The same entry strategy can be reversed to add to a trade at more favorable prices in a pullback situation.

Let’s use the same example but assume there is strong chance of a retracement. You would make an initial purchase of five mini lots (one quarter of the total position) at 1.3250, add another five lots at 1.3212 (a 38.2 percent retracement of the move) and, finally, add the remaining half of the trade — 10 lots — at 1.3188 (a 61.8-percent retracement of the move). Overall, the position would look like this:

1. Buy 5 lots at 1.3250 (initial level).

2. Buy 5 lots at 1.3212 (38.2 percent retracement of the entry bar).

3. Buy 10 lots at 1.3188 (61.8 percent retracement of the entry bar). Average cost = 1.3209.

4. Stop 1.3150.

In this case, using a stop of 1.3150 and target 1.3350, you would earn $1,410 for every $590 of risk if the move retraced all the way to 61.8 Fibonacci level. Indeed, the trade would already be profitable even if price simply returned to the initial entry point.

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