Symmetrical Triangles - Long Trading Strategy 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, Breakout Unclear
Symmetrical triangles show no clear tendency to break up or down. Despite the fact 56% of the patterns break out to the upside this is likely due to the fact the market tends to move higher. Around half (44%) of these breakouts are profitable and on average the profit per trade is 0.85% over a period of 9 days.
Improve Your Trades
Unusually symmetrical triangles do not work well when the market is an up trend, but perform better when the market is consolidating or falling. As would be expected, both the sector and the share should be consolidating or in an up trend.
Symmetrical triangles, that breakout early in the pattern, produce inferior results. A breakout is better if it occurs after the pattern gets past 30% of the way to the point. The length of a symmetrical triangle is important with patterns that are 25 days or less producing better results.
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. - 23222
Symmetrical Triangles, Breakout Unclear
Symmetrical triangles show no clear tendency to break up or down. Despite the fact 56% of the patterns break out to the upside this is likely due to the fact the market tends to move higher. Around half (44%) of these breakouts are profitable and on average the profit per trade is 0.85% over a period of 9 days.
Improve Your Trades
Unusually symmetrical triangles do not work well when the market is an up trend, but perform better when the market is consolidating or falling. As would be expected, both the sector and the share should be consolidating or in an up trend.
Symmetrical triangles, that breakout early in the pattern, produce inferior results. A breakout is better if it occurs after the pattern gets past 30% of the way to the point. The length of a symmetrical triangle is important with patterns that are 25 days or less producing better results.
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. - 23222
About the Author:
Jeff Cartridge has been trading CFDs since 2002 and created the website LearnCFDs.com Trading Chart Patterns - All The Insider Tricks
posted by X - Men @ 1:43 PM
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