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 Can Be Traded Short
Ascending triangles are definitely not one of the most predictable patterns that are available to trade short. With just 36% of the patterns breaking down ascending triangles also don't deliver good returns when they do. The average drop is 0.31% in 9 days with about half of the breakouts (44%) being profitable. These results aren't great, but selecting the right conditions can make trading ascending triangles better.
Improve Your Trades
As you would expect a break to the downside works better in a falling market environment, but the best trades actually occur at market turning points. By using filters that require the market and the stock to be in a consolidation or an up trend, while the sector is in a consolidation or a down trend, you can improve the results.
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 volume supports an ascending triangle breakout then the profitability of the trades improves. For volume to support the breakout, volume when the stock is going down should be greater than volume when the stock is going 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. - 23212
Ascending Triangles Can Be Traded Short
Ascending triangles are definitely not one of the most predictable patterns that are available to trade short. With just 36% of the patterns breaking down ascending triangles also don't deliver good returns when they do. The average drop is 0.31% in 9 days with about half of the breakouts (44%) being profitable. These results aren't great, but selecting the right conditions can make trading ascending triangles better.
Improve Your Trades
As you would expect a break to the downside works better in a falling market environment, but the best trades actually occur at market turning points. By using filters that require the market and the stock to be in a consolidation or an up trend, while the sector is in a consolidation or a down trend, you can improve the results.
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 volume supports an ascending triangle breakout then the profitability of the trades improves. For volume to support the breakout, volume when the stock is going down should be greater than volume when the stock is going 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. - 23212
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 @ 2:07 AM
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