The volatility of the share market is infamous all over the world. Even an experienced trader can't predict the market's movement with complete surety. Moreover, this volatile nature of the market is why you get to see trends like pullbacks. Pullbacks are among the most often occurring phenomena with the opportunity to earn money. In this blog, you'll understand what exactly a pullback is and the strategy to use during pullbacks.
A pullback is a temporary trend-reversal situation. It occurs due to a price correction. It creates a short-term trend reversal, which gives an opportunity to make a profit using a pullback strategy. A pullback may look like a trend reversal initially. But, it gets clear when the instrument's price gets corrected, and the market catches its natural momentum.
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The reasons for a pullback can be a profit-keeping, buying-selling imbalance, a temporary shift in the market's sentiments, and many more. Moreover, identifying a pullback requires market research, following trend patterns, determining moving averages, etc.
A pullback can happen in both an uptrend and a downtrend, so it's essential to devise a strategy accordingly. Here is how you can create a pullback trading strategy if you spot a pullback.
The risks involved in the pullback trading strategy are:
A pullback is a great opportunity to make money in trading. However, you must be correct and fast to identify the pullback and enter the trade. Otherwise, there can be a loss if you identify a false pullback. Open your Demat Account with Motilal Oswal and get a chance to be ahead of others with the best trading experience ever.