Trading RABFA

Because "right-angled and ascending broadening formation" is so long, I've abbreviated it to RABFA.

The idea behind pattern pairs is to pick a chart pattern type (like broadening bottoms with upward breakouts) to buy and another to sell (like double tops). You buy the upward breakout from the broadening bottom, hold for a few years, and sell when a double top appears and breaks out downward. Along the way, you give price a chance to rise far enough to overcome those trades which are stopped out for a loss. This is a trend-following strategy.

Trading RABFAs: Summary

The figure illustrates the idea for trading pattern pairs, where price is the red line and the boxes are chart patterns. This articles assumes you buy an upward breakout from either an RABFA or a busted one (price breaks out downward, drops no more than 10%, reverses, and closes above the top of the pattern. Buy as price rises above the top of the pattern).

On the sale side, you can sell the first bearish chart pattern which comes along or wait for your favorite bearish chart pattern to appear and sell then.

Here's a list of the top five performing sell signals, based on annualized gain (annualized because the hold time is often years, in parenthesis).

The following list shows the expected performance of chart pattern pairs, ranked by their expectancy. Expectancy is a way of gauging winning and losing trades and how much money you might make trading a pattern pair. I put the expected profit per trade, per share, in parenthesis.

Trading RABFAs: Entry and Exit Conditions

The databases I built over several decades doesn't identify every chart pattern. There may be plenty of double tops over the years, for example, that I didn't catalog on the way to the one I did catalog. So buying an upward breakout from a RABFA and selling at the double top I cataloged would be different than choosing to sell a different double top. However, the following analysis does give a real-world flavor for how well you might do trading chart patterns if you follow the pattern pair strategy.

I used the following 43 chart patterns in the analysis, but some only applied if they were busted.

Trading RABFAs: Stops

I used a stop loss order set a penny below the bottom of the chart pattern. Price on the way down may have gapped below the stop price (for the sale price), so I used the lower of the stop price or the opening price on the day of sale).

For trailing stops, I removed the stop loss order and used a trailing stop set at 10%, 15%, 20%, or 25% below a peak, never lowering the stop value, but raising it if a higher peak came along during the trade.

In Table 1, I calculated the percentage net gain (the average of gains and losses) when using various trailing stop loss amounts (10%, 15%, 20%, and 25%) for all tested chart patterns according to the busted/non-busted buy/sell configuration. In parenthesis is the size of the average loss so I could detail how losses change with various stop loss orders.

For example, if I tested non-busted RABFAs and sold various non-busted patterns (ascending triangles, broadening tops, head-and-shoulders tops, and so on), I made an average of 63% ("Stop Loss Only" column) after having a stop loss order in place. Losses averaged 12%. Replacing the stop loss with a 10% trailing stop cut the gain to 5% but also trimmed the average loss to 5%. Using a 25% trailing stop allowed me to keep more money, 29%, but losses climbed to 15%. If I didn't use any type of stop, the gain averaged 169% with losses averaging 27%.

The results show that trades which do not use a stop make the most money but losses are huge. Buying non-busted patterns outperformed busted ones.

Trading RABFAs: Busted Patterns

Table 1: Various Trailing Stop Settings: Net Profit and (Average Loss)
Data	10%	15%	20%	25%	Stop Loss Only	No Stop
Non-busted buys, non-busted sales	5% (-5%)	10% (-9%)	18% (-12%)	29% (-15%)	63% (-12%)	169% (-27%)
Busted buys, non-busted sales	1% (-7%)	4% (-8%)	12% (-12%)	13% (-16%)	12% (-11%)	71% (-28%)
Non-busted buys, busted sales	5% (-5%)	10% (-8%)	16% (-12%)	22% (-15%)	61% (-11%)	156% (-26%)
Busted buys, busted sales	1% (-6%)	3% (-8%)	11% (-12%)	12% (-17%)	10% (-11%)	88% (-27%)

Table 2 shows what I found when comparing the performance of non-busted patterns (both buy and sell) with busted and non-busted chart patterns. In 22 or 31 contests (up to 31 different chart pattern types, depending on which apply), I compared the three combinations of busted and non-busted buy and sell signals to non-busted buy and sell signals. The table below shows the percentage of time the busted combination beat the non-busted combination in the contests.

I found that the highest rate of success for busted patterns was 36%. If you used a non-busted RABFA for buying and sold a busted pattern (of your choice), you'd have a successful trade about a third of the time.

According to the contest results, do not trade using busted chart patterns.

Trading RABFAs: Non-busted Buy, Non-Busted Sale

Table 2: Busted or Non-Busted Contest Winners
	Sell Non-Busted Pattern	Sell Busted Pattern
Buy non-busted pattern	N/A (benchmark)	36%
Buy busted pattern	0%	5%

Table 3 shows statistics I collected for RABFAs using the trading rules described above and shown in the figure. A stop loss order was used and priced a penny below the bottom of the chart pattern (after buying).

For example, if you were to buy the upward breakout from a RABFA chart pattern and hold it until you encountered a broadening bottom (the first chart pattern listed in the table), but one with a downward breakout, you'd net an average of 43% on the 175 (43 winners, 132 losers) trades. That's an average of 214% on your winners, 13% average loss on your losers. You'd find that only 25% of the trades made money but you'd gain an average of 21% per year (ranking 25th where 1 is best). If you removed the stop loss order and just held on until the broadening bottom with a downward breakout appeared, you'd double your money (101% per trade).

The expectancy averaged $2.53 per share per trade which ranks 40th where 1 is the best value. It suggests you'll have a hard time making money by trading this pair.

Notes: The rank is based on the net gain for all four performance tables (tables 3 to 6) shown below. Trades with sample counts below 30 are not ranked.

Table 3: Statistics for RABFAs
Sell Pattern	Average Win	Average Loss	Net	Annualized Net	Rank	No Stop Net	Win/Loss Samples	Win Loss	Average Expectancy	Expectancy Rank
Broadening bottom	214%	-13%	43%	21%	25	101%	43/132	25%	$2.53	40
Broadening top	259%	-11%	73%	31%	8	123%	102/226	31%	$4.78	17
Broadening formation, right-angled and ascending	157%	-11%	42%	18%	36	61%	50/109	31%	$2.90	35
Broadening formation, right-angled and descending	225%	-13%	60%	24%	16	103%	35/79	31%	$2.61	38
Broadening wedge, ascending	159%	-12%	40%	25%	14	112%	32/73	30%	$1.91	42
Broadening wedge, descending	179%	-13%	38%	18%	38	78%	26/71	27%	$3.22	30
Bump-and-run reversal top	322%	-11%	115%	56%	3	161%	118/192	38%	$7.78	5
Diamond bottom	296%	-11%	72%	29%	10	113%	13/35	27%	$2.98	33
Diamond top	163%	-12%	38%	15%	43	86%	32/80	29%	$2.53	39
Adam & Adam double top	311%	-11%	71%	25%	15	181%	175/510	26%	$7.47	7
Adam & Eve double top	244%	-12%	60%	21%	22	133%	89/227	28%	$7.66	6
Eve & Adam double top	414%	-12%	123%	46%	7	209%	102/219	32%	$7.15	8
Eve & Eve double top	585%	-11%	153%	57%	2	244%	109/286	28%	$10.85	2
Falling wedge	162%	-11%	32%	15%	49	56%	26/79	25%	-$0.41	78
Head-and-shoulders top	196%	-12%	45%	20%	27	114%	297/782	28%	$4.16	23
Sell Pattern	Average Win	Average Loss	Net	Annualized Net	Rank	No Stop Net	Win/Loss Samples	Win Loss	Average Expectancy	Expectancy Rank
Head-and-shoulders, complex top	118%	-12%	22%	12%	55	83%	57/160	26%	$1.10	56
Rectangle top	136%	-12%	36%	16%	42	85%	66/139	32%	$4.48	21
Rising wedge	162%	-12%	43%	20%	28	110%	107/230	32%	$2.84	36
Rounding top	155%	-12%	30%	12%	57	81%	47/139	25%	$1.85	44
Ascending scallop	231%	-12%	36%	20%	29	62%	14/57	20%	-$0.55	81
Descending scallop	220%	-12%	55%	23%	20	116%	140/347	29%	$3.76	26
Scallop, inverted and ascending	1098%	-13%	285%	137%	1	356%	15/41	27%	$11.24	1
Scallop, descending and inverted	220%	-12%	43%	23%	19	88%	77/250	24%	$0.49	67
Triangle, ascending	186%	-12%	39%	18%	37	95%	47/134	26%	$3.67	27
Triangle, descending	192%	-12%	34%	16%	41	80%	43/148	23%	$0.84	59
Triangle, symmetrical	245%	-13%	50%	24%	18	107%	139/436	24%	$2.96	34
Triple top	238%	-12%	61%	24%	17	123%	262/637	29%	$5.47	13
Rectangle bottom	276%	-15%	25%	15%	47	46%	18/113	14%	-$3.43	93
3 falling peaks	295%	-12%	74%	30%	9	147%	251/646	28%	$4.17	22
Roof	185%	-11%	48%	21%	23	112%	15/35	30%	$3.55	28
Roof, inverted	192%	-12%	58%	21%	24	154%	26/50	34%	$3.50	29
Sell Pattern	Average Win	Average Loss	Net	Annualized Net	Rank	No Stop Net	Win/Loss Samples	Win Loss	Average Expectancy	Expectancy Rank

Trading RABFAs: Busted Buy, Non-Busted Sale

The figure shows the setup for this scenario. When price busts the bearish chart pattern (busts a downward breakout from a RABFA in a bull market), buy. Sell after a downward breakout from the target chart pattern.

Table 4 shows the performance of busted RABFAs for the entry and sales after downward breakouts from various bearish chart patterns. A stop loss order was used and priced a penny below the bottom of the pattern (after buying).

A busted RABFA has a downward breakout but price drops no more than 10% before reversing and moving above the top of the pattern. Buy when price moves at least a penny above the top of the busted pattern. Sell after price drops at least a penny below the target chart pattern.

For example, buying a RABFA with a busted downward breakout in a bull market (the entry price is really the higher of a penny above the top of the pattern or the opening price) and selling after the downward breakout from a broadening top shows winners averaging gains of 87%. Losses average 12%, for a net of 8%. Only 54 trades occurred with a win/loss ratio of 20%. This scenario ranks the annualized net gain as 80th among the four tables. If you traded this as a buy-and-hold position, meaning no stops were used, the net gain climbed to 52%. Expectancy was a loss of $0.21 per share, ranking 74th where 1 is best. Because the expectancy is negative, you wouldn't want to trade this pattern pair.

Table 4: Statistics for Busted Buys, Normal Sales
Sell Pattern	Average Win	Average Loss	Net	Annualized Net	Rank	No Stop Net	Win/Loss Samples	Win Loss	Average Expectancy	Expectancy Rank
Broadening bottom	87%	-12%	8%	5%	80	52%	11/43	20%	-$0.21	74
Broadening top	111%	-11%	16%	11%	61	64%	20/70	22%	$1.68	45
Broadening formation, right-angled and ascending	66%	-14%	7%	4%	83	34%	13/37	26%	-$0.52	80
Broadening formation, right-angled and descending	128%	-10%	7%	9%	67	52%	4/28	13%	-$2.83	92
Broadening wedge, ascending	68%	-8%	5%	8%	69	33%	6/28	18%	$1.36	51
Broadening wedge, descending	58%	-8%	0%	0%	91	42%	4/27	13%	-$0.56	82
Bump-and-run reversal top	101%	-10%	16%	19%	32	90%	26/84	24%	$0.62	63
Diamond bottom	72%	-11%	21%			29%	5/8	38%
Diamond top	86%	-11%	13%	7%	76	55%	12/37	24%	$1.49	50
Adam & Adam double top	168%	-10%	21%	14%	50	120%	37/175	17%	$1.57	47
Adam & Eve double top	128%	-11%	11%	6%	79	132%	16/84	16%	$0.51	66
Eve & Adam double top	102%	-10%	16%	10%	64	103%	24/80	23%	$1.15	54
Eve & Eve double top	112%	-11%	12%	8%	70	113%	27/115	19%	$0.29	68
Falling wedge	115%	-12%	12%	7%	73	41%	7/29	19%	-$0.63	83
Head-and-shoulders top	126%	-9%	17%	12%	58	96%	75/316	19%	$1.21	52
Sell Pattern	Average Win	Average Loss	Net	Annualized Net	Rank	No Stop Net	Win/Loss Samples	Win Loss	Average Expectancy	Expectancy Rank
Head-and-shoulders, complex top	70%	-11%	2%	2%	87	39%	11/55	17%	$0.08	71
Rectangle top	159%	-11%	15%	11%	62	86%	10/56	15%	-$0.79	84
Rising wedge	86%	-10%	10%	7%	75	90%	22/85	21%	$0.53	65
Rounding top	103%	-11%	3%	2%	88	67%	8/60	12%	-$1.60	87
Ascending scallop	29%	-10%	-5%			37%	3/21	13%
Descending scallop	78%	-11%	-1%	-1%	92	74%	17/133	11%	-$1.80	88
Scallop, inverted and ascending	None	-9%	-9%			78%	0/13	0%
Scallop, descending and inverted	79%	-12%	8%	6%	77	46%	20/74	21%	-$0.03	72
Triangle, ascending	123%	-10%	18%	15%	46	61%	13/49	21%	$0.26	69
Triangle, descending	93%	-11%	18%	11%	63	48%	22/56	28%	$0.98	57
Triangle, symmetrical	90%	-11%	8%	7%	74	58%	33/144	19%	$0.16	70
Triple top	161%	-10%	27%	18%	35	92%	55/201	21%	$2.41	41
Rectangle bottom	43%	-11%	-9%	-22%	94	-7%	1/30	3%	-$3.58	94
3 falling peaks	77%	-11%	1%	1%	89	69%	36/225	14%	-$0.35	76
Roof	14%	-11%	-2%			46%	7/13	35%
Roof, inverted	None	-10%	-10%			95%	0/24	0%
Sell Pattern	Average Win	Average Loss	Net	Annualized Net	Rank	No Stop Net	Win/Loss Samples	Win Loss	Average Expectancy	Expectancy Rank

Trading RABFAs: Non-busted Buy, Busted Sale

A bullish chart pattern appears and you buy at the breakout. Continue holding until your selected chart pattern appears. The chart pattern is bullish because it has an upward breakout but then things go wrong. Price reverses. Sell when the stock dips below the bottom of the chart pattern (meaning it busts the upward breakout).

Table 5 shows the performance statistics for this setup (buying a normal RABFA and selling only after a busted chart pattern appears). A stop loss order was used and priced a penny below the bottom of the chart pattern (after buying).

For example, buying a RABFA with an upward breakout in a bull market and selling a busted broadening top shows winning trades making an average of 188%. Losing trades lost 11% giving a net gain of 18%. The annualized gain is 8% in this case, giving the setup a rank of 68 (where 1 is best). If you traded this without a stop, the net gain climbed to 48%. Of the stocks I looked at, I found 76 trades with 14% of them winning. Expectancy was $1.49 per share, ranking 49th where 1 is best.

Table 5: Statistics for Normal Buy, Busted Sale
Sell Pattern	Average Win	Average Loss	Net	Annualized Net	Rank	No Stop Net	Win/Loss Samples	Win Loss	Average Expectancy	Expectancy Rank
Broadening bottom	188%	-11%	18%	8%	68	48%	11/65	14%	$1.49	49
Broadening top	157%	-10%	37%	15%	44	87%	35/90	28%	$2.72	37
Broadening formation, right-angled and ascending	82%	-10%	12%	8%	71	88%	14/45	24%	$1.90	43
Broadening formation, right-angled and descending	103%	-10%	20%	10%	65	47%	20/54	27%	$1.64	46
Broadening wedge, ascending	140%	-9%	42%	13%	54	110%	11/21	34%	$6.04	12
Broadening wedge, descending	221%	-10%	59%	26%	13	83%	12/28	30%	$4.63	20
Bump-and-run reversal bottom	152%	-9%	41%	12%	56	88%	13/29	31%	$6.11	10
Cup with handle	121%	-9%	34%	18%	33	93%	11/22	33%	$5.04	15
Diamond bottom	200%	-12%	25%	11%	59	57%	7/33	18%	$1.10	55
Diamond top	347%	-9%	32%	21%	26	106%	6/46	12%	-$0.14	73
Adam & Adam double bottom	233%	-11%	47%	15%	48	127%	52/167	24%	$5.03	16
Adam & Eve double bottom	282%	-13%	60%	18%	39	137%	25/76	25%	$4.09	24
Eve & Adam double bottom	377%	-12%	86%	27%	12	159%	23/69	25%	$6.05	11
Eve & Eve double bottom	183%	-12%	28%	14%	51	110%	13/50	21%	$3.16	32
Falling wedge	72%	-12%	4%	3%	86	72%	8/35	19%	-$0.22	75
Head-and-shoulders bottom	178%	-11%	40%	16%	40	80%	64/176	27%	$3.19	31
Sell Pattern	Average Win	Average Loss	Net	Annualized Net	Rank	No Stop Net	Win/Loss Samples	Win Loss	Average Expectancy	Expectancy Rank
Head-and-shoulders complex bottom	53%	-10%	8%	6%	78	75%	13/31	30%	-$1.91	90
Rectangle top	376%	-10%	138%	51%	6	176%	35/56	38%	$6.41	9
Rising wedge	214%	-10%	63%	28%	11	141%	24/49	33%	$0.66	62
Round bottom	60%	-10%	5%			6%	4/14	22%
Rounding top	403%	-12%	104%			112%	7/18	28%
Ascending scallop	112%	-12%	29%	13%	53	88%	27/54	33%	$0.79	61
Descending scallop	190%	-11%	31%	15%	45	65%	7/27	21%	$4.67	19
Scallop, inverted and ascending	119%	-11%	23%	14%	52	82%	29/83	26%	$1.18	53
Scallop, descending and inverted	164%	-11%	32%	11%	60	67%	10/31	24%	$0.85	58
Triangle, ascending	117%	-12%	17%	8%	72	77%	18/62	23%	-$0.80	85
Triangle, descending	144%	-10%	23%	10%	66	90%	21/76	22%	$1.55	48
Triangle, symmetrical	238%	-11%	58%	22%	21	127%	73/192	28%	$5.18	14
Triple bottom	592%	-12%	132%	56%	4	184%	70/225	24%	$8.53	4
Rectangle bottom	259%	-12%	38%	18%	34	57%	9/40	18%	$3.86	25
3 rising valleys	611%	-11%	158%	56%	5	223%	55/147	27%	$8.63	3
Roof	187%	-15%	63%			196%	5/8	38%
Roof, inverted	146%	-11%	56%			72%	12/16	43%
Sell Pattern	Average Win	Average Loss	Net	Annualized Net	Rank	No Stop Net	Win/Loss Samples	Win Loss	Average Expectancy	Expectancy Rank

Trading RABFAs: Busted Buy, Busted Sale

Table 6 shows the last combination of trading statistics. It shows busted RABFAs as the entry signal and various busted chart patterns as the exit signal. A stop loss order was used and priced a penny below the bottom of the chart pattern (after buying).

For example, buying a busted RABFA and selling a busted broadening top made 165% from the winners, lost 9% on the losers for a net gain of 39%. Annualized, it was 20%. The net gain placed the performance of this setup at 31, where a rank of 1 is best. Removing stops from the trades allowed them to make 139%. Only 43 trades were taken and 28% of them were winners. Expectancy was a gain of $4.68 per share, ranking 18th among the four tables.

Table 6: Statistics for Busted Buys and Sales
Sell Pattern	Average Win	Average Loss	Net	Annualized Net	Rank	No Stop Net	Win/Loss Samples	Win Loss	Average Expectancy	Expectancy Rank
Broadening bottom	31%	-11%	-3%			30%	3/13	19%
Broadening top	165%	-9%	39%	20%	31	139%	12/31	28%	$4.68	18
Broadening formation, right-angled and ascending	31%	-9%	0%			45%	3/10	23%
Broadening formation, right-angled and descending	133%	-9%	11%			113%	3/18	14%
Broadening wedge, ascending	103%	-11%	23%			97%	3/7	30%
Broadening wedge, descending	59%	-11%	-4%			15%	2/18	10%
Bump-and-run reversal bottom	None	-10%	-10%			4%	0/7	0%
Cup with handle	None	-14%	-14%			18%	0/9	0%
Diamond bottom	171%	-8%	43%			59%	2/5	29%
Diamond top	56%	-6%	18%			175%	5/8	38%
Adam & Adam double bottom	99%	-11%	5%	3%	85	109%	12/69	15%	-$0.40	77
Adam & Eve double bottom	51%	-13%	-6%	-5%	93	91%	5/40	11%	-$1.83	89
Eve & Adam double bottom	65%	-10%	1%	0%	90	155%	5/30	14%	-$1.56	86
Eve & Eve double bottom	133%	-13%	23%			70%	7/21	25%
Falling wedge	83%	-8%	-2%			136%	1/14	7%
Head-and-shoulders complex bottom	17%	-18%	-14%			-8%	1/9	10%
Sell Pattern	Average Win	Average Loss	Net	Annualized Net	Rank	No Stop Net	Win/Loss Samples	Win Loss	Average Expectancy	Expectancy Rank
Rectangle top	64%	-9%	3%	5%	82	35%	5/27	16%	-$2.15	91
Rising wedge	59%	-10%	9%			143%	4/11	27%
Round bottom	None	-14%	-14%			53%	0/4	0%
Rounding top	172%	-6%	65%			79%	2/3	40%
Ascending scallop	286%	-12%	29%			67%	3/19	14%
Descending scallop	None	-9%	-9%			11%	0/10	0%
Scallop, inverted and ascending	65%	-12%	-3%			58%	3/22	12%
Scallop, descending and inverted	90%	-10%	5%			54%	2/11	15%
Triangle, ascending	100%	-11%	21%			71%	6/15	29%
Triangle, descending	139%	-11%	14%			78%	4/20	17%
Triangle, symmetrical	219%	-10%	21%	20%	30	92%	14/90	13%	$0.84	60
Triple bottom	69%	-9%	2%	3%	84	82%	14/79	15%	-$0.48	79
Rectangle bottom	None	-10%	-10%			187%	0/8	0%
3 rising valleys	96%	-10%	6%	5%	81	94%	8/46	15%	$0.59	64
Roof	None	-12%	-12%			-38%	0/3	0%
Roof, inverted	50%	-8%	1%			53%	2/10	17%
Sell Pattern	Average Win	Average Loss	Net	Annualized Net	Rank	No Stop Net	Win/Loss Samples	Win Loss	Average Expectancy	Expectancy Rank

Trading RABFAs: Performance Improvements

Here are a few ideas the data suggested which may improve performance of your pattern pairs trading.

Trend Start: Short, Medium, or Long

Find the trend start for your chart pattern. Often you can just look at a chart and see where the trend begins. If not, or you want to be sure, then the glossary describes how to find it.

Determine the length from the trend start to the pattern's start: short term (less than 3 months), medium term (3 to 6 months) or long term (more than 6 months).

Table 7 shows the results for the four combinations of busted/non-busted trades and the resulting performance.

Buying non-busted patterns with a short-term (up to 3 months) duration from the trend start to the pattern's start results in better performance. Busted patterns do best using a long-term (more than 6 months) duration from the trend start.

Moving Averages: 50- and 200-Day SMA

Table 7: Short (S) Medium (M) or Long (L) Trend Start and Performance
	Sell Non-Busted Pattern	Sell Busted Pattern
Buy non-busted pattern	S104% M28% L23%	S110% M28% L23%
Buy busted pattern	S10% M-3% L21%	S13% M-5% L14%

I checked two moving averages at buy time, 50- and 200-day simple moving averages (not as a crossover setup). I compared the breakout price to the value of the moving average. Table 8 shows the performance of buying or selling busted or non-busted patterns when the breakout price was above (A) or below (B) the 50-day simple moving average (SMA).

Table 8: Above (A) Below (B) 50-Day Simple Moving Average
	Sell Non-Busted Pattern	Sell Busted Pattern
Buy non-busted pattern	A68% B12%	A66% B8%
Buy busted pattern	A14% B-5%	A14% B-5%

Table 9 shows the results of using a longer moving average, the 200-day. Traders often use this as a proxy for the long-term trend.

Selling First Bearish Chart Pattern

The prior discussion assumes you buy an RABFA (busted or non-busted) but sell a chart pattern of your choosing, such as a downward breakout from a head-and-shoulders top (you wait for one to appear). What if you sold the first bearish chart pattern which comes along? How would you do?

Table 9: Above (A) Below (B) 200-Day Simple Moving Average
	Sell Non-Busted Pattern	Sell Busted Pattern
Buy non-busted pattern	A71% B29%	A66% B34%
Buy busted pattern	A13% B2%	A13% B2%

Table 10 shows the results sorted by the type of patterns involved (busted or non-busted). For example, if you buy a non-busted RABFA and sell the first non-busted chart pattern which comes along, you'd make 23% on average. Annualized, you'd make 44%. This compares to a 27% annualized gain if you sell a designated pattern (like you waited for a double top before selling, which may or may not be the first bearish chart pattern to come along).

The table suggests that regardless of the busted/non-busted status of the RABFA at the time of buying, you should sell the first non-busted chart pattern which appears. You'll want to avoid trading busted pattern (busted buy and busted: that combination loses money and has a negative expectancy of profit).

The bottom half of the table shows expectancy for the four combinations. Selling non-busted patterns gives the highest expectancy of profit.

Table 10: Selling the First Bearish Pattern (Annualized)
	Sell Non-Busted Pattern	Sell Busted Pattern
Buy non-busted pattern	23% (44% v 27%)	7% (12% v 25%)
Buy busted pattern	9% (21% v 9%)	-1% (-3% v 8%)
Expectancy (Below)
	Sell Non-Busted Pattern	Sell Busted Pattern
Buy non-busted pattern	$2.16	$0.34
Buy busted pattern	$1.34	$-1.07

Bulkowski on Pattern Pairs: Right-Angled and Ascending Broadening Formations