Ascending Triangles -Short Trading Strategy
The ascending triangle can be traded on the short side entering the trade as the stock breaks out of the pattern to the downside. The pattern forms when the two boundary lines that contain the price movement converge to a point. The bottom line slopes up toward the top line which is horizontal.
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.
Refine Your Entries
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.
A breakout from an ascending triangle is best if it occurs later in the pattern, in fact all the way to the point of the pattern is good, but not near the start. The best trades occur when a down side break occurs after the stock bounces off the lower boundary and drops back before hitting the upper boundary.
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
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.
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. - 23218
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.
Refine Your Entries
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.
A breakout from an ascending triangle is best if it occurs later in the pattern, in fact all the way to the point of the pattern is good, but not near the start. The best trades occur when a down side break occurs after the stock bounces off the lower boundary and drops back before hitting the upper boundary.
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
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.
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. - 23218
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 @ 5:34 AM
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