How to Set Up Bulkowski’s Retrace Day Trading Strategy in Olymp Trade.

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What is Bulkowski’s Retrace Day Trading Strategy?

Bulkowski’s Retrace Day Trading Strategy is a day trading strategy that capitalizes on the very first retracement of the day to profit.

The strategy relies on price action to spot trends, enter trades, and exit them.

Bulkowski’s Retrace Day Trading Strategy is among the chart patterns in Thomas Bulkowski’s Encyclopedia of Chart Patterns.

It is a suitable strategy for part-time traders because it is only applicable at the open of trading day.

You could actually use this trading strategy on 1-minute or 5-minute timeframes. Well, that’s if you prefer scalping.

So how does Bulkowski’s Retrace strategy look like?

  1. There has to be a trend
  2. Then an apparent retracement of the trend, which seems to be ending.

Bulkowski’s Retracement on a bullish trend.

Here are the defining criteria of a Bulkowski’s retracement on a bullish trend:

  • Bullish Trend from the previous day.
  • At least three consecutive bearish candlesticks on a new day.
  • One bullish candlestick following the three consecutive bearish candlesticks in the new day.

Bulkowski’s Retracement on a bearish trend.

Here are Bulkowski’s Retracement defining criteria on a bearish trend:

  • Bearish Trend from the previous day.
  • At least three consecutive bullish candlesticks on a new day.
  • One bearish candlestick following the three consecutive bullish candlesticks in the new day.

Do you know how to set up and trade the Bulkowski’s Retrace day trading strategy in Olymp Trade?

In this post, I will explain how to set up and trade that same strategy in Olymp Trade.

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Bulkowski’s Retracement on a bearish trend

Setting Up and Trading the Bulkowski’s Retrace Day Trading Strategy in Olymp Trade.

Setting up the chart for Bulkowski’s Retrace Day Trading Strategy is easy.

You actually may not need to use any chart tools but price action and trend lines only.

Here are the simple steps to setting up and trading the Bulkowski’s Retrace Day Trading Strategy in Olymp Trade:

  1. Establish a Trend from Previous Day.

One of the conditions of Bulkowski’s Retrace Day Trading Strategy is that there needs to be a trend.

Given that the strategy is applicable at the open of a trading day, the trend needs to be established from the previous day.

But how do you establish a trend from the previous day?

You just have to observe price action towards the end of that previous day and you can as well draw trend lines.

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Is the trend towards the end of the previous day upwards and still looking like an uptrend would continue at open of the next trading day?

Also Read: – HOW TO FIND REVERSAL POINTS WITH THE 1-2-3 PRICE PATTERN METHOD.

Or is the trend towards the end of that previous day downwards and looking like a downtrend would still continue at open of the next trading day?

You can establish this by looking for higher highs and higher lows to conclude an uptrend.

On the other hand, lower highs and lower lows can be used as a sign of a downtrend.

You can also draw trend lines and if trend lines joining swing lows slope upwards, that would be an uptrend.

However, if trend lines joining swing highs slope downwards, then such would be a downtrend.

  1. Wait for the Start of New Trading Day.

If you have established the trend by using price action or drawing the necessary trend lines, then you have set your chart ready.

The setting up is over and what remains is to wait and observe.

Whatever kind of trend you have established, whether uptrend or downtrend, you must wait for the open of the next trading day.

It is the first retracement of that next day that meets Bulkowski’s retrace set-up criteria which we anticipate.

  1. Spot the First Bulkowski’s Retracement of the Previous Day’s Trend in the New Trading Day.

Here, you are not just spotting any kind of retracement.

It is the retracement that meets the criteria of being a Bulkowski’s retracement which you are looking for.

If the previous day gave an uptrend, you expect a Bulkowski’s retracement on that bullish trend from the previous day, in the new trading day.

It has to meet these two criteria:

  • At least three consecutive bearish candlesticks on a new day.
  • One bullish candlestick following the three consecutive bearish candlesticks in the new day.

If the previous day gave a downtrend, you expect a Bulkowski’s retracement on that bearish trend from the previous day, in the new trading day.

It has to meet these two criteria:

  • At least three consecutive bullish candlesticks on a new day.
  • One bearish candlestick following the three consecutive bullish candlesticks in the new day.
  1. Set Up Buy Stop or Sell Stop Pending Order.

Did you spot a Bulkowski’s retracement on the bullish trend from the previous day, in the new day?

Then set up a Buy Stop Pending Order above the high of the bullish candlestick following the three bearish consecutive candlesticks in the new trading day.

Did you, on the other hand, spot a Bulkowski’s retracement on the bearish trend from the previous day, in the new day?

Then set up a Sell Stop Pending Order below the low of the bearish candlestick following the three bullish consecutive candlesticks in the new day.

Bulkowski’s Retrace Day Trading Strategy

  1. Adjust Stop Loss and Take Profit.

For the Buy Stop Pending Order, place your Stop Loss just below the low of the bullish candlestick following the three bearish consecutive ones.

For the Sell Stop Pending Order, however, place the Stop Loss just above the high of the bearish candlestick following the three bullish consecutive ones.

Take Profit for the Buy trade should target 50% retracement of the prior down move before the resumption of the uptrend.

On the flip side, Take Profit for the Sell trade should target 50% retracement of the prior up move before the resumption of the downtrend.

Wondering what the exact location of the 50% retracement is?

Just use the highest high among the four candlesticks of the setup and the lowest low among the same four candlesticks to place your 0% and 100% levels accordingly.

Happy Trading!


*Risk warning:

The information provided does not constitute a recommendation to carry out transactions. When using this information, you are solely responsible for your decisions and assume all risks associated with the financial result of such transactions.
 

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