Chart Reading : Lesson - 4 (Part : 2): Pullback

In our last lesson, we discussed regarding the Breakout trading system. No trading system is 100% accurate. To follow the Breakout, sometimes you may caught by the Fake-out. How can we overcome this. We can overcome this by Pullback trading system.

Buy at 1st Pullback after a breakout.

Okay, Let's see the chart.

Pullback

After a breakout, if you find a Higher Low (HL), yes, it's a Pullback. Buy at 1st Pullback after a breakout. Always try to catch the 1st Pullback. If you miss the first one then you may get more breakouts as well as pullbacks but you may compromise with profit.

Please keep in mind that Lower Low (LL) is not a pullback. If a Higher Low (HL) can not resist, then you will see a break down.

Which trading system should follow? Breakout? or Pullback? Ask it to your money management policy. It's not a bad idea if you use the both policy. Some money for Breakout and some money for Pullback and Some money for...... I will share you later.