Triangles are very often found on the chart, but not everyone knows how to trade them.
Today we will try to learn how to trade triangles correctly.
How does it look?
The ascending and descending triangle have two sides: one side is flat and horizontal, the second is sloped and moves towards the first.
The ascending triangle has a flat upper horizontal side and the lower one is sloping.
When see this figure, you should expect an upward movement.
The descending triangle is a mirror image of the ascending triangle.
With a descending triangle, there is a flat bottom line and a sloping top line, moving in the direction of a flat.
If you see this pattern, look for a bearish breakout.
opening a position
There are three techniques for opening a position:
1. Stop level order.
2. Fixing the level.
3. Retest the triangle trend line.
Each method is good in its own way, but the logic is the same everywhere: a flat line advance and a further move to a breakthrough.
Therefore, if the price starts to move against the breakout, the figure most likely did not work out, and in order not to lose money in such situations, set a stop loss.
You need to set a stop loss in a place where it is clear for certain that the figure did not work out.
Usually this point is behind the slanted line of the triangle.
There are two ways to fix earnings:
1. Trailing stops.
2. Graphic projection of the price.
The trailing stop is set according to your trading strategy and there shouldn’t be many questions if you have a strategy.
It is easy to calculate the fixing point from the graphic projection: it is enough to measure the width of the base of the triangle and put the resulting value under the flat perforated line; this will be your goal.
These figures are quite common, so it is important to know how to negotiate them.
Don’t forget that nothing works in the market 100% of the time, so set a stop loss.