Ascending Wedges - Long CFD Trading Strategy
Ascending wedges have been very popular with traders on the short side, but not so often traded when it breaks in the upward direction. An ascending wedge is defined by two lines, one on the lower boundary of the price movement which slopes up steeply towards the line on the upper side which also slopes up at a less of an angle.
Ascending Wedges, Surprise On The Upside
Ascending wedges are normally patterns that are considered to trade short, but also can perform on the upside. A stunning 68% of the patterns break upwards and can deliver good returns when they do. The average gain is 0.94% in 9 days with half of the breakouts (48%) being profitable. There are better patterns to trade on the long side, but selecting the right conditions can make trading ascending wedges attractive.
Refine Your Entries
A break to the upside works better in strange market conditions. By using filters that require the market to be in a consolidation or an up trend you can improve the results. The stock and the sector should be in a down trend or a consolidation for the best results. Profitable entries tend to occur when there is a pull back in the share and sector in a market up trend.
Avoid trading ascending wedge patterns that breakout late, in the last 20% of the pattern. Likewise avoid very shallow patterns where the height of the pattern is less than 6% of the stock price. Patterns that take longer than 44 days to form also perform poorly.
Illiquid stock can sometimes be identified by two identical closes and if this is the case you are better to avoid these trades. Prior to the breakout a low less than the previous day is beneficial. If volume supports an ascending wedge breakout then the profitability of the trades improves. For volume to support the breakout, volume when the stock is going up should be greater than volume when the stock is going down.
Ascending Wedges Can Be Profitable
You can improve your trading results by using a series of filters that have been outlined here. This select group of ascending wedges delivers an average profit of 1.89% in 8 days and is profitable on 52% of the trades. Overall this makes ascending wedges 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. - 23196
Ascending Wedges, Surprise On The Upside
Ascending wedges are normally patterns that are considered to trade short, but also can perform on the upside. A stunning 68% of the patterns break upwards and can deliver good returns when they do. The average gain is 0.94% in 9 days with half of the breakouts (48%) being profitable. There are better patterns to trade on the long side, but selecting the right conditions can make trading ascending wedges attractive.
Refine Your Entries
A break to the upside works better in strange market conditions. By using filters that require the market to be in a consolidation or an up trend you can improve the results. The stock and the sector should be in a down trend or a consolidation for the best results. Profitable entries tend to occur when there is a pull back in the share and sector in a market up trend.
Avoid trading ascending wedge patterns that breakout late, in the last 20% of the pattern. Likewise avoid very shallow patterns where the height of the pattern is less than 6% of the stock price. Patterns that take longer than 44 days to form also perform poorly.
Illiquid stock can sometimes be identified by two identical closes and if this is the case you are better to avoid these trades. Prior to the breakout a low less than the previous day is beneficial. If volume supports an ascending wedge breakout then the profitability of the trades improves. For volume to support the breakout, volume when the stock is going up should be greater than volume when the stock is going down.
Ascending Wedges Can Be Profitable
You can improve your trading results by using a series of filters that have been outlined here. This select group of ascending wedges delivers an average profit of 1.89% in 8 days and is profitable on 52% of the trades. Overall this makes ascending wedges 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. - 23196
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 @ 12:39 AM
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