Video summary

5 Things To Look For Before You Place A Trade (Pullback Trading)

Main summary

Key takeaways

Finance

Finance-focused pullback trading checklist (T-A-Y)

Core instruments / assets mentioned

  • FX pairs / currency crosses
    • EUR/AUD
    • EUR/CHF
    • USD/CAD
    • GBP/NZD (implied)
    • Also mentions “a fx market” example on an 8-hour timeframe (specific pair not named)
  • Stocks
    • Netflix (NFLX)
    • “SUMR” (spelled sumr)
    • S&P 500 index (referenced generally)
  • Indicators / tools (not tickers)
    • 50MA (50-period moving average)
    • ATR (Average True Range), specifically 20-period ATR
    • ROC (Rate of Change)

Key methodology: the “T-A-Y formula” for pullback trades

T = Trend

Pullback trades require an existing trend (not a range). Prefer trends with a clear retracement toward the 50MA or deeper.

A = Area of value

Identify where buying/selling pressure may appear:

  • Support / Resistance
  • Trendlines
  • Moving averages (example given: the 50MA repeatedly tested)

E = Entry trigger

Use candlestick patterns to time the entry, such as:

  • Bullish engulfing
  • Hammer
  • Shooting star (reversal pattern type)
  • Engulfing / price rejection
  • Dark cloud cover (bearish reversal example)
  • False break (FB) setup:
    • Price briefly breaks below/above support/resistance,
    • then closes back in the intended direction.

Y = Exit if you are wrong (stop-loss)

Place the stop where it invalidates the setup.

Examples:

  • Head-and-shoulders breakdown: stop goes where the pattern is destroyed/invalidated.
  • Support/Resistance: stop is set below the support break, with a buffer to reduce stop-hunt risk.

ATR-based buffer example (with explicit numbers)

  • Uses 20-period ATR (ATR SMA).
  • Example ATR value: ~39.1 pips, rounded to ~40 pips.
  • Conceptual stop formula:
    • Stop loss = (support low) − 1 ATR
  • Example math:
    • 1.0722 − 0.0040 (~40 pips) ≈ 1.0682
    • Stop placed around 1.0682.

Final exit if you are wrong (summary)

  • Stop loss is set at the level that proves your thesis wrong (optionally buffered using 1× ATR).

Exit if you are right

  • Swing trading: take profit at/near a swing high/low, targeting a move into likely selling pressure.
  • Trend-following alternative: use a trailing stop (e.g., trail below recent swing lows or via a moving average).

Practical recommendations / cautions

  • Avoid pullback setups when the pullback is too shallow (entries become harder to time).
  • The pullback should show visible retracements toward the 50MA or more.
  • Don’t assume entries always work:
    • The presenter notes the examples are cherry-picked winners, and real trading will include a series of losses.
  • Be careful with stop placement:
    • Stops can be too tight, increasing the chance of being stop-hunted beyond support/resistance.
    • An FX sizing/range concept is mentioned (e.g., deciding whether to base the stop on one high vs another, with phrases like “180 above this high” affecting conservativeness).

Bonus: performance filter for stock selection (ROC-based)

When choosing between two similar stock setups:

  1. Buy the stronger stock (relative strength).
  2. Measure ROC over roughly 6–12 months (example uses about 50-week lookback).
  3. Use explicit example numbers:
    • SUMR: ROC 663% over the last 50 weeks
    • Netflix: ROC 85% over the last 50 weeks
    • Preference: choose the higher ROC stock (here, SUMR).
  4. Avoid weak stocks:
    • Example comparison vs index (S&P 500):
      • Index ROC ~ 20
      • Stock ROC ~ 15
      • If the stock ROC is lower than the index ROC, avoid.

Explicit recap (as stated)

  1. Trend
  2. Area of value (support/resistance/trendline/MA)
  3. Entry trigger (false break or candlestick reversal patterns)
  4. Exit if wrong = stop loss where the setup is invalidated
    • optionally using 1× ATR buffer (example: 20-period ATR ~40 pips)
  5. Exit if right = swing target or trailing stop

Disclosures / disclaimers

  • Examples are cherry-picked winners; in real trading, it won’t work all the time—expect losses.
  • The note “Don’t take what [the presenter] says at face value—do the work” implies forward testing/backtesting.

Presenter / sources

  • Presenter: Rainer (referenced repeatedly as “Rainer”)
  • Mentions general claims like “academy research has proven” without a specific paper/institution cited.

Original video