Symmetrical Triangles -Short CFD Trading Strategy
The symmetrical triangle is sometimes referred to as a wedge. It is a very well known and easily recognized chart pattern that has been used by many successful traders over the years. A symmetrical triangle is formed when the price action is contained within two lines. The top line slopes down while the bottom line slopes up towards the top line. The angle of the two lines is similar giving rise to the name symmetrical.
Symmetrical Triangles, Not Usually Traded Short
Symmetrical triangles provide no clear breakout direction, but 45% break out to the downside making it possible to trade on the short side. Just 44% of these breakouts are profitable and on average the profit per trade is only 0.33% over a period of 9 days. The symmetrical triangle is not one of the best chart patterns when it breaks to the downside, but applying some filters can make this pattern more attractive to trade.
Specific Setups to Improve Profitability
Short breakouts from symmetrical triangles work better in falling markets which is clear from the historical results that were achieved. The market, sector and the stock should be in a down trend or consolidating for the best results when trading symmetrical triangles short.
A breakout from a symmetrical triangle is best if it occurs later in the pattern, but not near the start. The best trades occur when a down side break occurs after the stock bounces off the lower boundary and drops back before hitting the upper boundary.
If the volume supports the breakout the results are better. Supportive volume means the volume on the way down is higher than the volume on the way up. Better breakouts occur when the stock closes lower than the previous day.
Symmetrical Triangles Can Be Profitable
Following a series of simple rules to determine which symmetrical triangle to trade can improve results dramatically. By applying these filters symmetrical triangles are profitable on 47% of the trades and return an average of 1.58% per trade in 9 days. This is a profitable pattern to trade.
Note: Statistics for this article have been provided by Patterns Trader after analyzing over 60,000 chart patterns on the Australian market from 2000 - 2008. - 23229
Symmetrical Triangles, Not Usually Traded Short
Symmetrical triangles provide no clear breakout direction, but 45% break out to the downside making it possible to trade on the short side. Just 44% of these breakouts are profitable and on average the profit per trade is only 0.33% over a period of 9 days. The symmetrical triangle is not one of the best chart patterns when it breaks to the downside, but applying some filters can make this pattern more attractive to trade.
Specific Setups to Improve Profitability
Short breakouts from symmetrical triangles work better in falling markets which is clear from the historical results that were achieved. The market, sector and the stock should be in a down trend or consolidating for the best results when trading symmetrical triangles short.
A breakout from a symmetrical triangle is best if it occurs later in the pattern, but not near the start. The best trades occur when a down side break occurs after the stock bounces off the lower boundary and drops back before hitting the upper boundary.
If the volume supports the breakout the results are better. Supportive volume means the volume on the way down is higher than the volume on the way up. Better breakouts occur when the stock closes lower than the previous day.
Symmetrical Triangles Can Be Profitable
Following a series of simple rules to determine which symmetrical triangle to trade can improve results dramatically. By applying these filters symmetrical triangles are profitable on 47% of the trades and return an average of 1.58% per trade in 9 days. This is a profitable pattern to trade.
Note: Statistics for this article have been provided by Patterns Trader after analyzing over 60,000 chart patterns on the Australian market from 2000 - 2008. - 23229
About the Author:
Jeff Cartridge is a private trader and created the website LearnCFDs.com Trading Chart Patterns - All The Insider Tricks
posted by X - Men @ 6:19 AM
0 Comments
0 Comments:
Post a Comment
Subscribe to Post Comments [Atom]
<< Home