The symmetrical triangle can be traded on the short side entering the trade as the stock breaks out of the pattern to the downside. The pattern forms when the two boundary lines that contain the price movement converge to a point. The bottom line slopes up toward the top line which slopes down. Both lines have nearly the same slope as each other which is why the pattern is called symmetrical.
Symmetrical Triangles Can Be 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
When you look at the performance of a symmetrical triangle in bearish market conditions you will see the results were stronger than they were in more bullish years. The market, sector and stock should be in a down trend or consolidating to make the best profits.
Symmetrical triangles that breakout early in the pattern, which is not many, produce inferior results to those that breakout later. The best results are achieved when the stock climbs up from the lower boundary and collapses back before reaching the upper boundary of the pattern.
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 Profitable on the Short Side as Well
You can improve your trading results by using a series of simple filters that have been outlined here. This select group of symmetrical triangles delivers an average profit of 1.58% in 9 days and is profitable on 47% of the trades. Overall this makes symmetrical triangles attractive to trade on the short side.
Statistics for this article have been provided by Patterns Trader after analyzing over 60,000 chart patterns on the Australian market from 2000 - 2008.
Symmetrical Triangles Can Be 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
When you look at the performance of a symmetrical triangle in bearish market conditions you will see the results were stronger than they were in more bullish years. The market, sector and stock should be in a down trend or consolidating to make the best profits.
Symmetrical triangles that breakout early in the pattern, which is not many, produce inferior results to those that breakout later. The best results are achieved when the stock climbs up from the lower boundary and collapses back before reaching the upper boundary of the pattern.
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 Profitable on the Short Side as Well
You can improve your trading results by using a series of simple filters that have been outlined here. This select group of symmetrical triangles delivers an average profit of 1.58% in 9 days and is profitable on 47% of the trades. Overall this makes symmetrical triangles attractive to trade on the short side.
Statistics for this article have been provided by Patterns Trader after analyzing over 60,000 chart patterns on the Australian market from 2000 - 2008.
About the Author:
Jeff Cartridge is a private trader and created the website LearnCFDs.com Discover Chart Pattern Secrets
0 comments:
Post a Comment