Tips for Trading Ascending Triangles Short
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, Not Usually Traded Short
The ascending triangle is not often traded as a short pattern, but when it does break down, historically 36% of the time, it can be profitable. An ascending triangle breakout to the downside is not as reliable as a breakout to the upside with only 44% of the trades profitable. The average profits are also less at 0.31% in 9 days.
Specific Setups to Improve Profitability
When you look at the performance of an ascending triangle in bearish market conditions you will see the results were stronger than they were in more bullish years. Despite this the pattern works the best at turning points, which occur when the stock and the market are in an up trend or consolidating. The sector should be falling or consolidating to make the best profits.
Ascending triangles that breakout early in the pattern, produce inferior results to those that breakout later. It is acceptable for the stock to move all the way to the point of the pattern before breaking out. The best results are achieved when the stock climbs up from the lower boundary and collapses back before reaching the upper boundary of the pattern.
If the volume supports the breakout the results are better. Supportive volume means the volume on the way down is higher than the volume on the way up.
Ascending Triangles Can Be Profitable
Following a series of simple rules to determine which ascending triangle to trade can improve results dramatically. By applying these filters ascending triangles are profitable on 52% of the trades and return an average of 1.07% per trade in 10 days. This is a profitable pattern to trade.
Statistics for this article have been provided by Patterns Trader after analyzing over 60,000 chart patterns on the Australian market from 2000 - 2008. - 23200
Ascending Triangles, Not Usually Traded Short
The ascending triangle is not often traded as a short pattern, but when it does break down, historically 36% of the time, it can be profitable. An ascending triangle breakout to the downside is not as reliable as a breakout to the upside with only 44% of the trades profitable. The average profits are also less at 0.31% in 9 days.
Specific Setups to Improve Profitability
When you look at the performance of an ascending triangle in bearish market conditions you will see the results were stronger than they were in more bullish years. Despite this the pattern works the best at turning points, which occur when the stock and the market are in an up trend or consolidating. The sector should be falling or consolidating to make the best profits.
Ascending triangles that breakout early in the pattern, produce inferior results to those that breakout later. It is acceptable for the stock to move all the way to the point of the pattern before breaking out. The best results are achieved when the stock climbs up from the lower boundary and collapses back before reaching the upper boundary of the pattern.
If the volume supports the breakout the results are better. Supportive volume means the volume on the way down is higher than the volume on the way up.
Ascending Triangles Can Be Profitable
Following a series of simple rules to determine which ascending triangle to trade can improve results dramatically. By applying these filters ascending triangles are profitable on 52% of the trades and return an average of 1.07% per trade in 10 days. This is a profitable pattern to trade.
Statistics for this article have been provided by Patterns Trader after analyzing over 60,000 chart patterns on the Australian market from 2000 - 2008. - 23200
About the Author:
Jeff Cartridge is the author of Supercharge Your Trading with CFDs and created the website LearnCFDs.com A Simple Timeless Method for Huge Gains
posted by X - Men @ 5:34 AM
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