Tips for Trading Ascending Triangles Short
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, Not Usually Traded 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
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.
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.
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.
Short Trading Ascending Triangles Can Be Profitable
You can improve your trading results by using a series of simple filters that have been outlined here. This select group of ascending triangles delivers an average profit of 1.07% in 10 days and is profitable on 52% of the trades. Overall this makes ascending triangles mildly attractive to trade on the short side.
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. - 23305
Ascending Triangles, Not Usually Traded 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
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.
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.
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.
Short Trading Ascending Triangles Can Be Profitable
You can improve your trading results by using a series of simple filters that have been outlined here. This select group of ascending triangles delivers an average profit of 1.07% in 10 days and is profitable on 52% of the trades. Overall this makes ascending triangles mildly attractive to trade on the short side.
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. - 23305
About the Author:
Jeff Cartridge is a private trader and created the website LearnCFDs.com Discover Patterns of Success
posted by Mr. Forex at
2:15 AM
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