your win % by getting you a better price – but they also mean that less signals will be triggered (so there is a chance after 10 candles the trigger was never reached).
Here is a good article on how Backtesting works with the “10-candle” system:
http://piphut.com/2010/08/qa-10-candle-strategy-and-drawdown/
February 10, 2012 at 06:39
EURUSD bearish engulfing candle on 30tf opened on feb 10 4:30, one set up is pull back 5,tp 11,sl 11. So if I enter in this trade I will enter at pull back 5 pips. Now my question is tp will be from the point I enter or from the point the signal candle closed? Because if I use entry point for tp of 11 pips, then the actually profit candle has gone down only 6 from from the signal candle. Am I right or wrong?
February 10, 2012 at 07:41
Correct, TP and SL numbers are both from the ENTRY point. Those are the values CP uses for its backtesting.