Video and Transcription: Buying the First Pull Back Explained
Robert Knight, Head Trader at TurboTrading.biz gives three examples of when he successfully bought the first pull-back option. This video is great for anyone who deals with the stock market whose having trouble identifying when to buy during a pullback.
Okay, this is a video on buying, the first pullback opportunity. It's something that we did quite successfully today, there are three good examples of it. And certain times it works much better up until, you know, a few months ago, this wasn't really working, but it's coming back into its own now. So I'm going to start trying to trade it more often.
So you'll always hear me say no to chase us. Let's wait for the first pullback. So this is a two-minute chart and that's what I'm using for the first pullback opportunity. So we see the stock spikes here. Now, this is a, let me just go back one step. This is software applications. This has been a very strong, sector.
The stock went from. 30 to 80 and then a huge pullback down to 27, but now it has been surging. This is the sector and the day it's almost true. It will do trade over 50. It was on our watch list this morning. And so, so we were watching it, but it took off very sharply spiked up. So. I didn't want to chase it.
The volume was low, so I was waiting for it to pull back. So this is, I say the two-minute chart. So we see it gets this big, long wick, next candles red. This is an indicator that it might pull back. What we're looking for is the first green candle. So in a sense, the second candle, but the first green candle to make a new high.
So we've got these three red candles. Then we get this reversal here, big spike up and it trades too. $44.16. Now we're looking. So what we're looking for is the next green candle to make a new high. And that's this candle here and it trades to $44.45. So this is where I said - and then actually was this next candle-
I said, okay, this is it. We're going to trade the stock. And we got in around $44.40. I think that was my entry and a little bit, you know, 20 cents above where it should have been, but it looked like it was going to go. So here's your first pull back first candle, first green candle, first green candle to make a new high is here.
And you take that trade. Well, it ran to, $46.49. So, you know, a quick $2 movie. From that pullback, then it pulled back, it held support and then just started to trend up in this thing, actually traded to $50. You could have stayed in this trade, you know, sharp sell-off like that. There might've scared you out of it here.
You know what? I backed off. I same thing, but, you know, if you know, you could scale it out all the way and keep it and scale of the last bit up in the 50 area, but the key is this pullback. Now this, the next step that I want to look at is this $SKYT. This is the same thing. This was quite strong in the pre-market, but it was on very low volume and at the opening it spikes.
And we get this double top. So again, I'm not chasing this up. And so, yeah, you're not buying it at the opening, but then you're not taking the risk either. So $24 and without taking the risk, you buy it at $25 and $20.50. So you get it, you know, it's already had a dollar move, but at least there's at least a lot of the risk has been taken out of the trade.
You get this double top, you know, this is going to pull back. And then, so now we're looking for the first candle to make a new high. So here's your first green candle. It was $25.38. And here's your next green candle. So there's where you get into the trade around $25.40, $25.50 and off it takes and traded two.
And that spike $26.70. So nice dollar $1.20 move in 2, 4, 6, 8, 10 minutes. Pull back. You could have stayed in the trade skill, a little low pulls back. You know, it gets an, a trend line like this gets at the top of the channel, you sell some. Breaks the channel line, you get out of the balance. So there was a great opportunity there for the first pullback opportunity.
Then the last one, I just want to look at it and there are lots of them put this as the next one. Is this $TKAT. This, this is really in here where the first pullback entry opportunity was, at the opening, But it wasn't trading that much volume and it wasn't a big move. So not something really you'd trade. I mean, there's nothing in here to say that this is going to go, but all of a sudden the $NFT stocks take off and this thing really starts to run.
So you have a few opportunities here. One was here, were popped. We get a spinning top, a red candle, then here's your next, here's your first green candle. Here's your first green candle to make a new high here at 6 and a half. Now that spiked up pretty quickly. And so maybe, you know, this has been the easier opportunity to identify here.
The second pullback opportunity. It's $7.65. Here's your, you know, it had a red candle, green, red, green, red, green. And then here, this actually is your first green candle. Here is your breakout here, but you know what? This resistance up above here. You probably want to wait for this one here, take it at $7.65.
It runs almost to nine. So again, another couple of dollar move, and you know, over $3 move from this candle here. So you can see that you may miss the initial move, but at least you're not chasing it. You're not going to get whacked. And you know, it's because you have defined risks. Here's your first candle to make a new high, but let's say you bought it here at the $7.72.
Well, you know, you've got a divine defined risk. You're 30, 40 cents. You buy this, you know when it's spiking like this. You know, if you buying it after, you know, like a dollar move, you've got a lot of risk for this thing to pull back and go against you when you've already had the pullback and then looking to buy the first candle to make a new high you've eliminated, quite a bit of that, that initial risk.
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