You’re staring at your chart. A setup’s forming.
Price is pressing against resistance — could be a breakout.
Or maybe it’s better to wait for the pullback.
You’ve likely asked yourself this before: “What’s the best approach — breakout vs pullback trading?”
It’s a fair question. But it might be the wrong one.
It’s not about breakouts or pullbacks. It’s about your process.
In this post — based on a recent episode of the Trading Truths Podcast — we dig into a question that seems tactical on the surface, but reveals a deeper issue underneath. You’ll hear from both myself and Dennis Wilborn as we unpack what really matters when choosing (and sticking with) a strategy.
🎧 Prefer to listen? Catch the full episode on Spotify:
Breakouts vs. Pullbacks: Are You Asking the Wrong Question?
The Real Problem: Why Strategy Comparisons Fall Short
Here’s what we see all the time — especially from newer traders or folks trying to turn the corner:
They bounce between setups, endlessly tweaking their plan.
Breakouts one week. Pullbacks the next. A little RSI here, some MACD there.
It’s like a “Frankenstein Strategy” — pieces stitched together from YouTube, Twitter, and chat rooms, but no unified system.
And what starts as curiosity or research turns into confusion and lack of conviction.
In the episode, I shared how I’ve seen traders paralyze themselves this way. It’s not that breakouts or pullbacks are bad. They both work — but only when built into a coherent process.
“The question shouldn’t be: which setup is better? It should be: which setup aligns with your process, your personality, and your trading plan?”
What Is a Breakout or Pullback… Really?
Before we go further, let’s get something straight:
Even the terms “breakout” and “pullback” can mean wildly different things to different traders.
For some, a breakout means a close above resistance on heavy volume.
For others, it’s an intraday push past a key level, confirmed by momentum indicators.
Same with pullbacks — is it a dip to a moving average? A retest of a former high?
The definitions vary, which is why chasing someone else’s version of the setup often leads to inconsistency.
In our conversation, Dennis and I highlighted how important it is to define these setups for yourself, in your own system — so your brain recognizes what you’re trading and why.
The Hidden Cost of Complexity
Here’s something most traders don’t realize until it’s too late:
More complexity = less clarity.
When your system is overloaded with “if this, then that” conditions…
When you’re second-guessing if this breakout has enough volume or if the pullback is “deep enough”…
You stop trusting your own signals.
That indecision shows up in your trades:
- You hesitate on entries
- You exit too early
- You skip valid setups, then chase them later
I’ve been there. Dennis has been there. Most traders have.
“At some point, I realized my trading wasn’t suffering from lack of knowledge — it was suffering from lack of clarity.”
One of the key takeaways from this episode is that simplicity is a real edge.
When you know what your setup looks like, you can act decisively and consistently — even when the market throws curveballs.
Case Study: My HRTG Trade (Breakout or Pullback?)
To bring this down to earth, let me walk you through a trade I took in $HRTG.
On the chart, it looked like a breakout to some.
To others, it could be seen as a pullback within a larger uptrend.
But for me, the label didn’t matter — what mattered was that it matched my trading criteria.
Here’s what I saw:
- Price was consolidating near recent highs
- There was a clean range with a well-defined resistance level
- Volume was building on the approach
- My risk/reward aligned with my plan
When it triggered, I entered.
Was it textbook perfect? Not exactly.
But I knew what I was looking for, and I executed without hesitation.
That’s what a clean system gives you — permission to trust yourself.
This is where traders often get tripped up. They ask:
“Is this a real breakout? Should I wait for the pullback?”
But the better question is:
“Does this setup fit my criteria — and can I execute it with confidence?”
Breakouts and Pullbacks Both Work — If You Do
Let’s be clear — this isn’t about picking sides.
Both breakouts and pullbacks can be profitable approaches.
There are traders crushing it with each style.
What separates them isn’t the setup — it’s the consistency, conviction, and system behind it.
Here are a few questions to ask yourself:
- Do you actually have a written trading plan that defines your setup?
- Can you describe it in under 30 seconds to another trader?
- Are you tracking the win rate and risk/reward of your entries?
- Do you feel clear before you enter — or only after the trade works?
If your answers are fuzzy… it might not be the setup that’s the problem.
The Better Question Traders Should Be Asking
So what should you be asking instead of “Breakouts or pullbacks?”
Here’s the question that has changed my own trading — and the traders I coach:
“What setups fit my trading personality, allow for consistent execution, and give me clarity under pressure?”
This is where trading moves from theory to process.
When you start asking that question, you stop copying random entries on Twitter and start building a system that actually works for you.
In our podcast, Dennis and I both agreed:
Traders don’t need more setups — they need more clarity around the setups they already know.
Want to Audit Your Own System?
If this post struck a chord — if you’ve been jumping between styles, tweaking endlessly, or hesitating on trades because you’re not sure what counts as a “valid” setup — you’re not alone.
And you don’t have to overhaul everything to fix it.
🎯 That’s why we created the 2-Minute Trading System Audit — a simple, free tool to help you spot the gaps in your current process and bring more clarity to your execution.
It only takes two minutes — and it could save you months of second-guessing.
Final Thoughts
The “Breakout vs. Pullback” debate will always come up in trading conversations. But now you know the truth:
The real edge isn’t the setup. It’s the trader behind it.
When you trade from a place of clarity, conviction, and consistency — it almost doesn’t matter what the pattern is called.
It matters that you recognize it, trust it, and know how to execute it.
If you want to go deeper into this conversation, check out the full episode of Trading Truths:
🎧 Listen to the episode on Spotify
📈 Trading Coach & Author of “The Trading Mindwheel”
🥇 Helped coach a top 10 finisher at USIC
🌟 Specializing in process, skill development & mindset