CONTINUATION TRADING

The Philosophy (The Why)

Continuation trading is the backbone of professional futures trading. It focuses on joining strength, not predicting reversals. Institutions build positions over time. They do not chase price; they add on pullbacks. Continuation setups represent these re-entries. Retail traders sell pullbacks in trends, expecting reversals. Institutions use that selling pressure to add longs.

Mechanical Signature (The Setup)

The trigger is market structure alignment: higher highs and higher lows (or lower highs/lows). After a strong displacement, price pulls back into a Fair Value Gap or prior structure level. The entry occurs on retracement, not breakout.

Step-by-Step Execution (The How)

• Confirm Market Structure: Identify clear higher highs and higher lows (uptrend) or lower lows and lower highs (downtrend).
• Wait for Displacement: Look for strong momentum move that creates separation from previous structure.
• Identify Pullback Zone: Mark Fair Value Gaps or previous structure levels where price may retrace.
• Entry on Retracement: Enter when price pulls back into identified zone. Do not chase breakouts.
• Stop Below Structure: Place stop below the most recent higher low (uptrend) or above lower high (downtrend).

Risk & Management (The Math)

RR averages 1:2 to 1:3. Stops sit below the most recent higher low. Invalidation occurs when structure fails. Frequency: 3–6 trades per week depending on market conditions.

Master This Strategy

Firm's Note: The first pullback after displacement is the highest probability entry.

Prop Firm Angle

This is a steady growth strategy. It compounds slowly, minimizes drawdowns, and performs best after evaluation periods.