Trading RABFD

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

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 RABFDs: 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 a RABFD 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 RABFDs: 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 RABFD 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 RABFDs: 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 RABFDs and sold various non-busted patterns (ascending triangles, broadening tops, head-and-shoulders tops, and so on), I made an average of 41% ("Stop Loss Only" column) after having a stop loss order in place. Losses averaged 11%. Replacing the stop loss with a 10% trailing stop cut the gain to 6% but also trimmed the average loss to 5%. Using a 25% trailing stop allowed me to keep more money, 27%, but losses climbed to 12%. If I didn't use any type of stop, the gain averaged 112% with losses averaging 29%.

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 RABFDs: 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	6% (-5%)	12% (-8%)	18% (-11%)	27% (-12%)	41% (-11%)	112% (-29%)
Busted buys, non-busted sales	5% (-9%)	9% (-9%)	17% (-10%)	19% (-15%)	22% (-9%)	99% (-33%)
Non-busted buys, busted sales	6% (-5%)	11% (-8%)	18% (-11%)	23% (-13%)	34% (-10%)	109% (-25%)
Busted buys, busted sales	5% (-8%)	9% (-9%)	18% (-9%)	19% (-14%)	22% (-8%)	99% (-33%)

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 RABFD 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 RABFDs: 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	16%	14%

Table 3 shows statistics I collected for RABFDs 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 RABFD 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 41% on the 192 (42 winners, 150 losers) trades. That's an average of 231% on your winners, 12% average loss on your losers. You'd find that only 22% of the trades made money but you'd gain an average of 18% per year (ranking 16th 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 more than double your money (121% per trade).

The expectancy averaged $2.07 per share per trade which ranks 57th where 1 is the best value.

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 RABFDs
Sell Pattern	Average Win	Average Loss	Net	Annualized Net	Rank	No Stop Net	Win/Loss Samples	Win Loss	Average Expectancy	Expectancy Rank
Broadening bottom	231%	-12%	41%	18%	16	121%	42/150	22%	$2.07	57
Broadening top	175%	-11%	34%	15%	34	108%	94/292	24%	$3.25	40
Broadening formation, right-angled and ascending	144%	-13%	32%	16%	27	83%	50/125	29%	$2.59	53
Broadening formation, right-angled and descending	85%	-12%	11%	7%	72	43%	33/109	23%	$0.23	79
Broadening wedge, ascending	242%	-12%	78%	36%	1	129%	41/74	36%	$4.67	21
Broadening wedge, descending	138%	-12%	39%	17%	26	81%	22/43	34%	$4.37	23
Bump-and-run reversal top	111%	-10%	37%	18%	18	96%	125/195	39%	$4.67	20
Diamond bottom	128%	-11%	33%	16%	31	70%	21/46	31%	$3.02	44
Diamond top	141%	-9%	41%	20%	9	100%	43/85	34%	$5.09	14
Adam & Adam double top	285%	-10%	61%	22%	5	189%	184/576	24%	$7.04	6
Adam & Eve double top	354%	-11%	68%	28%	3	183%	74/265	22%	$7.09	5
Eve & Adam double top	225%	-11%	48%	20%	8	126%	91/269	25%	$5.71	10
Eve & Eve double top	163%	-11%	28%	12%	43	112%	89/308	22%	$3.11	42
Falling wedge	66%	-13%	3%	2%	87	48%	19/76	20%	-$1.42	88
Head-and-shoulders top	190%	-11%	48%	19%	14	117%	385/920	30%	$5.79	9
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	78%	-12%	17%	8%	68	64%	65/141	32%	$2.67	52
Rectangle top	208%	-10%	40%	17%	24	107%	50/167	23%	$4.89	18
Rising wedge	131%	-11%	27%	16%	29	90%	105/285	27%	$2.18	56
Rounding top	257%	-10%	60%	21%	7	112%	54/152	26%	$4.96	15
Ascending scallop	110%	-12%	24%	12%	45	44%	27/64	30%	$1.80	65
Descending scallop	153%	-12%	47%	17%	22	100%	204/368	36%	$4.10	26
Scallop, inverted and ascending	101%	-12%	13%	6%	76	74%	13/46	22%	$1.42	70
Scallop, descending and inverted	130%	-11%	27%	13%	42	47%	100/273	27%	$1.32	73
Triangle, ascending	177%	-12%	33%	15%	35	93%	52/165	24%	$3.66	30
Triangle, descending	207%	-11%	46%	22%	4	105%	56/157	26%	$2.78	47
Triangle, symmetrical	174%	-11%	45%	17%	21	116%	183/424	30%	$3.92	27
Triple top	166%	-11%	38%	16%	28	120%	282/735	28%	$4.33	24
Rectangle bottom	107%	-11%	12%	6%	75	37%	27/110	20%	$0.03	81
3 falling peaks	167%	-11%	41%	17%	25	106%	326/787	29%	$3.54	32
Roof	72%	-10%	14%	6%	73	100%	17/41	29%	$2.58	54
Roof, inverted	121%	-11%	26%	10%	57	82%	25/65	28%	$3.77	29
Sell Pattern	Average Win	Average Loss	Net	Annualized Net	Rank	No Stop Net	Win/Loss Samples	Win Loss	Average Expectancy	Expectancy Rank

Trading RABFDs: 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 RABFD in a bull market), buy. Sell after a downward breakout from the target chart pattern.

Table 4 shows the performance of busted RABFDs 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 RABFD 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 RABFD 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 102%. Losses average 11%, for a net of 3%. Only 49 trades occurred with a win/loss ratio of 12%. This scenario ranks the annualized net gain as 85th among the four tables. If you traded this as a buy-and-hold position, meaning no stops were used, the net gain climbed to 69%. Expectancy was a loss of $0.54 per share, ranking 84th 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	102%	-11%	3%	2%	85	69%	6/43	12%	-$0.54	84
Broadening top	100%	-10%	13%	9%	62	72%	19/73	21%	$1.27	75
Broadening formation, right-angled and ascending	149%	-8%	24%	18%	17	78%	8/31	21%	$3.04	43
Broadening formation, right-angled and descending	226%	-9%	33%			85%	5/23	18%
Broadening wedge, ascending	182%	-8%	35%			70%	5/17	23%
Broadening wedge, descending	96%	-11%	26%			92%	8/15	35%
Bump-and-run reversal top	105%	-10%	25%	19%	15	90%	22/52	30%	$3.37	37
Diamond bottom	123%	-8%	33%			54%	5/11	31%
Diamond top	106%	-9%	9%	9%	66	95%	5/27	16%	-$0.72	86
Adam & Adam double top	247%	-8%	48%	18%	19	147%	36/127	22%	$4.96	16
Adam & Eve double top	123%	-8%	16%	8%	67	71%	14/64	18%	$2.04	59
Eve & Adam double top	122%	-9%	18%	9%	63	88%	23/90	20%	$1.32	74
Eve & Eve double top	129%	-9%	24%	14%	39	105%	24/76	24%	$3.45	34
Falling wedge	125%	-9%	3%			21%	2/21	9%
Head-and-shoulders top	110%	-9%	18%	10%	55	98%	67/227	23%	$1.89	62
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	97%	-8%	12%	6%	78	86%	7/31	18%	$1.35	71
Rectangle top	141%	-9%	30%	15%	32	79%	13/37	26%	$1.85	64
Rising wedge	133%	-9%	23%	13%	40	70%	19/64	23%	$1.90	61
Rounding top	192%	-10%	38%	17%	23	76%	10/32	24%	$2.75	49
Ascending scallop	102%	-10%	11%			64%	4/18	18%
Descending scallop	99%	-10%	7%	5%	81	102%	22/125	15%	$0.52	77
Scallop, inverted and ascending	134%	-7%	10%			74%	2/15	12%
Scallop, descending and inverted	28%	-9%	-2%	-2%	89	32%	13/61	18%	-$0.65	85
Triangle, ascending	71%	-8%	9%	5%	79	121%	11/40	22%	$1.33	72
Triangle, descending	81%	-9%	13%	8%	70	75%	12/37	24%	$1.72	67
Triangle, symmetrical	143%	-8%	21%	11%	52	77%	30/127	19%	$1.58	69
Triple top	110%	-8%	18%	9%	65	98%	49/173	22%	$2.05	58
Rectangle bottom	243%	-9%	47%	17%	20	43%	8/28	22%	$3.40	35
3 falling peaks	200%	-9%	41%	19%	11	110%	67/210	24%	$3.35	38
Roof	None	-7%	-7%			76%	0/7	0%
Roof, inverted	93%	-10%	22%			70%	5/11	31%
Sell Pattern	Average Win	Average Loss	Net	Annualized Net	Rank	No Stop Net	Win/Loss Samples	Win Loss	Average Expectancy	Expectancy Rank

Trading RABFDs: 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 RABFD 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 RABFD with an upward breakout in a bull market and selling a busted broadening bottom shows winning trades making an average of 111%. Losing trades lost 11% giving a net gain of 24%. The annualized gain is 9% in this case, giving the setup a rank of 60 (where 1 is best). If you traded this without a stop, the net gain climbed to 57%. Of the stocks I looked at, I found 74 trades with 28% of them winning. Expectancy was $1.74 per share, ranking 66th 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	111%	-11%	24%	9%	60	57%	21/53	28%	$1.74	66
Broadening top	258%	-11%	62%	28%	2	159%	46/124	27%	$9.77	1
Broadening formation, right-angled and ascending	114%	-10%	20%	8%	69	63%	14/43	25%	$6.22	7
Broadening formation, right-angled and descending	94%	-9%	23%	11%	53	80%	26/58	31%	$2.34	55
Broadening wedge, ascending	110%	-9%	27%			81%	7/16	30%
Broadening wedge, descending	117%	-10%	20%	9%	64	64%	12/39	24%	$1.86	63
Bump-and-run reversal bottom	73%	-10%	5%	2%	86	103%	8/37	18%	-$0.47	83
Cup with handle	67%	-10%	-2%			31%	3/26	10%
Diamond bottom	64%	-10%	13%	6%	74	78%	11/24	31%	$4.89	17
Diamond top	121%	-9%	24%	10%	56	100%	16/46	26%	$7.92	2
Adam & Adam double bottom	358%	-11%	71%	21%	6	202%	47/165	22%	$6.14	8
Adam & Eve double bottom	138%	-10%	29%	11%	51	113%	42/120	26%	$3.39	36
Eve & Adam double bottom	171%	-11%	43%	14%	37	121%	33/79	29%	$3.65	31
Eve & Eve double bottom	107%	-12%	13%	5%	80	65%	22/84	21%	-$0.40	82
Falling wedge	90%	-10%	18%	10%	58	80%	15/38	28%	$3.02	45
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 bottom	234%	-10%	47%	19%	12	145%	67/219	23%	$5.26	13
Head-and-shoulders complex bottom	39%	-10%	3%	1%	88	24%	10/30	25%	$0.10	80
Rectangle top	145%	-9%	30%	16%	30	124%	30/89	25%	$2.72	50
Rising wedge	80%	-10%	11%	8%	71	93%	13/45	22%	$2.02	60
Round bottom	20%	-10%	-4%			67%	4/15	21%
Rounding top	63%	-14%	11%	5%	82	52%	10/21	32%	$3.33	39
Ascending scallop	139%	-10%	20%	9%	61	106%	15/60	20%	$3.13	41
Descending scallop	191%	-8%	69%	19%	13	78%	14/22	39%	$7.17	4
Scallop, inverted and ascending	148%	-9%	36%	15%	36	104%	38/93	29%	$4.82	19
Scallop, descending and inverted	157%	-9%	41%	12%	47	91%	18/42	30%	$5.45	12
Triangle, ascending	59%	-10%	8%	4%	83	124%	24/67	26%	-$1.59	89
Triangle, descending	179%	-9%	43%	20%	10	115%	24/63	28%	$5.65	11
Triangle, symmetrical	144%	-10%	29%	12%	48	117%	87/256	25%	$3.51	33
Triple bottom	142%	-11%	31%	11%	49	108%	96/257	27%	$4.63	22
Rectangle bottom	129%	-11%	25%	11%	50	70%	17/49	26%	$0.48	78
3 rising valleys	164%	-10%	39%	13%	41	116%	63/162	28%	$3.78	28
Roof	279%	-9%	117%			178%	7/9	44%
Roof, inverted	62%	-10%	15%	6%	77	184%	12/22	35%	$2.78	48
Sell Pattern	Average Win	Average Loss	Net	Annualized Net	Rank	No Stop Net	Win/Loss Samples	Win Loss	Average Expectancy	Expectancy Rank

Trading RABFDs: Busted Buy, Busted Sale

Table 6 shows the last combination of trading statistics. It shows busted RABFDs 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 RABFD and selling a busted broadening top made 196% from the winners, lost 9% on the losers for a net gain of 29%. Annualized, it was 12%. The net gain placed the performance of this setup at 46, where a rank of 1 is best. Removing stops from the trades allowed them to make 100%. Only 38 trades were taken and 18% of them were winners. Expectancy was a gain of $1.10 per share, ranking 76th 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	184%	-8%	40%			67%	4/12	25%
Broadening top	196%	-9%	29%	12%	46	100%	7/31	18%	$1.10	76
Broadening formation, right-angled and ascending	5%	-7%	-6%			102%	1/10	9%
Broadening formation, right-angled and descending	43%	-7%	1%			156%	2/10	17%
Broadening wedge, ascending	74%	-11%	1%			190%	1/6	14%
Broadening wedge, descending	30%	-6%	3%			32%	4/11	27%
Bump-and-run reversal bottom	32%	-11%	8%			104%	3/4	43%
Cup with handle	None	-7%	-7%			-3%	0/2	0%
Diamond bottom	246%	-11%	99%			131%	3/4	43%
Diamond top	75%	-5%	11%			12%	2/8	20%
Adam & Adam double bottom	157%	-8%	32%	10%	59	99%	13/41	24%	$4.20	25
Adam & Eve double bottom	128%	-8%	37%	15%	33	144%	10/20	33%	$7.29	3
Eve & Adam double bottom	133%	-8%	29%			158%	7/20	26%
Eve & Eve double bottom	55%	-9%	6%			13%	5/17	23%
Falling wedge	109%	-8%	7%			94%	2/14	13%
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	28%	-9%	3%			115%	3/6	33%
Rectangle top	182%	-9%	34%			92%	5/17	23%
Rising wedge	55%	-8%	13%			2%	3/6	33%
Round bottom	70%	-6%	19%			29%	1/2	33%
Rounding top	259%	-12%	56%			33%	1/3	25%
Ascending scallop	90%	-9%	9%			144%	3/14	18%
Descending scallop	None	-12%	-12%			24%	0/8	0%
Scallop, inverted and ascending	113%	-9%	3%	4%	84	38%	3/27	10%	-$1.02	87
Scallop, descending and inverted	49%	-8%	11%			39%	5/10	33%
Triangle, ascending	257%	-9%	22%			74%	2/15	12%
Triangle, descending	42%	-8%	0%			58%	3/16	16%
Triangle, symmetrical	119%	-7%	29%	12%	44	79%	22/56	28%	$2.94	46
Triple bottom	123%	-8%	25%	11%	54	102%	20/59	25%	$2.72	51
Rectangle bottom	46%	-9%	-5%			-10%	1/13	7%
3 rising valleys	146%	-9%	28%	14%	38	94%	15/48	24%	$1.70	68
Roof	117%	-5%	56%			125%	2/2	50%
Roof, inverted	5%	-6%	-5%			22%	1/7	13%
Sell Pattern	Average Win	Average Loss	Net	Annualized Net	Rank	No Stop Net	Win/Loss Samples	Win Loss	Average Expectancy	Expectancy Rank

Trading RABFDs: 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	S55% M47% L20%	S51% M38% L15%
Buy busted pattern	S1% M39% L57%	S4% M17% L52%

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	A41% B41%	A34% B35%
Buy busted pattern	A28% B-4%	A27% B-2%

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.

Buy non-busted RABFDs when the breakout price is below the 200-day SMA and busted RABFDs when the breakout price is above the SMA.

Selling First Bearish Chart Pattern

The prior discussion assumes you buy an RABFD (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	A40% B46%	A31% B49%
Buy busted pattern	A26% B-3%	A26% B-4%

Table 10 shows the results sorted by the type of patterns involved (busted or non-busted). For example, if you buy a non-busted RABFD and sell the first non-busted chart pattern which comes along, you'd make 14% on average. Annualized, you'd make 28%. This compares to a 17% 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).

In three of four table cells, selling the first bearish chart pattern which appears will give larger 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	14% (28% v 17%)	6% (13% v 14%)
Buy busted pattern	13% (31% v 12%)	6% (13% v 11%)
Expectancy (Below)
	Sell Non-Busted Pattern	Sell Busted Pattern
Buy non-busted pattern	$1.83	$0.25
Buy busted pattern	$1.65	$0.51

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