Pullback Trading
Buy the dip — but only in a proven uptrend, at a logical support, with defined risk.
Trend StrategiesAdvanced 7 min read· Lesson 2 of 9 in Trading Strategies
Overview
Trends breathe. Entering on the exhale (a pullback to the rising 20/50MA or a prior breakout level) buys the trend at a discount with a nearby invalidation, instead of chasing extended prices with distant stops.
Market conditions
Established uptrend (price above rising 50MA, or TRENDING_REGIME). No trend, no pullback trade — a 'dip' in a downtrend is just the downtrend.
Entry rules
Price touches the rising 20EMA (PULLBACK_TO_EMA20) or the 38–62% retracement zone, then prints a reversal bar (hammer/bullish engulfing). The reversal bar is the trigger; the level alone is not.
Exit rules
Into strength: prior high / NEW_20D_HIGH, or scale out and trail the remainder.
Stop loss
Below the pullback low — the tight stop is this strategy's whole appeal.
Position sizing
Risk 0.5–1% of equity; tight stops allow meaningful size WITHOUT increasing risk per trade.
Risk management
Skip pullbacks arriving on heavy volume (that's distribution, not rest), and never average down when the level breaks.
Evidence & backtesting
Pullback entries historically improve reward/risk versus breakout chasing in the same trends; the dip-buy preset (RSI<30 + trend filter) is the mechanical cousin — backtest both. Every strategy here maps to this platform's Backtest panel — the matching Strategy Preset fills entry/exit/stops in one click, and every result is benchmarked against buy-and-hold, which most simple strategies LOSE to on strong trenders. Seeing that honestly is the lesson.