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Technical Trading Strategies
Technical analysts and traders believe that certain
stock chart patterns and shapes are signals for profitable trading opportunities. Many
professional and amateur traders claim that they consistently make trading profits by
following those signals. In this chapter we introduce eight types of stock patterns and
the corresponding trading strategies, that, according to our extensive historical tests, give the trader an advantage.
"Triple Top/Bottom"
Triple Top/Bottom patterns, which appear frequently in stock trading, are relatively
easier to detect. Below are some typical Triple Top/Bottom patterns:
Figure 21. A bounce-back from an up-trend Triple Bottom is a buy signal.
Risk involved is low. One can sell the stock if it turns back and penetrates
the line.
Figure 22. This is a Triple Bottom breakdown with large volume, a sell signal.
Risk is small because one can cover the
short
position if the stock price turns back up to the line.
Figure 23. A bounce-back from Triple Top, a sell signal
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