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Lesson 8 of 14 · Free

Your first complete strategy: the trend pullback

Entry, stop, target and sizing rules for a simple, robust setup you can trade on any market.

Author: Moustafa HijaziContent reviewed: 2026-10-301 min readSelf-study course

This is the strategy we teach first because it's simple, works across markets and timeframes, and forces you to trade with the trend.

The rules

  1. Trend filter (daily chart): price above a rising 50 EMA → longs only. Below a falling 50 EMA → shorts only.
  2. Wait for a pullback to a support zone or to the 20/50 EMA. Don't chase price away from the level.
  3. Entry trigger: a bullish reversal candle (pin bar, engulfing) at the level. Enter on the break of that candle's high.
  4. Stop-loss: below the low of the signal candle, or 1.5× ATR below entry, whichever is further.
  5. Target: the previous swing high, and at least 2× your stop distance. If 2:1 isn't available, skip the trade.
  6. Size: 1% risk, calculated with the position-size tool.
  7. Management: once price has moved 1× risk in your favour, move the stop to break-even. Then leave it alone.

What a good setup looks like

Clear uptrend, a clean pullback of 3–8 candles into a level you marked before the pullback, then a strong rejection candle with a long lower wick. If you have to squint to see it, it's not a setup.

What to avoid

  • Trading during major news releases (NFP, central bank decisions).
  • Taking the setup against the higher-timeframe trend.
  • Entering before the trigger candle has closed.
Practice firstTrade this on a demo account for at least 30 trades, journaling each one, before using real money. You're testing yourself, not just the strategy.

Self-check

Answer the questions, then check your answers. You can retry as often as you like.

1. Price on the daily chart is below a falling 50 EMA. Which trades does the trend filter allow?

2. Long setup: you enter at €100. The signal candle's low is €98 and the ATR is €2. The rule is: stop below the signal candle low or 1.5× ATR below entry, whichever is further. What are the stop and the minimum target?

3. The only target available in a setup is 1.5× your stop distance. What does the strategy say?

Automatic self-check for your own revision. Your answers are checked in your browser and are not seen or assessed by us. It is not an exam and not a qualification.

Your progress

“Complete” only means you marked the lesson as done. It is not a test of your understanding. Progress and notes are saved only in this browser on this device — not in an account.

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