How to Trade Pullbacks

by Manny Backus

There’s no question that trend following and momentum investing can and do work. But all trends eventually come to an end, and momentum can reverse with little or no warning. Selling at the top of “irrationally exuberant” bull markets is the way the richest of the rich — Wall Street’s modern “robber barons” — have been making their money for decades. It happened during the Great Depression, it happened during the 1990’s dot-com bubble, and it happened again directly before the start of the most-recent financial crisis. How do you avoid being one of the “suckers”
that gets taken?

The answer is: you have to learn how to trade pullbacks.

10 pages, Kindle Edition

First published August 26, 2012