Have you ever noticed that even in the strongest trends, price will always make a rotation? Price never moves in a straight line either higher or lower. These rotations in trading are known as pullbacks.
In this post we look at exactly what pullback trading is, how you can use it in your trading and how you can use a pullback indicator in MT4 and MT5.
Table of Contents
What is a Pullback?
Pullback trading is an extremely popular way to trade the markets.
When trading from pullbacks you are trading with the overall markets trend and momentum and you are often entering high probability trades.
When pullback trading you are looking for price to make a rotation or ‘pullback’ from its current level.
For example; price may be making a strong trend lower, but you don’t want to sell at the market swing low. You would rather wait for price to pullback into a value area and then make your trade.
As the example chart below shows; even though price is making a clear trend lower, it is still making regular pullbacks higher and giving a lot of opportunities for traders to get short.
How to Trade Pullbacks?
One of the simplest strategies to trade pullbacks is to use important market levels.
Two strategies you can use to find these important market levels are key areas of support or resistance and using trendlines.
The example below shows how you could use trendlines to find simple, but high probability pullback trades to get long with the trend higher.
As price moves higher it is regularly pulling back into the trendline and giving you a chance to look for long trades.
To increase your trades odds you could combine the trendline with Japanese candlestick patterns that would then confirm that price is looking to continue the move off the trendline.
Pullback Indicators for MT5
Whilst pullback trading is straightforward, it can become time-consuming to look for trades, especially when using other strategies and systems.
Using MT4 or MT5 indicators and expert advisors can help you find these pullbacks quickly and also ensure you don’t miss any high probability trades.
Pullback Alert Indicator for MT5
This MT5 pullback indicator will quickly help you find the important pullbacks that form within a trend.
This is quite a handy indicator that you can use across multiple time frames and has settings you can adjust as you need.
This indicator works with all Forex pairs, but it is best used with pairs that are often making large trends or that see bigger pip movements.
Features of this MT5 pullback indicator include;
- Ability to get notifications via Metatrader or push notifications on your phone.
- Ability to find trades with tight stop loss.
- Ability to spot clear pullbacks with a trend quickly.
Pullback Entry Expert Advisor MT5
This is a MT5 pullback expert advisor that will make your trades for you depending on the different settings you create.
This expert advisor creates the pullback signals based on a mixture of price action and indicators such as moving averages and the RSI.
Pullback Indicators for MT4
Trend Pullback Indicator for MT4
This is a more advanced indicator that comes with more features. This is also a premium indicator at MQL5.
This indicator will give you trading signals that you have the ability to adjust and filter based on the trend, key support and resistance levels and other factors such as price channels.
This indicator comes with a stack of features. Some of these are;
- You can see statistics for up to 10,000 signals per asset.
- Does not repaint.
- Simple and easy to use.
- Alerts through Metatrader or mobile with push notifications.
- Suited to many different strategies including scalping and swing trading.
Pullback Entry EA for MT4
This is a MT4 pullback expert advisor that will make your trades depending on the different settings you create.
The pullback signals are based on moving averages within the trend. This EA will create a trailing stop and take profit order automatically.
This EA works on all time frames and Forex pairs.
Pullback trading can be an incredibly simple and powerful way to trade the markets. You will often be trading with the main trend and from the highest probability area to enter the market.
It is incredibly important you test these indicators and expert advisors on a free demo account first.
Never risk any real money with any new indicators, EA’s or trading strategies before you know how they work and you are comfortable with them.