Putting it All Together – The Anatomy of a Pullback Trade
One of the most common short-term trading technique and keywords is the
“pullback” trade. A pullback occurs when a strongly trending stock moves against
its trend; this occurs to both the long side and the short side, and it is an
opportunity for trend followers to get a better price before the stock resumes
its original direction.
But just when is the right time to get in? Many traders attempt to buy on the
lows of the pullback, only to have the stock fall further, which means losing
more money. Many a frustrated trader has gotten out of a losing pullback trade,
only to see the stock bounce and the original trend resume.
So again, how do you know when it’s time to enter a pullback trade?
PowerRatings (for Traders) is built to find these types of trades, and provides
traders with a historically-backed, quantified edge. We have run tests on
millions of trades going back to 1995, and we have solidified our PowerRatings
indicator with proven results. Stocks rated 9 and 10 have outperformed the
average stock by 12 to 1 since 1995 and ideally are the stocks to focus on each
day. Stocks rated 1 and 2 on average have lost money, and you want to know these
stocks in order to avoid them.
Dendreon
(
DNDN |
Quote |
Chart |
News |
PowerRating) has been a PowerRatings (for Traders) focus stock
for the past 3 days. Last Thursday, DNDN went from a PowerRating of 5 to a
PowerRating of 8, indicating that the stock was becoming more and more extended
to the downside, despite an overall positive trend.
Today, DNDN surged at the open more than 10% before falling back slightly.
This is a perfect example of a pullback trade. A stock is trending up, but then
falls for a few days to extended lows. PowerRatings (for Traders) picks up on
those conditions, and gives DNDN a higher rating accordingly.
Remember, pullbacks work!