Symmetrical Triangles - Long Trading Strategy with CFDs
Symmetrical triangles have been very popular with traders over the years trading the chart pattern when it breaks out in either direction. A symmetrical triangle is defined by two lines, one on the upper boundary of the price movement which slopes down and one on the lower side which slopes up. The lines have almost the same angle, hence 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.
Refine Your Entries
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.
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 the volume is very strong in support of the breakout the results are better. Supportive volume means the volume on the way up is 40% higher than the volume on the way 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.
Article Source: FxTradingStock.com
About the Author
Jeff Cartridge is a private trader and created the website LearnCFDs.com A Simple Timeless Method for Huge Gains
by: Jeff Cartridge
Total views: 58
Word Count: 346
Date: Thu, 3 Sep 2009
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