facebook  youtube  blogger

Look for a Retracement

Once prices have broken out, look for a retracement. Successful retracement trading can lead to very nice short-term profits.

When prices finally do overcome resistance or support, penetrate a psychological barrier. or break out of a formation or trading range, it tends to do so boldly at first. But after their initial thrust, prices often seem to need reassurance. It's as if prices need to reconfirm their new-found freedom. Prices may even return to, and penetrate somewhat, the very area from which they just broke out.

When traders who are on the wrong side of the trade exit, and new participants eagerly enter in the direction of the breakout, the retracement to retest succeeds in reenergizing, reinforcing, and resuming the new trend. At that point, be prepared to go with the trend and not against it. That is why we trade breakouts of ledges in the direction of the former trend. A similar truth applies to breakouts from trading ranges. We trade the breakout of a trading range in the direction of the breakout, but we also anticipate a reaction to the breakout. Once the reaction is over, we use the Traders Trick Entry to pursue the trade in the direction of the breakout.

Sign up for our FREE weekly Chart Scan newsletter!

We want to hear from you, Joe Ross wants you to learn trading. Email us your questions or if you need additional information. Another great investment is private mentoring with Joe, our students find this very helpful and accelerates their trading successes.

Private Mentoring with Joe Ross - Sign Up Today



No comments made yet. Be the first to submit a comment
Already Registered? Login Here
Wednesday, 21 April 2021

By accepting you will be accessing a service provided by a third-party external to https://tradingeducators.com/

Derivative transactions, including futures, are complex and carry a high degree of risk. They are intended for sophisticated investors and are not suitable for everyone. There are numerous other factors related to the markets in general or to the implementation of any specific trading program which cannot be fully accounted for in the preparation of hypothetical performance results, and all of which can adversely affect actual trading results. For more information, see the Risk Disclosure Statement for Futures and Options.