Tips for Trading Symmetrical Triangles Long with CFDs
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, Unpredictable but Profitable
Symmetrical triangle breakouts show a slight bias to the upside with patterns breaking up 56% of the time. This upward bias is likely due to the overall bullish bias of the market as the symmetrical nature of the pattern does not clearly indicate a breakout direction. The breakout of symmetrical triangles can deliver strong returns with 44% of the patterns being profitable. The average return for the long trades is 0.85% in 9 days.
Specific Setups to Improve Profitability
When you look at the performance of a symmetrical triangle surprisingly the pattern works better when the market is falling. Trading symmetrical triangles when the market is in a down trend or consolidating improves your trading results. If the sector is consolidating or rising this also improves the performance of the pattern.
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 volume strongly supports a symmetrical triangle breakout then the profitability of the trades improves. For volume to support the breakout, volume when the stock is going up should be 40% greater than volume when the stock is going down.
Symmetrical Triangles Deliver Strong Profits
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 1.87% in 11 days and is profitable on 55% of the trades. Overall this makes symmetrical triangles attractive 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. - 23199
Symmetrical Triangles, Unpredictable but Profitable
Symmetrical triangle breakouts show a slight bias to the upside with patterns breaking up 56% of the time. This upward bias is likely due to the overall bullish bias of the market as the symmetrical nature of the pattern does not clearly indicate a breakout direction. The breakout of symmetrical triangles can deliver strong returns with 44% of the patterns being profitable. The average return for the long trades is 0.85% in 9 days.
Specific Setups to Improve Profitability
When you look at the performance of a symmetrical triangle surprisingly the pattern works better when the market is falling. Trading symmetrical triangles when the market is in a down trend or consolidating improves your trading results. If the sector is consolidating or rising this also improves the performance of the pattern.
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 volume strongly supports a symmetrical triangle breakout then the profitability of the trades improves. For volume to support the breakout, volume when the stock is going up should be 40% greater than volume when the stock is going down.
Symmetrical Triangles Deliver Strong Profits
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 1.87% in 11 days and is profitable on 55% of the trades. Overall this makes symmetrical triangles attractive 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. - 23199
About the Author:
Jeff Cartridge is the author of Supercharge Your Trading with CFDs and created the website LearnCFDs.com Ways to Make Serious Money With A Small Investment
posted by X - Men @ 7:52 AM
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