Ascending Triangles -Short Trading Strategy
Ascending triangles have been very popular with traders on the long side and are not so often traded when it breaks in the downward direction. An ascending triangle is defined by two lines, one on the upper boundary of the price movement which is horizontal and one on the lower side which slopes up.
Ascending Triangles Can Be Profitable Short
Most ascending triangles would be expected to break up and most of the time this is true, but 36% break out to the downside making it possible to trade on the short side. Just 44% of these breakouts are profitable and on average the profit per trade is only 0.31% over a period of 9 days. The ascending triangle is not one of the best chart patterns when it breaks to the downside, but applying some filters can make this pattern more attractive to trade.
Specific Setups to Improve Profitability
Short breakouts from ascending triangles work better in falling markets which is clear from the results that were achieved in 2000, 2002 and 2008. The best short trades occur at market turning points. The market and the stock should be in an up trend or consolidating, with the sector consolidating or falling for the best results when trading ascending triangles short.
Avoid ascending triangle trades that break down at the start of the pattern, but it is ok to let the trade go all the way to the point of the ascending triangle before breaking out. Another key to picking successful short breakouts from ascending triangles is to look for a turning point up from the lower boundary that fails to reach the upper boundary and then falls away.
Ensure that the volume is supportive of the breakout, i.e. volume as the stock falls is greater than volume as the stock rises.
Ascending Triangles Profitable on the Short Side as Well
Incorporating these simple changes when selecting ascending triangles to trade short, dramatically improves the results. With an average return per trade of 1.07% in 10 days and a hit rate of 52% it is possible for ascending triangles to be traded short successfully.
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. - 23167
Ascending Triangles Can Be Profitable Short
Most ascending triangles would be expected to break up and most of the time this is true, but 36% break out to the downside making it possible to trade on the short side. Just 44% of these breakouts are profitable and on average the profit per trade is only 0.31% over a period of 9 days. The ascending triangle is not one of the best chart patterns when it breaks to the downside, but applying some filters can make this pattern more attractive to trade.
Specific Setups to Improve Profitability
Short breakouts from ascending triangles work better in falling markets which is clear from the results that were achieved in 2000, 2002 and 2008. The best short trades occur at market turning points. The market and the stock should be in an up trend or consolidating, with the sector consolidating or falling for the best results when trading ascending triangles short.
Avoid ascending triangle trades that break down at the start of the pattern, but it is ok to let the trade go all the way to the point of the ascending triangle before breaking out. Another key to picking successful short breakouts from ascending triangles is to look for a turning point up from the lower boundary that fails to reach the upper boundary and then falls away.
Ensure that the volume is supportive of the breakout, i.e. volume as the stock falls is greater than volume as the stock rises.
Ascending Triangles Profitable on the Short Side as Well
Incorporating these simple changes when selecting ascending triangles to trade short, dramatically improves the results. With an average return per trade of 1.07% in 10 days and a hit rate of 52% it is possible for ascending triangles to be traded short successfully.
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. - 23167
About the Author:
Jeff Cartridge is a private trader and created the website LearnCFDs.com A Simple Timeless Method for Huge Gains
posted by X - Men @ 2:02 AM
0 Comments
0 Comments:
Post a Comment
Subscribe to Post Comments [Atom]
<< Home