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 are definitely not one of the most predictable patterns that are available to trade short. With just 45% of the patterns breaking down symmetrical triangles also don't deliver good returns when they do. The average drop is 0.33% in 9 days with less than half of the breakouts (44%) being profitable. These results are not great, but selecting the right conditions can make trading symmetrical triangles better.
Improve Your Trades
As you would expect a break to the downside works better in a falling sector and market environment. By using filters that require the market, stock and the sector to be in a consolidation or a down trend you can improve the results.
Very few trades break down at the start of the pattern, but those that break in the first 30% of the pattern should be avoided. Another key to picking successful short breakouts from symmetrical triangles is to look for a turning point up from the lower boundary that fails to reach the upper boundary and then falls away. This is not a prerequisite, but does produce better trades.
Ensure that the volume is supportive of the breakout, i.e. volume as the stock falls is greater than volume as the stock rises. One last filter that improves the results is to look for the share to close lower prior to the breakout.
Short Trading 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. - 23159
Symmetrical Triangles, Not Usually Traded Short
Symmetrical triangles are definitely not one of the most predictable patterns that are available to trade short. With just 45% of the patterns breaking down symmetrical triangles also don't deliver good returns when they do. The average drop is 0.33% in 9 days with less than half of the breakouts (44%) being profitable. These results are not great, but selecting the right conditions can make trading symmetrical triangles better.
Improve Your Trades
As you would expect a break to the downside works better in a falling sector and market environment. By using filters that require the market, stock and the sector to be in a consolidation or a down trend you can improve the results.
Very few trades break down at the start of the pattern, but those that break in the first 30% of the pattern should be avoided. Another key to picking successful short breakouts from symmetrical triangles is to look for a turning point up from the lower boundary that fails to reach the upper boundary and then falls away. This is not a prerequisite, but does produce better trades.
Ensure that the volume is supportive of the breakout, i.e. volume as the stock falls is greater than volume as the stock rises. One last filter that improves the results is to look for the share to close lower prior to the breakout.
Short Trading 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. - 23159
About the Author:
Jeff Cartridge is a private trader and created the website LearnCFDs.com A Simple Timeless Method for Huge Gains
posted by X - Men @ 3:59 AM
0 Comments
0 Comments:
Post a Comment
Subscribe to Post Comments [Atom]
<< Home