Tips for Trading Symmetrical Triangles Long with CFDs
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, Unpredictable but Profitable
Symmetrical triangle breakouts show a slight bias to the upside with patterns breaking up 56% of the time. This upward bias is likely due to the overall bullish bias of the market as the symmetrical nature of the pattern does not clearly indicate a breakout direction. The breakout of symmetrical triangles can deliver strong returns with 44% of the patterns being profitable. The average return for the long trades is 0.85% in 9 days.
Improve Your Trades
Surprisingly a break to the upside works better in a falling or consolidating market. By using filters that require the market to be in a consolidation or a down trend you can improve the results. If the sector is consolidating or rising the results also improve. This is more as you would expect.
Symmetrical triangles are sensitive to the length of the pattern with breakouts that occur in less than 25 days, from the start of the pattern, performing the best. While the pattern breakout works best in the range specified, avoid trading patterns that breakout early, in the first 30% of the pattern length.
If the volume is very strong in support of the breakout the results are better. Supportive volume means the volume on the way up is 40% higher than the volume on the way down.
Symmetrical Triangles Deliver Strong Profits
By following these simple rules profitability of trading symmetrical triangles can be improved substantially. With an average return per trade of 1.87% in 11 days and a hit rate of 55% it is understandable why many traders are drawn to the symmetrical triangle.
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, Unpredictable but Profitable
Symmetrical triangle breakouts show a slight bias to the upside with patterns breaking up 56% of the time. This upward bias is likely due to the overall bullish bias of the market as the symmetrical nature of the pattern does not clearly indicate a breakout direction. The breakout of symmetrical triangles can deliver strong returns with 44% of the patterns being profitable. The average return for the long trades is 0.85% in 9 days.
Improve Your Trades
Surprisingly a break to the upside works better in a falling or consolidating market. By using filters that require the market to be in a consolidation or a down trend you can improve the results. If the sector is consolidating or rising the results also improve. This is more as you would expect.
Symmetrical triangles are sensitive to the length of the pattern with breakouts that occur in less than 25 days, from the start of the pattern, performing the best. While the pattern breakout works best in the range specified, avoid trading patterns that breakout early, in the first 30% of the pattern length.
If the volume is very strong in support of the breakout the results are better. Supportive volume means the volume on the way up is 40% higher than the volume on the way down.
Symmetrical Triangles Deliver Strong Profits
By following these simple rules profitability of trading symmetrical triangles can be improved substantially. With an average return per trade of 1.87% in 11 days and a hit rate of 55% it is understandable why many traders are drawn to the symmetrical triangle.
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 Discover Patterns of Success
posted by X - Men @ 3:28 AM
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