CFD Trading Strategy - Symmetrical Triangles Upside 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, A Traders Favourite Pattern
Symmetrical triangles show no clear breakout direction. Just over half (56%) of the patterns break upwards and this is likely due to the upward bias of the markets. The average gain is 0.85% in 9 days with less than half of the breakouts (44%) being profitable.
Specific Setups to Improve Profitability
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.
A breakout from a symmetrical triangle should be after the pattern has travelled at least 30% of the length. If it breaks out early in the pattern it will produce smaller profits. In a similar way longer patterns that have a length of 25 days or more produce smaller returns.
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. - 23208
Symmetrical Triangles, A Traders Favourite Pattern
Symmetrical triangles show no clear breakout direction. Just over half (56%) of the patterns break upwards and this is likely due to the upward bias of the markets. The average gain is 0.85% in 9 days with less than half of the breakouts (44%) being profitable.
Specific Setups to Improve Profitability
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.
A breakout from a symmetrical triangle should be after the pattern has travelled at least 30% of the length. If it breaks out early in the pattern it will produce smaller profits. In a similar way longer patterns that have a length of 25 days or more produce smaller returns.
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. - 23208
About the Author:
Jeff Cartridge is a private trader and created the website LearnCFDs.com Discover Patterns of Success
posted by X - Men @ 1:27 AM
0 Comments
0 Comments:
Post a Comment
Subscribe to Post Comments [Atom]
<< Home