Pullback Entry Strategy

Hi Salzburg,

Do you have experience with trading a volatility systems? I read your other posts and you say you cut your teeth in futures if I’m not mistaken.

I was doing some studying of the systems that are used in futures trading and I was wondering if they would work trading stocks. What I’m trying to do is make some type of a system where I can buy on pullbacks. I read somewhere that a futures trader will take the signal at times in the other direction. Like say if he gets a sell signal he will do the opposite. I don’t know? Does something like this work? I’m thinking about tying to find some software & test something like this. What I’m thinking is taking a simple system, say the average of x number of days and add & subtract from the close.

Any experience your willing to offer I would sure appreciate.


Thanks in advance,
Tonkicat

 

Hi Salzburg,

I read your other posts and you say you cut your teeth in futures if I�m not mistaken.

It never hurts to clarify things right up front, Tonkicat. I cut my teeth studying futures. But I found that a larger universe of tradables at the end of every day gave me more material to observe. It seemed to offer more opportunities, that’s all, so I switched to watching stocks. But having said that, I don’t think that one price chart is a lot different from another – in general terms. (More experienced members may come forward an disagree.) Probably, if I were to strip the price scale and the x-axis off an hourly, a weekly, a monthly and daily chart and ask you, “Which is which?” it would be hard to answer. Maybe I better clarify that again: it would be very hard for me to answer. So I believe, and will be happy to stand corrected, that many systems that work on futures would also work on stocks.

With futures things are little complicated because contracts have that damn habit of expiring, but for very simple systems (the only ones I can understand) I think it’s safe to say that you can interchange them. But you should check carefully and not rely on what I say. That way we’ll stay good friends.


What I'm trying to do is make some type of a system where I can buy on pullbacks. I read somewhere that a futures trader will take the signal at times in the other direction. Like say if he gets a sell signal he will do the opposite. I don't know?

Well, niether do I, of course. If you get a genuine sell signal, you better sell. I you get a real buy signal, you better buy. The only explanation that comes to mind is that some signals which might look like they’re telling you sell, are actually presenting an opportunity to buy – and vice versa. Isn’t that what buying on a pullback or selling a rally is about? Could that be what you mean?

Am I saying anything helpful yet? Or am I missing your point? Or as NYC Mayor Ed Koch used to say, “How am I doing.” (No political aspirations here!)

What I�m thinking is taking a simple system, say the average of x number of days and add & subtract from the close.

You’re thinking about a simple moving average system? Is that it? You'd like to use a moving average to define direction? That can probably be done. Not sure what you mean about “subtracting from the close,”though, but fill me in. I'm sometimes a little reluctant to discuss stuff in microscopic detail, but . . .fire away, I’ll tell you what I can.

 

Thanks for the post.

 

I detailed a Pullback trade idea for TSCM in this thread in the TA section of Elite Trader:

http://www.elitetrader.com/vb/showthread.php?s=&postid=406262#post406262

I decided to do pullbacks as discretionary entries and skip the rigid rules. Thanks to everyone for their ideas.

Banker

 

I have been called of from this postings before but I bleieve that depending on how you define "pullbacks" my example was a valid one. I really have plenty of good examples.

 

I agree with you. Will you be interested in starting your separate tread on this ?
Hombre

 

As far as I am concerned you can use this thread however you wish. I decided to go without rules and definitions for pullback entries, so my work is done here.

Banker