CFD Trading Strategy - Symmetrical Triangles Downside Breakout
Symmetrical triangles have been very popular with traders over the years trading the chart pattern when it breaks out in either direction. A symmetrical triangle is defined by two lines, one on the upper boundary of the price movement which slopes down and one on the lower side which slopes up. The lines have almost the same angle, hence the name symmetrical.
Symmetrical Triangles Can Be Profitable 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.
Refine Your Entries
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.
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.
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.
Short Trading Symmetrical Triangles Can Be Profitable
Incorporating these simple changes when selecting symmetrical triangles to trade short, dramatically improves the results. With an average return per trade of 1.58% in 9 days and a hit rate of 47% it is possible for symmetrical triangles to be traded short successfully.
Statistics for this article have been provided by Patterns Trader after analyzing over 60,000 chart patterns on the Australian market from 2000 - 2008. - 23223
Symmetrical Triangles Can Be Profitable 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.
Refine Your Entries
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.
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.
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.
Short Trading Symmetrical Triangles Can Be Profitable
Incorporating these simple changes when selecting symmetrical triangles to trade short, dramatically improves the results. With an average return per trade of 1.58% in 9 days and a hit rate of 47% it is possible for symmetrical triangles to be traded short successfully.
Statistics for this article have been provided by Patterns Trader after analyzing over 60,000 chart patterns on the Australian market from 2000 - 2008. - 23223
About the Author:
Jeff Cartridge is the author of Supercharge Your Trading with CFDs and created the website LearnCFDs.com Trading Chart Patterns - All The Insider Tricks
posted by X - Men @ 6:19 AM
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