Tips for Trading Symmetrical Triangles Short with CFDs
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 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.
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 volume supports a symmetrical triangle breakout then the profitability of the trades improves. For volume to support the breakout, volume when the stock is going down should be greater than volume when the stock is going up. A close lower than the previous day, before the breakout, results in better trades.
Symmetrical Triangles Can Be Profitable
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.
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. - 23217
Symmetrical Triangles Can Be 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.
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 volume supports a symmetrical triangle breakout then the profitability of the trades improves. For volume to support the breakout, volume when the stock is going down should be greater than volume when the stock is going up. A close lower than the previous day, before the breakout, results in better trades.
Symmetrical Triangles Can Be Profitable
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.
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. - 23217
About the Author:
Jeff Cartridge is a private trader and created the website LearnCFDs.com Discover Patterns of Success
posted by X - Men @ 5:14 AM
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