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Beat the Street: A Trader's Guide to Consistently Scoring in the Markets by Adrian Manz

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Chapter 9. Ratio Pullbacks

STRONG DIRECTIONAL MOVES are usually followed either by consolidation periods or pullbacks in the direction of the dominant trend. Although many traders advocate entering breakouts of these retracements the moment a higher tick is in place, better opportunities are to be had when some specific criteria are met. The ratio-pullback pattern focuses particular attention on the characteristics of the most extreme day of the move in an attempt to filter out pullbacks that lack the potential for follow-through. In doing so, many potential trend reversals are eliminated before they have a chance to cause losses.The ratio pullback is a pullback pattern that establishes a position after profit-taking has caused a one-to-five ...

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