BPA trading room Q&A: August 28, 2015
I’ve been trading pullbacks — high probability, low-risk entries. Can I make a living trading pullbacks?
Video duration: 1min 54sec
Trading pullbacks for a living?
Absolutely, but a lot of them are hard. Today, what’s a pullback? It’s a trading range day — this is a pullback; strong leg down, that’s a pullback. I think you totally could make a living trading pullbacks. The different things that you can trade — breakouts — breakouts are my favorite. When I see a bar at like 27, I’m shorting. So breakouts are my favorite. And then you start to get pullbacks from breakouts — they’re okay as well, but the difficulty is you’re then in a channel and sometimes it’s really hard, like selling below 62, 63 here yesterday — I did not sell with a stop below those bars. It’s too low down and too big a bull bar. But that’s — it turned out to be okay. This is a better pullback — a pullback near the moving average, two legs down — something like that. So you definitely can make money or a living trading just pullbacks.
Reversals are more difficult. Major trend reversals I think are good if you can swing trade because 60 percent of the time you’re not going to make money on a reversal. You’ll make a little money, you’ll lose a little money. But 40 percent of the time, you will get a swing. So there’re okay as well.
Trading ranges, I think, are the most difficult for most traders. They’re frustrating; you don’t make a lot of money; you’re never as certain as you want to be. But you can make a living doing it, just fading everything — every time it goes up, you sell; every time it goes down, you buy; you scale in, use wide stops. And I do that in trading ranges a lot. On a day like today when I thought we were going to get a big breakout, I was not willing to sell above bars and buy below bars. And had I done that, obviously would have made a lot more points than what I did.