Trading pullbacks is based on the reality that even in a strong trend, price rarely moves straight up or down: It will repeatedly retrace its steps briefly before continuing to trend higher or lower.

Most traders pay more attention to a system’s entry rules than its exit rules. This trading strategy identifies three-bar pullback patterns in the E-Mini S&P 500 futures and explores each step in the development process in further detail, with a special focus on modifying exits to boost the probability of winning trades and protect against large losses.