Trading Volatile Trend Pullbacks
You guys know I love trading trend pullbacks, especially shallow pullbacks in momentum markets. Generally, I don't like volatile trend pullbacks, but rather pullbacks that are orderly and thus, easy to trade.
It's because trend pullbacks are a money makers, and if you follow the setup correctly, it's a no brainer that offers great reward to risk. When the market is booming and pullbacks are bought up, there is not a setup that's more effective. Even breakouts pail in comparison. This is why I trade the post breakout move rather than the breakout itself.
In the past I've focused on a "relative strength" as a key element for trading the trend pullback setup.
The reason we give importance to relative strength is stocks that hold up well during pullbacks tend to resume trend at a higher rate than beaten down stocks.
However, there are exceptions to every trading rule, and today's Netflix trade review is a great example. This pullback actually showed relative weakness and is a "volatile trend pullbacks" setup.
In today's video, we analyze the volatile trend pullback setup using out recent winning trade alert in NFLX. Key elements of the trade include:
- Analyzing the trend
- The different between orderly and volatile pullbacks
- Key entry signals
- Targets and exit strategy
- Trading before earnings announcements
- Post earnings breakout setups
Watch, learn and let me know if you have any comments or questions.
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