Symmetrical Triangles - Long Trading Strategy with CFDs

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, A Traders Favourite Pattern

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.

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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.

Symmetrical triangles are sensitive to the length of the pattern with breakouts that occur in less than 25 days, from the start of the pattern, performing the best. While the pattern breakout works best in the range specified, avoid trading patterns that breakout early, in the first 30% of the pattern length.

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If volume strongly supports a symmetrical triangle breakout then the profitability of the trades improves. For volume to support the breakout, volume when the stock is going up should be 40% greater than volume when the stock is going down.

Trading Symmetrical Triangles Can Be Very Profitable

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.

Jeff Cartridge has been trading chart patterns since 1998 and created the website LearnCFDs.com Ways to Make Serious Money With A Small Investment