Every DTR trade starts with the same question: where do I put my stop loss? The answer depends entirely on which entry technique applies — pullback or aggressive. These two techniques give you different risk zones, different stop loss placements, and dramatically different risk-reward profiles. Understanding when to use each is fundamental to executing the DTR method.
The Pullback Entry Technique (Conservative)
"The pullback entry technique occurs when the entry can happen prior to price action making a breakout above the high of our confirmation candle — or the low of our confirmation candle if we're bearish."
In plain terms: price hasn't broken out yet. It's still consolidating inside the confirmation candle range, and you're catching a dip.
Stop Loss Placement
"You want to be setting your stop loss at the low of your confirmation candle." If price makes a lower low below that candle, your bullish thesis is dead.
Key Characteristic
"The pullback entry technique will often happen faster than you would expect. It often happens as a sign of capitulation — faster than you expect, and it makes you kind of scared that it's going to flush through."
This is actually what you want to see: "Weak bears flush through, they run out of juice, and then they get overwhelmed with a tremendous amount of buyers."
The Position Sizing Constraint
"Even though price action pulls back under the green line towards the red line, we still want to make sure that we are entering at the point where we are within our max loss number."
Critical rule: "I want the point where I lose $500 and the low of my confirmation candle to be the same on this pullback technique." Your max loss price and your stop loss must align. Don't place a stop loss beyond your dollar risk tolerance.
When It Happens
"The pullback technique happens relatively rarely, or less often, and that makes it harder for us to take advantage of some of those moves." It's the ideal entry — but you can't count on always getting it.
The Aggressive Entry Technique
"The aggressive entry technique is one where price action makes a lower low or a higher high prior to it pulling back towards your confirmation candle."
In other words: the breakout has already happened. Price made a new high (or low), and now you're waiting for a retest of the breakout level.
Stop Loss Placement
"I want to place my stop loss at the high or low of my entry candle." Not the confirmation candle — the entry candle after the breakout.
Why Michael Prefers This Technique
"The reason why I like the aggressive entry technique is because it makes it easier for me to be able to get realistic entries with my position sizing."
The math works better: "The difference between the low of my confirmation candle and the high of my entry candle gives me a more realistic risk zone. In this context, I'd be risking 22 points — only $440 — instead of risking $1,500 and having to wait for a very deep pullback."
More trades, better sizing, tighter risk. That's the aggressive edge.
The Logic of the Stop
"If we make a lower low through our confirmation candle, I would anticipate that price acts as support and continues to push lower. If it doesn't, and we retest above our entry candle high — we are no longer getting a sign that price action is behaving very strong."
The aggressive technique relies on breakout momentum. If that momentum immediately fails, your thesis is wrong.
How They Work Together
This isn't an either-or choice. Michael switches between them dynamically:
"By default, I'm always going to be looking for the pullback entry technique as my initial starter. Once I make a new lower low or a new higher high through the confirmation candle, I then switch to the aggressive entry technique."
The flow:
- Confirmation candle forms → Look for pullback entry (stop at confirmation candle low/high)
- Breakout happens without pullback → Switch to aggressive entry (stop at entry candle low/high)
- Continue trading → Each new breakout candle can become a new aggressive entry setup
What It Looks Like in the Live Stream
"If you ever see me inside the live stream moving my stop loss from being $21.84 to $21.32 — that is because price has actually broken out from that range, and I would not want to see it pull back into my confirmation candle."
"When we make a breakdown or breakout and those breakouts are strong, those moves should sustain. If they don't sustain, then my thesis is no longer strong."
The Cheat Sheet
For bullish trades:
- Pullback entry: Stop loss = low of confirmation candle. Valid before breakout above confirmation high.
- Aggressive entry: Stop loss = low of entry candle (after breakout). Valid after new higher high is made.
For bearish trades:
- Pullback entry: Stop loss = high of confirmation candle. Valid before breakdown below confirmation low.
- Aggressive entry: Stop loss = high of entry candle (after breakdown). Valid after new lower low is made.
Key Takeaways
- Pullback = conservative — stop at confirmation candle, wider risk zone, less frequent
- Aggressive = tighter risk — stop at entry candle, better position sizing, more frequent
- Default to pullback first — switch to aggressive after a breakout occurs
- Pullback entries happen fast — the scary flush is often the entry signal
- Aggressive entries need sustained momentum — if the breakout immediately fails, exit
- Max loss and stop loss must align — especially on pullback entries
- Both techniques use the reference price — the blue line determines your entry zone
- The switch happens dynamically — watch for it in real-time during live trading
Master Both Techniques in a Funded Account
At DayTrader Funding, understanding when to use pullback vs aggressive entries is what separates traders who survive from those who don't. Get funded and apply both techniques to maximize your edge.