Trading Educators Blog
Short-Term Pullbacks
Short-term Pullbacks provide opportunities to enter trades in the direction of the longer-term trend. Trade set-ups like these occur against short-term momentum (the pullback) but are in alignment with the longer-term trend and typically offer high probability and low risk trade ideas with a 2:1 (or better) reward-to-risk ratio.
A great way to trade short-term pullbacks is to use a moving average. Every time prices pull back to the moving average you enter a trade in the direction of the moving average. It doesn't matter very much if the moving average is weighted in some way or not weighted at all. The moving average is designed to keep you on the right side of the market, i.e., in the overall trending direction of prices.
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