Trading Symmetrical Triangles

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 Symmetrical Triangles: 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 symmetrical triangle 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 Symmetrical Triangles: 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 symmetrical triangle 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 Symmetrical Triangles: 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 symmetrical triangles and sold various non-busted patterns (ascending triangles, broadening tops, head-and-shoulders tops, and so on), I made an average of 27% ("Stop Loss Only" column) after having a stop loss order in place. Losses averaged 9%. Replacing the stop loss with a 10% trailing stop cut the gain to 4% but also trimmed the average loss to 6%. Using a 25% trailing stop allowed me to keep more money, 20%, but losses climbed to 15%. If I didn't use any type of stop, the gain averaged 160% with losses averaging 30%.

Most trailing stops (except 25%) gave better results when applied to busted buy patterns.

Trading Symmetrical Triangles: 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	4% (-6%)	7% (-9%)	13% (-11%)	20% (-15%)	27% (-9%)	160% (-30%)
Busted buys, non-busted sales	5% (-5%)	9% (-10%)	15% (-12%)	22% (-13%)	29% (-10%)	100% (-23%)
Non-busted buys, busted sales	3% (-6%)	6% (-9%)	12% (-11%)	17% (-14%)	22% (-9%)	164% (-29%)
Busted buys, busted sales	5% (-5%)	8% (-10%)	14% (-12%)	17% (-12%)	25% (-10%)	87% (-26%)

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 58%. If you bought a busted symmetrical triangle and sold a non-busted pattern, that combination succeeded 58% of the time over the non-busted buy and non-busted sale combination.

According to the contest results, avoid trading using busted chart patterns.

Trading Symmetrical Triangles: 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)	41%
Buy busted pattern	58%	36%

Table 3 shows statistics I collected for symmetrical triangles 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 symmetrical triangle 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 14% on the 397 (72 winners, 325 losers) trades. That's an average of 129% on your winners, 11% average loss on your losers. You'd find that only 18% of the trades made money but you'd gain an average of 9% per year (ranking 85th 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 average 48% per trade.

The expectancy averaged a loss of $0.83 per share per trade which ranks 110th where 1 is the best value. It means you'll struggle to make money trading this pattern 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 symmetrical triangles
Sell Pattern	Average Win	Average Loss	Net	Annualized Net	Rank	No Stop Net	Win/Loss Samples	Win Loss	Average Expectancy	Expectancy Rank
Broadening bottom	129%	-11%	14%	9%	85	48%	72/325	18%	-$0.83	110
Broadening top	137%	-10%	27%	18%	28	75%	199/589	25%	$4.40	37
Broadening formation, right-angled and ascending	121%	-10%	18%	14%	53	51%	89/316	22%	$1.40	84
Broadening formation, right-angled and descending	93%	-11%	12%	9%	89	25%	58/209	22%	$2.38	70
Broadening wedge, ascending	252%	-11%	72%	45%	2	110%	72/156	32%	$2.89	60
Broadening wedge, descending	88%	-10%	15%	10%	80	30%	54/160	25%	$1.43	83
Bump-and-run reversal top	124%	-11%	34%	26%	6	73%	241/487	33%	$5.50	22
Diamond bottom	140%	-12%	25%	19%	24	86%	21/65	24%	$0.14	98
Diamond top	101%	-10%	26%	17%	30	62%	98/205	32%	$3.44	49
Adam & Adam double top	205%	-9%	36%	20%	17	110%	428/1607	21%	$5.29	25
Adam & Eve double top	148%	-10%	22%	13%	63	81%	172/685	20%	$4.76	33
Eve & Adam double top	167%	-9%	26%	16%	40	89%	194/779	20%	$3.55	46
Eve & Eve double top	114%	-10%	19%	13%	66	69%	245/788	24%	$4.24	41
Falling wedge	88%	-10%	10%	8%	92	34%	45/173	21%	-$0.26	106
Head-and-shoulders top	188%	-10%	39%	25%	8	93%	750/2284	25%	$3.45	48
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	100%	-11%	17%	13%	62	52%	125/362	26%	$1.55	80
Rectangle top	108%	-10%	14%	11%	75	43%	99/381	21%	$2.25	73
Rising wedge	115%	-10%	21%	14%	48	77%	198/605	25%	$3.53	47
Rounding top	127%	-10%	21%	12%	72	52%	100/341	23%	$2.73	61
Ascending scallop	253%	-11%	55%	44%	3	74%	48/143	25%	$0.52	97
Descending scallop	160%	-10%	23%	19%	22	64%	241/998	19%	$2.29	72
Scallop, inverted and ascending	161%	-10%	24%	14%	47	102%	22/89	20%	$6.16	16
Scallop, descending and inverted	186%	-10%	29%	24%	10	54%	128/513	20%	$0.75	94
Triangle, ascending	132%	-10%	29%	20%	19	75%	128/334	28%	$2.71	62
Triangle, descending	99%	-11%	16%	11%	73	32%	122/374	25%	-$0.09	103
Triangle, symmetrical	124%	-10%	21%	15%	46	62%	347/1139	23%	$2.34	71
Triple top	160%	-10%	28%	18%	26	74%	530/1834	22%	$4.96	30
Rectangle bottom	70%	-11%	3%	2%	111	10%	51/241	17%	-$0.30	107
3 falling peaks	189%	-9%	31%	23%	13	82%	448/1730	21%	$2.67	63
Roof	87%	-9%	17%	11%	76	65%	33/90	27%	$2.92	59
Roof, inverted	114%	-10%	24%	17%	34	74%	59/158	27%	$5.18	27
Sell Pattern	Average Win	Average Loss	Net	Annualized Net	Rank	No Stop Net	Win/Loss Samples	Win Loss	Average Expectancy	Expectancy Rank

Trading Symmetrical Triangles: 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 symmetrical triangle in a bull market), buy. Sell after a downward breakout from the target chart pattern.

Table 4 shows the performance of busted symmetrical triangles 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 symmetrical triangle 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 symmetrical triangle 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 bottom shows winners averaging gains of 121%. Losses average 11%, for a net of 19%. Annualized that's 13% (ranking 65th). Only 124 trades occurred with a win/loss ratio of 23%. If you traded this as a buy-and-hold position, meaning no stops were used, the net gain climbed to 42%. Expectancy was a gain of $0.01 per share, ranking 100 where 1 is best.

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	121%	-11%	19%	13%	65	42%	28/96	23%	$0.01	100
Broadening top	117%	-10%	29%	19%	23	66%	72/166	30%	$8.36	9
Broadening formation, right-angled and ascending	114%	-9%	27%	17%	29	53%	37/88	30%	$4.37	38
Broadening formation, right-angled and descending	50%	-12%	7%	5%	103	24%	16/38	30%	$5.11	28
Broadening wedge, ascending	108%	-12%	37%	24%	11	46%	25/37	40%	$2.55	67
Broadening wedge, descending	109%	-11%	15%	9%	88	31%	11/40	22%	$0.96	92
Bump-and-run reversal top	142%	-11%	48%	23%	12	77%	87/140	38%	$5.62	20
Diamond bottom	224%	-13%	69%			112%	9/17	35%
Diamond top	179%	-12%	53%	24%	9	83%	35/68	34%	$4.65	34
Adam & Adam double top	207%	-10%	45%	25%	7	110%	175/517	25%	$7.71	10
Adam & Eve double top	130%	-10%	32%	18%	27	76%	88/205	30%	$9.73	6
Eve & Adam double top	109%	-9%	20%	12%	68	81%	78/235	25%	$5.38	24
Eve & Eve double top	172%	-11%	40%	23%	14	89%	92/239	28%	$9.13	7
Falling wedge	146%	-9%	24%	16%	36	33%	14/52	21%	-$2.00	114
Head-and-shoulders top	145%	-10%	35%	20%	18	67%	288/703	29%	$6.11	17
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	116%	-11%	38%	18%	25	61%	54/87	38%	$3.99	44
Rectangle top	114%	-9%	25%	14%	51	46%	42/107	28%	$4.16	42
Rising wedge	145%	-9%	33%	22%	15	63%	66/175	27%	$4.34	40
Rounding top	116%	-11%	21%	10%	82	51%	37/113	25%	$2.45	69
Ascending scallop	115%	-13%	29%	16%	35	31%	18/37	33%	$5.11	29
Descending scallop	158%	-12%	28%	15%	42	61%	92/299	24%	$4.09	43
Scallop, inverted and ascending	82%	-10%	20%	13%	56	58%	10/21	32%	$4.58	36
Scallop, descending and inverted	100%	-11%	8%	6%	100	16%	33/159	17%	$1.17	90
Triangle, ascending	136%	-10%	28%	19%	20	62%	42/119	26%	$2.62	64
Triangle, descending	140%	-11%	25%	14%	50	32%	37/120	24%	$1.30	88
Triangle, symmetrical	144%	-11%	27%	17%	32	50%	110/343	24%	$1.39	85
Triple top	137%	-10%	28%	17%	33	72%	200/580	26%	$6.41	13
Rectangle bottom	124%	-12%	11%	6%	98	15%	14/69	17%	-$0.11	104
3 falling peaks	102%	-11%	12%	8%	93	39%	145/556	21%	$5.40	23
Roof	56%	-9%	9%	9%	91	38%	13/33	28%	$2.46	68
Roof, inverted	63%	-11%	11%	9%	90	43%	23/54	30%	$3.20	54
Sell Pattern	Average Win	Average Loss	Net	Annualized Net	Rank	No Stop Net	Win/Loss Samples	Win Loss	Average Expectancy	Expectancy Rank

Trading Symmetrical Triangles: 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 symmetrical triangle 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 symmetrical triangle with an upward breakout in a bull market and selling a busted broadening bottom shows winning trades making an average of 135%. Losing trades lost 9% giving a net gain of 22%. The annualized gain is 13% in this case, giving the setup a rank of 67 (where 1 is best). If you traded this without a stop, the net gain climbed to 43%. Of the stocks I looked at, I found 149 trades with 21% of them winning. Expectancy was $1.92 per share, ranking 78 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	135%	-9%	22%	13%	67	43%	32/117	21%	$1.92	78
Broadening top	109%	-9%	16%	11%	77	63%	76/285	21%	$3.20	55
Broadening formation, right-angled and ascending	154%	-9%	21%	15%	43	59%	26/116	18%	$0.60	95
Broadening formation, right-angled and descending	104%	-11%	14%	10%	83	42%	30/106	22%	-$0.02	101
Broadening wedge, ascending	69%	-14%	-4%	-4%	114	60%	7/48	13%	-$2.06	115
Broadening wedge, descending	107%	-12%	19%	10%	79	56%	27/76	26%	$1.43	82
Bump-and-run reversal bottom	57%	-10%	5%	3%	110	56%	22/74	23%	$3.07	56
Cup with handle	15%	-9%	-5%	-5%	115	-4%	11/49	18%	-$1.19	112
Diamond bottom	61%	-8%	7%	4%	109	76%	15/55	21%	$1.44	81
Diamond top	181%	-8%	31%	15%	41	92%	129/496	21%	$4.78	32
Adam & Adam double bottom	132%	-5%	10%	8%	94	161%	6/50	11%	$6.59	12
Adam & Eve double bottom	187%	-10%	23%	14%	49	59%	58/288	17%	$5.72	19
Eve & Adam double bottom	181%	-9%	17%	10%	81	99%	44/272	14%	$0.94	93
Eve & Eve double bottom	88%	-10%	8%	5%	105	37%	45/211	18%	$5.99	18
Falling wedge	97%	-10%	19%	13%	57	63%	41/112	27%	$2.99	58
Head-and-shoulders bottom	117%	-9%	24%	13%	58	56%	163/469	26%	$3.39	51
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	78%	-10%	10%	6%	102	23%	20/69	22%	-$0.39	108
Rectangle top	100%	-10%	9%	7%	96	63%	40/189	17%	$2.20	76
Rising wedge	99%	-9%	13%	13%	60	68%	27/103	21%	$0.01	99
Round bottom	143%	-11%	32%			37%	7/18	28%
Rounding top	62%	-11%	11%	6%	101	24%	16/36	31%	$2.12	77
Ascending scallop	92%	-9%	17%	13%	59	60%	45/129	26%	$2.56	66
Descending scallop	93%	-10%	12%	9%	86	38%	17/65	21%	$1.04	91
Scallop, inverted and ascending	104%	-10%	17%	12%	70	66%	50/158	24%	$3.31	52
Scallop, descending and inverted	50%	-8%	4%	5%	107	30%	18/73	20%	$1.39	86
Triangle, ascending	73%	-12%	7%	5%	104	38%	45/158	22%	-$0.03	102
Triangle, descending	62%	-10%	5%	4%	108	42%	45/179	20%	$1.35	87
Triangle, symmetrical	237%	-10%	50%	33%	4	84%	180/569	24%	$3.41	50
Triple bottom	268%	-9%	42%	28%	5	94%	130/581	18%	$5.29	26
Rectangle bottom	107%	-11%	13%	8%	95	16%	27/106	20%	$3.05	57
3 rising valleys	106%	-8%	15%	11%	78	90%	91/357	20%	$4.34	39
Roof	119%	-10%	26%	19%	21	74%	13/34	28%	$1.24	89
Roof, inverted	60%	-10%	14%	9%	84	38%	25/47	35%	$4.63	35
Sell Pattern	Average Win	Average Loss	Net	Annualized Net	Rank	No Stop Net	Win/Loss Samples	Win Loss	Average Expectancy	Expectancy Rank

Trading Symmetrical Triangles: Busted Buy, Busted Sale

Table 6 shows the last combination of trading statistics. It shows busted symmetrical triangles 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 symmetrical triangle and selling a busted broadening top made 325% from the winners, lost 7% on the losers for a net gain of 69%. Annualized, it was 33%. The net gain placed the performance of this setup at 38, where a rank of 1 is best. Removing stops from the trades allowed them to make 237%. Only 57 trades were taken and 23% of them were winners. Expectancy was a gain of $1.84 per share, ranking 85th 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	55%	-11%	1%	1%	113	13%	10/44	19%	-$0.20	105
Broadening top	161%	-10%	29%	17%	31	66%	28/94	23%	$8.69	8
Broadening formation, right-angled and ascending	123%	-10%	11%	7%	97	38%	7/37	16%	-$1.50	113
Broadening formation, right-angled and descending	46%	-9%	2%	1%	112	24%	10/42	19%	-$0.58	109
Broadening wedge, ascending	105%	-14%	19%			27%	5/13	28%
Broadening wedge, descending	101%	-10%	28%	13%	61	44%	11/21	34%	$2.24	74
Bump-and-run reversal bottom	14%	-8%	-6%			8%	2/27	7%
Cup with handle	24%	-9%	-1%			-4%	5/15	25%
Diamond bottom	151%	-9%	-4%			2%	1/27	4%
Diamond top	71%	-10%	16%	12%	69	56%	14/31	31%	$5.57	21
Adam & Adam double bottom	161%	-9%	29%	14%	55	77%	54/183	23%	$11.14	2
Adam & Eve double bottom	80%	-11%	8%	5%	106	36%	26/102	20%	$3.28	53
Eve & Adam double bottom	366%	-8%	97%	45%	1	124%	19/49	28%	$10.86	3
Eve & Eve double bottom	205%	-8%	30%	16%	37	58%	15/68	18%	$4.79	31
Falling wedge	101%	-11%	22%	12%	71	70%	13/31	30%	$0.54	96
Head-and-shoulders complex bottom	89%	-10%	9%			57%	4/17	19%
Sell Pattern	Average Win	Average Loss	Net	Annualized Net	Rank	No Stop Net	Win/Loss Samples	Win Loss	Average Expectancy	Expectancy Rank
Rectangle top	65%	-10%	10%	9%	87	64%	25/69	27%	$1.66	79
Rising wedge	114%	-10%	43%	16%	38	69%	19/25	43%	$2.23	75
Round bottom	38%	-12%	-1%			20%	3/11	21%
Rounding top	32%	-13%	0%			22%	4/10	29%
Ascending scallop	101%	-11%	28%	14%	54	73%	20/38	34%	$7.13	11
Descending scallop	49%	-10%	15%	6%	99	29%	11/15	42%	$6.22	15
Scallop, inverted and ascending	133%	-10%	50%	16%	39	73%	31/43	42%	$9.95	5
Scallop, descending and inverted	12%	-10%	-10%			40%	1/27	4%
Triangle, ascending	93%	-12%	18%	11%	74	28%	18/45	29%	-$0.88	111
Triangle, descending	89%	-9%	16%	13%	64	40%	16/46	26%	$3.80	45
Triangle, symmetrical	123%	-9%	18%	15%	45	42%	58/220	21%	$2.58	65
Triple bottom	130%	-10%	30%	14%	52	60%	71/183	28%	$10.42	4
Rectangle bottom	143%	-10%	23%	15%	44	31%	12/44	21%	$6.36	14
3 rising valleys	194%	-10%	40%	21%	16	66%	34/105	24%	$11.44	1
Roof	128%	-11%	0%			50%	1/12	8%
Roof, inverted	145%	-14%	26%			42%	5/15	25%
Sell Pattern	Average Win	Average Loss	Net	Annualized Net	Rank	No Stop Net	Win/Loss Samples	Win Loss	Average Expectancy	Expectancy Rank

Trading Symmetrical Triangles: 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.

Buy non-busted patterns with a long-term (more than 6 months) duration from the trend start to the pattern's start. When buying busted patterns, use the short-term (0 to 3 months)

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	S29% M20% L30%	S25% M15% L23%
Buy busted pattern	S27% M23% L38%	S27% M24% L26%

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	A28% B27%	A25% B17%
Buy busted pattern	A29% B28%	A25% B24%

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.

In three of four table cells, buy symmetrical triangles when the breakout price is below the 200-day SMA.

Selling First Bearish Chart Pattern

The prior discussion assumes you buy an symmetrical triangle (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	A21% B41%	A18% B30%
Buy busted pattern	A30% B24%	A24% B30%

Table 10 shows the results sorted by the type of patterns involved (busted or non-busted). For example, if you buy a non-busted symmetrical triangle and sell the first non-busted chart pattern which comes along, you'd make 10% on average. Annualized, you'd make 31%. This compares to a 18% 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).

Selling the first pattern which comes along works only when selling non-busted patterns.

The bottom half of the table shows expectancy for the four combinations. The bottom rows shows buying busted patterns have a higher expectancy of profit.

Table 10: Selling the First Bearish Pattern (Annualized)
	Sell Non-Busted Pattern	Sell Busted Pattern
Buy non-busted pattern	10% (31% v 18%)	2% (5% v 15%)
Buy busted pattern	10% (26% v 17%)	2% (6% v 14%)
Expectancy (Below)
	Sell Non-Busted Pattern	Sell Busted Pattern
Buy non-busted pattern	$1.47	$-0.29
Buy busted pattern	$4.55	$4.71

Bulkowski on Pattern Pairs: Symmetrical Triangles