2. Pullback Enter a Position — The Love of Conservative Traders ❤️❤️❤️

⭐Pullback to Enter a Position is a more robust way to enter a position. After the market consolidates at a bottom or top, forming a reversal confirmation, wait for the market to pull back and enter the position after a secondary signal of market initiation appears.
First, let's look at the market on the left side and confirm the reversal and pullback trend. The 1-hour level market has broken above the descending trend line and formed an upward 123 structure. After establishing the bullish trend, the market began to pull back. As you can see, the pullback is very deep, even exceeding the 61.8% level of the Fibonacci retracement, approaching the previous low. The Enter a Position price has a significant advantage. After the market pullback tested the trend line's reverse support, switch the candlestick chart to 5 minutes. The 5-minute level shows a very clear double bottom breakout, directly enter the market with stop-loss placed at the previous low, and then the market rises sharply. The advantage of opening a position during the pullback.
(1) Buy cheap, earn more. Trend confirmation does not happen all at once; it takes time for the market to complete its movement, which is what we call exchanging time for space. Therefore, during market operation, there will be pullbacks, but the trend remains. At this time, entering the market is more advantageous than chasing prices directly at high levels. Do not underestimate this advantage; the stop-loss space is reduced, thus obtaining a larger risk-reward ratio. (2) Stop-loss is easy to set. Generally, entering the market during a pullback occurs when the market adjusts to a support level, forming a technical standard for a second launch to enter, making the stop-loss more justifiable, smaller, and more reasonable. (3) Significant psychological advantage. Buying in a reassuring area makes it less likely to be deeply trapped. There’s no need to panic at every pullback; the psychological advantage of holding positions is substantial, making it easier to ride a wave of major upward movement. (4) Especially suitable for the logic of looking at the big picture while operating on a smaller scale. When a high-level trend confirms a pullback and tests support, switch to a smaller scale to enter the market. Small stop-loss, big trend, reasonable risk-reward ratio.
The risks of entering a position during a pullback
(1) Entering a Position prematurely before the pullback has ended. Seeing that the space has pulled back quite a bit, one might think the pullback is over and enter directly, but in fact, the pullback is still ongoing; we might think we have caught the bottom, only to end up getting trapped. In practice, don’t just look at how much it has dropped; also check for signs of a bottoming out. Wait for a technical confirmation, such as a bottoming candlestick or a bullish reversal candlestick. Without a bottoming signal, do not take action. (2) When the trend has changed, one might still think it is a pullback. After buying, if the price does not rise but falls instead, one can be directly trapped in the market. This situation is also quite common; everyone must pay attention to identifying the trend when opening a position during a pullback. I have created a judgment table for whether the trend is a pullback or a reversal, which you can refer to. (3) Improper stop-loss settings. When opening a position during a pullback, the worst scenario is encountering a choppy decline, leading to frequent stop-losses due to false signals. When entering during a pullback, the stop-loss price should not closely follow the technical levels; rather, allow some space above the technical level. For example, if the market pulls back to the 38.2% Fibonacci level and forms an opening signal, after entering, the stop-loss can be appropriately widened to below 50% to avoid being worn down by false signals.
Techniques for Entering a Position during a pullback to Improve Winning Rate
(1) Buy at key positions. When entering a position on a pullback, you must wait for the price to fall back to key support levels, such as previous high support, trendline support, lower moving average support, and Fibonacci retracement support. Having these supports to rely on makes the trade more robust and allows for better stop-loss placements. You can even select multiple support levels for confluence. (2) Wait for a signal that the decline has stopped before taking action. You must wait for a signal that the decline has stopped before entering a position; you cannot take risks by catching falling knives. For example, if a reversal candlestick forms at a key support level during a pullback, or if there is a volume contraction signaling the end of the decline, or if there is indicator confirmation. If you are using a top-down approach, you can switch to a smaller timeframe when the market pulls back to a key level to look for bullish signals. For instance, observing a 1-hour trend and switching to a 15-minute chart to see the reversal candlestick patterns and MACD confirmation, or looking at a 5-minute chart for candlestick pattern breakouts. (3) You can start with a small position to test and increase after confirmation. For example, if the 5-minute chart gives the earliest signal, open a position of 30%, wait for the 15-minute chart to also signal a reversal, and then add another 30%. Finally, wait for the 1-hour chart to give a signal to fully establish the position.