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‘Penny Stocks’ are considered to be the most alluring topic to the public than ever before, particularly to traders who have comparatively small accounts. The reason for their attraction, rightly or wrongly, is the amount of leverage one can get if the right stock is chosen. More than likely, most of us are fantasized about owning 1,000 shares of a $0.50 stock and have it skyrocket to $1 or $2 for triple digit gains. But what are “penny stocks” and how can we best take advantage of them?

A “penny stock” refers to a stock that trades below $5 per share, and for a number of reasons,these are considered to be the choice of the people who invest with limited funds. Though, trading penny stocks is a double-edge sword, as a lot of newbies to trading quickly discover.

For example, a penny stock can return magnificent gains, even with relatively small investments. But they can also take magnificent losses as well. Hence, it is most excellent that a penny stock trader is armed with the best possible tools, and with as much knowledge as possible before venturing into these shark-infested waters.

The good news is that knowledge about the underlying company is not required, nor is it required that the investor research company fundamentals. The reason is because all knowledge is accessible from one simple source—everything that is identified about a company and its fundamentals survives in the action of its stock chart!

It is tru that that market is like a polling station, where a lot of individuals are making a speculative “bet” on a number of instruments. If this action is properly interpreted, what better “opinion” can there be than a hundred thousand people placing hard money on the line? So, throw that analyst estimation out the window, throw those earnings reports in the trash, and do not take into account on all “news” about the company, because every conceivable piece of information is built into the chart. And it is reflected instantly, in real time.

But the best news of all is that chart interpretation is done for you, right away, you can find a numerous products available on the internet which you can make use of. By using comprehensive software products we can easily see which penny stocks are receiving the action, right now. This will also disclose which stocks have the greatest probability of a near-term move. Above all, it will keep you from making mistakes that could prove costly, or still serious to your finances.

Find additional information about the best penny stocks using a product available at StockVision at www.garsworld.com. And, best of all? StockVision is reasonably priced, and at a one-time payment. It is the product of choice for those with limited funds, yet great expectations. To discover the best possible trading solution today go to http://www.garsworld.com and download your FREE 7 Day copy of Stockvision.

This is part 2 of the four part series on the discussion of principles of investment in the stock market. In the first part, the first principle involved realizing that the stock market is just another investment vehicles and that before you start investing in the stock market, you must realize that there are other vehicles of investments. We continue by discussing the next two principles. If you wish to view the entire article, please visit my blog.

2.) You must know that investing in the stock market is a roller coaster ride – One of the advantages of the stock market is that there are times when it really climbs up then really big profits are made. However when it really goes down then really big losses are also made.

Bearing in mind that the stock market is a roller coaster ride it is generally best to sell when the market goes up and buy when the market goes down. When I started investing in the stock market about 2 years ago, the Philippine Stock exchange index was about 2000 + points. It went up to 2500 points and then down to the 2000 level in the middle of 2006. Slowly and steadily it climbed up to the 3200 level during the 1st quarter of 2007. It then went down in a very short period of time during the final days of the 1st quarter of 2007. It steadily climbed to a high of 3700+ points in July 2007 but went down below 3000 points a month after. It rose steadily to its highest at 3800+ points by October 2007, but after a month dropped to 3600 points.

There is only one conclusion that can be drawn here, that is it is really a roller coaster ride. Huge Profits and losses are made during those times that the market is up or down.

3.) You should determine what type of investor you are – Are you a long term investor or a short term investor? This is a very important question that each serious new investor should consider. This affects whether you should buy or sell a certain stock.

Take note that If you are a long term investor, this means means that you hold your stocks from 5 to 10 years or more. This actually means that you believe in the company that you are investing in. Since you are putting in your money for a long period of time, you must be certain that such money you put in is considered already as extra.

Long term investors also do not have to worry about the gruesome day to day technical analysis that has to be monitored. For as long as they believe in the fundamentals of the company there is no problem if the stock is held for a long period of time. But if you are a short term investor, that means you decide to cash in within a months time to 6 months time, then you should consider several things. You have to monitor the day to day activities of the market.

Like the long term investor, you have to make sure that you can afford to put in your money for a long period of time but not as long as the long term investor. The reason for such is because during the short period wherein you plan to invest and pull out your stocks, you may incur losses during that time so you may decide to wait a little longer.

When I first invested in the stock market I said to by myself that I will be more of a long term investor. There are stock that I invest in that I consider as short term. However most of the stocks I hold are considered as medium and long term investments.

Would you like to know more about investment strategies ? Visit the blog of Zigfred Diaz where he blogs about several interesting topics such as investments, money management, business, making money online and Stock market investing

This is the final part of the series on principles of investment in the stock market. The last seven principles was discussed in the past articles. We will be discussing the last three principles in this article. Visit my blog if you want to see the whole article.

8.) You must devote your time to study – When you want to invest in the stock market you should devote time to study what it’s all about. You can’t just place in your money and hope that it will somehow grow someday. You have to read books and materials on the stock market. When I started investing I dug out materials in the internet related to the stock market especially the Philippine stock market. I bought books on the stock market. The Philippine stock exchange has an “investor’s primer” for those who are new to the stock market. (See the Philippine stock exchange website for more information.)

You can also attend seminars on how to trade in the stock market. Several brokerage firms have conducted free seminars for those who are new to the stock market. I attended a 2 day seminar by CITISEC Online last year. CITISEC online is one of the most innovative, well managed and most active brokerage firms in the country. The information that you could learn is astounding. Studying the stock market requires continual study. You should not stop learning.

Do the best you can to read all the materials out there and attend all the seminars if possible. Do not give up just because you encounter terms that you could not understand. For example when you went over this article you would probably scratch your head since there are terms that are difficult to understand. Terms such as “points”, Philippine Stock Exchange Index (PSEi), “Blue Chips” or “Bull run” may sound foreign to you. Add to the fact that you don’t even understand what a stock is and how it works. So what ? When I first began I did not even know what these things are.

Stuff like these are never taught in school. I only learned them by reading and having a hands on experience in trading. I highly suggest that you watch the movie “Pursuit of Happyness” This is a story about one man’s struggle to learn the stock market. Years later he made millions through stock trading. This movie is based on a true story and is sure to inspire you!

9.) News Clues – Know today’s news and use them to your advantage. There are a thousand factors that are in the news that will definitely have an effect as to which direction the market will take. The most important page that an investor should read is the business page. This will give you an idea as to which stock should be bought or sold. My preferred daily news reading is the Philippine Daily Inquirer. I get ideas here on the possible directions the market will take.

10.) Don’t delay today is the best day to start – Experience is the best way to learn. You may start small but the most important thing is that you start right away. Put off procrastination. Study how to go about it without rushing, but don’t delay. If you already know the basics about investments start buying your first stock. Making your first profit from your first sale is truly rewarding.

Would you like to know more about investment strategies ? Visit the blog of Zigfred Diaz where he writes about several interesting topics such as investments, money management, business, making money online and Stock market investing

Whether your employer offers one or not, you should learn the basics of a 401k account. This information will come in handy if your company ever switches to a 401k plan or you change jobs and are able to invest in a 401k. These accounts give you the ability to have some control over your retirement fund, unlike pensions where the company controls the funds.

Another benefit of 401k plans is how they are taxed. When you contribute to a 401k plan, the money you invest is not taxed as income in the year that it is earned. Instead, it is taxed as ordinary income when you withdraw it from the retirement account. Since it is likely that you will be making less money when you retire than you do now, this can result in substantial tax savings.

If you make less than $110, 000 per year, you can contribute up to $16, 500 per year to your 401k, and the total contribution including your employer match cannot exceed $49, 000. The limits increase to $22, 000 and $54, 500 once you reach the age of fifty. If you make more than $110, 000 per year, your employer may be required to reduce the amount you can contribute so that you are not investing a higher percentage of your income than the average worker at your company.

Most companies that offer 401k plans also offer employer matching. That means that if you invest in your 401k plan, your company will also invest in your retirement plan on your behalf. Some employers match the full amount you contribute up to a certain percentage, while others only match part of your contribution. Employers may allow you to choose what the employer match is invested in, or they may invest the employer match portion in company stock or another investment of their choice.

The money that is invested in a 401k by your company match may or may not be vested immediately. What that means is that in some plans, you have to wait a certain period of time after the investment is made before the money is fully yours. The investment choices available to you in your 401k plan are chosen by your company. You can decide how to invest your money within those options. Sometimes the options are quite limited.

Depending on your company’s policies regarding their 401k plan, it may be able to take out a loan against the vested balance in your 401k. In most cases, the interest rate is very low compared to a traditional bank loan. If you do take out a loan against your 401k, you will be paying yourself back with interest. The downside is that if you lose your job before paying back the full amount, the balance will become due immediately and you will be hit with a tax penalty if you can’t pay it back at that time.

It’s good to have a little knowledge about 401k plans in case you ever work for an employer who offers them. They are becoming very popular, and you never know when your employer might decide to start offering a 401k plan to its employees.

Have you been looking for a good 401k retirement investment strategy that is good for you? Before you spend your time looking for quality retirement investing information, look at BeforeYouInvest.com’s guide to invest money online before you do anything else. BeforeYouInvest.com reviews everything from saving for retirement to the 401K direct rollover so take a look.

A covered call strategy is great, as it can allow you to get your income back, and put it to work elsewhere quickly. In addition, time value is certain, and covered calls will allow you to collect this value while speculators betting on a stock rising beyond the option price plus what they paid for the option will have to pay this amount to you no matter what. Even if the stock does go beyond this point, you don’t incur a loss; instead, you miss out on potential gains. This can cause a covered call strategy to be more stable. You ultimately want the stock to expire at the money as this will allow you to collect the full premium, and still own the stock. Anything above this and your gains of your stock will cover the loss of the call and your gain will ultimately be the same. However, if it goes higher, you will have to repurchase your shares at a higher price, although selling another call against them will result in a higher premium.

Some covered calls will yield a 10% monthly return based on it’s time value premium that you collect, meaning that in 10 months you will have your initial investment back if you can successful receive the full time value. The risk is not that the stock goes up in value and that you miss out on potential gains, as the yield will be roughly the same after appreciation, but that the stock goes down dramatically in value. However, you cannot lose more than your initial investment minus the full premium. This is a major point that critics of the covered call strategy often miss, as they say it has “the same risk profile as selling naked puts.” This means that if you sell a put you are un-hedged, and if the stock goes to zero, you are also limited to the loss of the strike price minus zero times $100. Where a put owner will gain $100 per share ($10000 per contract) if a $100 stock goes to 0, a put seller will have to pay the put owner this $10,000 per contract. Selling puts is dangerous because people generally do not manage money well. The top 10% of people own the other 90% of wealth generally because the top 10% have learned to manage their money better than the other 90%.Selling puts is dangerous, because if you sell a $100 put for $500 your gain is capped to $500 per contract for a given length of time, and your potential loss is $10,000. Now a covered call owner may be capping his gain to lets say $500, and if the stock goes to zero, he is also going to potentially lose $10,000. So why is a covered call generally less risky? The reason why is that unless the seller of the put has $10,000, then he risks going on margin. In addition to actually having to have put up what the buyer affords to risk, The buyer of the stock not only is required to have that 10,000 before he can buy 100 shares of $100, but even someone with a limited understanding of risk management will do at least something to manage risks, even if it’s still investing a high percentage such as 20% of the income that loss is limited to 20% of the portfolio. Technically that buyer should risk only a smaller percentage of his capital. A seller of a put receives $500, but to collect $500 and have to leave $50,000 to the side doesn’t seem naturally as rational. People that invest in a covered call buying a stock for $10,000 and collecting a $500 premium and invest the remaining $40,000 will be risking less than someone who sells a naked put, but invests the remaining cash. Of course the reason is, the put seller has to have $10,000 to cash if the stock goes to zero.

However, there’s an even greater difference. In the event of a loss when the stock doesn’t go to 0, the covered call seller experiences a paper loss; where as a put seller experiences a real loss. The covered call owner might put up $10,000 and that $10,000 suddenly is only good for $8,000 and all he has received is the $500 premium for the covered call. However, if this person has done the research and determined that the stock is undervalued, and is currently in a panic due to margin calls and forced selling, and that the fundamentals are good, the covered call owner still owns the 100 shares of the stock that they determined to be worth $140 at $100. Technically the put seller could choose to buy that same stock at $100 which is now worth $80, and put up the money rather than take the $20 per share loss. However, the covered call owner has likely researched the stock, has determined it to be undervalued and intends on owning this stock anyways. The put seller doesn’t want to own this stock, instead expects the stock to remain neutral, and just wants to collect the $500. If the covered call owner was wrong, that means the stock goes lower than he expects, however that doesn’t mean that the stock still wouldn’t be undervalued even more so. If the put seller is wrong, the put seller will have to buy 100 shares of an $80 stock at $100. It may just seem like semantics, but the covered call owner already has bought the stock where as the put seller may not really believe he has to buy the stock. A put seller gets paid to buy the stock at a set price, where the covered caller gets paid to own the stock. Psychologically, it’s a lot easier for a put seller to say “well I’m a good investor I think, my bet is probably right, I don’t need to worry about the fact that the stock might drop in value because I don’t think it will. I don’t need to do more research, and oh, by the way, this extra $10,000 on the side, I can invest it elsewhere because I’m a good investor, and I’m not going to lose. An over confident put seller can lose everything in the account and then some with even a drop from $100 to $80, where as a covered call owner who is over confident will probably only lose a maximum of the amount he owns in that individual stock minus the price of the stock, and that’s if the stock goes to all the way to zero.

In many ways they are a similar strategy betting a stock won’t go up beyond a certain point, and that it won’t go down beyond a certain point. But a person who writes a covered call will be forced to have the money to pay for it and on maximum in a margin account that person can only go on 2:1 margin. If a covered call buyer with $10,000 risked $20,000 they might need to transfer some money from their bank to their stock account and come up with $10,000

If someone sells puts, they are not technically on margin until a major loss occurs, however, if they sell 10 covered calls of a stock at $100 at $500 each, they risk losing $100,000 if it goes to zero. Put sellers most likely think that has a low probability of happening. Covered callers may think the same thing is true, the difference is, covered callers can never bet more than twice what they have even on margin, and most people won’t go on margin anyways simply because they don’t have the account set up to. Put sellers will usually HAVE to have a margin account to sell puts.

Selling puts requires a more sophisticated understanding as well, and when lost in the technical, I believe it’s easier to forget about what you are betting on happening. If you sell an out of the money covered call, you are betting on it going down less than what you received for the option, or going up to the strike price (or higher, but gain is capped). If you already own a stock, it’s easier to understand that you are trading upside potential for income, where as put sellers are risking money they don’t have committing to buying a stock at a certain price no matter what betting that a stock will do the same thing essentially. But leveraged buyers and sellers are generally not the type that likes to have money on the sideline.

Naked call seller as are collecting income but if the stock goes up, they have unlimited risk since they do not own the stock that will cover them in case the stock goes higher. Selling a naked call could potentially result in unlimited margin. However in order for a stock to go unlimited gains, it has to have an unlimited amount of money put into it. This does not happen, especially to the largest of large cap stocks that are already heavily owned on heavily leveraged companies… However, large amounts of cash reserves still are needed, as large caps still appreciate in value, sometimes significantly. Being un-hedged and selling any sort of shares “naked” is not recommended. In theory there may be an identical hedged strategy, but in practice it just doesn’t work out the same way.

In the world of investments, attitude counts for a lot. Why is that, you may be asking? The answer is simple: in investing, it’s important that your decisions be founded exclusively on information and reasons pertinent to that investment. You never want to put yourself in the situation where you end up making a decision on an investment based on completely extraneous and irrelevant matters. Hence the saying “Plan the trade, and trade the plan.” I’ve listed some points which may help you with this.

1. Only invest with money that is not and will not be destined for basic living expenses. Even if the money is needed only several months down the line do not even think of using it for an investment. The reason for this is that if you do invest that money, subsequent decisions on the investment will be shaped by basic living expense needs, which strictly speaking is not a factor pertinent to the investment.

For example, Lets say you need that money in 3 months to pay a mortgage repayment. Your investment may temporarily drop on the very week you need the money. In this situation, the correct decision, based on your strategy, could be to hold for another week. But because you have the mortgage, you make the decision to close the investment. This decision was made on information which was irrelevant to the investment and ended up ruining the trade and causing a loss. This issue would never exist if you only invested money you didn’t need.

2. When you invest your money, it may help you to imagine that that money is completely lost as soon as you invest it. Quite often investments look like they are going bad before they turn around. It just happens as part of the typical fluctuations of the investment market. Many a good investment has been turned into a bad one by people (me included) who get scared and close a trade, instead of giving it the time to complete successfully.

If you convince yourself the money is gone when you invest it, its much easier to avoid getting the jitters during these times. (And let me tell you, there is nothing worse than closing a trade early for a loss, only to watch it turn around and become successful, if only you had let it run its course.)

3. Any and every investor needs to accept that failed trades are a basic fact of life. Everybody will make a certain amount of trades that run into losses. The important part here is the attitude that you adopt in the face of such losses: being a poor, vision-less loser in such events will prevent you from ever becoming a successful investor over the long haul. Following are two exemplary ways to contemplate an unsuccessful trade.

3a). Instead of looking at your portfolio as a series of individual investments, think of them as a group or a totality. Imagine that based on a certain investment strategy you are running, four out of every five investments runs a profit (which alternatively means that one out of five is a loss). Instead of considering the losing investment as independent of the other four, rack all five up together in terms of net profit and then divide that by five, not four. The answer, which is your profit per trade, must reflect on all trades in the strategy and in that sense, 20% of the final net profit is courtesy of the failed trade. Remember: if it’s a necessary part of the overall strategy, it is not strictly a loss.

In this manner, you save yourself from abandoning a good method simply for fear of small failures.

3b). Consider the losses you make as educational expenses. Most folks dedicated to the industry of finance have dedicated many years and thousands of dollars on educating themselves on the matter at prestigious universities, getting a grip on the trade. The equivalent for somebody striking up in the field from zero is a series of unsuccessful trades. This implies though you actually learn from them. This must be done professionally and objectively, without emotions, otherwise you will never make the cut and will miss out on lucrative long term gains through investments.

Investment markets are renowned for being able to bring out the very best and the very worst in people. It is fundamental that an investor learn how to dominate and control such emotions, remove them from the decision making process, so that they don’t weigh where they don’t belong. Remember the saying: “Plan the trade, trade the plan.

Damian Papworth makes investments for his lifestyle and his family. Not too long ago he researched baby high chairs. He created a website with his findings on high chairs for babies.

The symmetrical triangle can be traded very successfully on the long side entering the trade as the stock breaks out to the upside. The pattern forms when the two boundary lines that contain the price movement converge to a point. The bottom line slopes up toward the top line which slopes down. Both lines have nearly the same slope as each other which is why the pattern is called symmetrical.

Symmetrical Triangles, Breakout Unclear

Symmetrical triangles show no clear breakout direction. Just over half (56%) of the patterns break upwards and this is likely due to the upward bias of the markets. The average gain is 0.85% in 9 days with less than half of the breakouts (44%) being profitable.

Refine Your Entries

When you look at the performance of a symmetrical triangle surprisingly the pattern works better when the market is falling. Trading symmetrical triangles when the market is in a down trend or consolidating improves your trading results. If the sector is consolidating or rising this also improves the performance of the pattern.

Symmetrical triangles are sensitive to the length of the pattern with breakouts that occur in less than 25 days, from the start of the pattern, performing the best. While the pattern breakout works best in the range specified, avoid trading patterns that breakout early, in the first 30% of the pattern length.

Volume is very important with symmetrical triangles ensure that the volume is highly supportive of the breakout with the volume as the share rises 40% or more than volume as the share falls.

Trading Symmetrical Triangles Can Be Very Profitable

By following these simple rules profitability of trading symmetrical triangles can be improved substantially. With an average return per trade of 1.87% in 11 days and a hit rate of 55% it is understandable why many traders are drawn to the symmetrical triangle.

Note: Statistics for this article have been provided by Patterns Trader after analyzing over 60,000 chart patterns on the Australian market from 2000 – 2008.

Jeff Cartridge is the author of Supercharge Your Trading with CFDs and created the website LearnCFDs.com A Simple Timeless Method for Huge Gains

The way you buy stocks has changed a lot in the last 10 years. It used to be that you had to find and contact a broker, probably go into their office in your city, open an account, and then arrange to have funds transferred. Every time you wanted to buy or sell a stock, you had to pick up the phone and tell you broker what you wanted to have done. Actually meeting up with someone and having to call them to make trades might have been a bit intimidating for a beginner.

Now with the Internet however, how to buy stocks for beginners has gotten extremely easy. Everything can be done through the computer and you most likely will never have to speak to anyone. You can choose a brokerage and open up an account online, send in the money via snail mail or wire transfer, and then make trades all day long by just pushing buttons on your computer. No human contact is ever necessary which makes it less intimidating for someone who is new to investing to get started.

If you are just starting out in your investing career, where should you go to learn more and get good advice? Other than the Internet, the public library always has some good investing books that will explain the basics of the stock market and some investment strategies you may want to explore. The Internet has information on anything and there will be abundance on stocks, but you must be careful what advice you pay attention to as there will be a lot of questionable content there as well.

Once you have studied some stock market basics for a while, it could be a good time to get started buying a stock. You can read and learn all you want but nothing is a substitute for the real thing. On the job learning is the best teacher and that goes for the stock market too.

Although the market is down right now and it is usually best to buy stocks when they are low, you still might not want to jump in just yet. The economy is worse off than at any time in recent memory and it could be headed back down even further. In this kind of a bear market, things are so bad that all stocks will go down even if they are of companies that are doing well. It might be best to hold on and wait things out a little while until the picture becomes clearer and things start to turn around in earnest. It is best to be cautious in this kind of a bear market, especially if you are a beginner.

Would you like to learn about buying stocks for dummies? If so, please visit my website Stock Market For Beginners.

A lot of people start trading Forex without really understanding what’s going on – and that’s a problem. If you don’t know what you’re doing, it is incredibly easy to mess up. That’s where getting some proper Forex training comes in – if you can find someone to teach you the skills you need, you can dramatically reduce the time it takes you to learn. And the money you spend along the way!

So the obvious question is, where to get this training. Forex training is available from all sorts of sources, ranging from slim books of tips and tricks, to huge week-long seminars filled with information and practical advice. With so much on offer, it’s easy to get lost and not know where to start. That’s where I employ a technique I call “information overload”, which has been incredibly helpful to me.

Information Overload is the process of completely immersing yourself in the data. Studying it constantly, and making it so much a part of your life that when it comes time to use your knowledge, you almost instinctively know what to do. I won’t lie to you, this a hard path – but the rewards are worth it. If you just want quick, simple success, you can get a for robot, which will do most of the work for you. And yes, they do work, but for myself I prefer to be the master of my craft – not just someone using a tool.

The first thing you need to do is to find an initial information overload source. So, head out to the public library, and ask them for the Forex training books. Once you’ve found them, pick one randomly. And I mean completely randomly – just close your eyes and grab one, any one. Doesn’t matter.

Great! You’ve picked out a book, and now you just have to read it. This trick here, is to read it fast – keep it with you all the time, and every spare moment (on your break, in a line, during commercials on tv…) you read it. Even just a little bit, even just a paragraph or two, it all counts. And, most importantly, read it just before you fall asleep – several pages, at least. This is essential.

This is because whatever you are thinking of last thing at night, is what your mind remembers most strongly. So when you’re trying to learn about something, falling asleep thinking about it helps hugely. The purpose of this is not to study the book. Don’t worry if you don’t understand it, or if you don’t get something. Just shrug your shoulders and keep going. The important thing is to get as much information into your mind as possible.

Once you’ve finished the book, you can go get another one. Just keep doing this, randomly taking books and paging through them, until you’ve had enough exposure. You’ll know when this is, because you’re mind will start producing facts and figures you weren’t even aware you know. Someone will say something about Forex you couldn’t have got before, and you’ll suddenly realize you know exactly what they mean. You may even start dreaming about foreign exchange. Don’t worry, this is totally natural, and you’re doing well.

The second stage of information overload, is directed reading. Now you’ve filled your brain with knowledge, it’s time to start learning. Go back to the library, and this time take a look at the books. You may be surprised at how well you know them, and can understand what they’re saying. At this point, just let your instinct guide you – don’t listen to anyone else. Your subconscious is full of Forex knowledge, and it knows what you need to learn.

By now your brain is full of information about Forex, and all you’re doing is awakening it. So go through the book, studying it carefully. This time, when you see something you don’t understand, investigate it – find another book, look online, whatever. As you study, everything you already know subconsciously will fall into place, allowing you to go through the book with an ease you’ve probably never know before.

Well, now you’ve got everything you need, and if you really put your mind to it, I wouldn’t be surprised to see you become an skilled Forex trader with only a few weeks of study. I can also suggest, if you can spare the funds, that you find yourself a Forex training program. Something that gives you some hand-on practice, so you can experiment as you learn. In the end of course, you have everything you need inside your own head.

Here’s to your success!

Jacob Tremblay is an experienced stock market trader, who has now turned his hand to forex training. Click to take a look at his site, where he provides reviews of various forex trading and training systems.

The symmetrical triangle can be traded on the short side entering the trade as the stock breaks out of the pattern to the downside. The pattern forms when the two boundary lines that contain the price movement converge to a point. The bottom line slopes up toward the top line which slopes down. Both lines have nearly the same slope as each other which is why the pattern is called symmetrical.

Symmetrical Triangles, Not Usually Traded Short

Symmetrical triangles provide no clear breakout direction, but 45% break out to the downside making it possible to trade on the short side. Just 44% of these breakouts are profitable and on average the profit per trade is only 0.33% over a period of 9 days. The symmetrical triangle is not one of the best chart patterns when it breaks to the downside, but applying some filters can make this pattern more attractive to trade.

Specific Setups to Improve Profitability

As you would expect a break to the downside works better in a falling sector and market environment. By using filters that require the market, stock and the sector to be in a consolidation or a down trend you can improve the results.

Very few trades break down at the start of the pattern, but those that break in the first 30% of the pattern should be avoided. Another key to picking successful short breakouts from symmetrical triangles is to look for a turning point up from the lower boundary that fails to reach the upper boundary and then falls away. This is not a prerequisite, but does produce better trades.

If volume supports a symmetrical triangle breakout then the profitability of the trades improves. For volume to support the breakout, volume when the stock is going down should be greater than volume when the stock is going up. A close lower than the previous day, before the breakout, results in better trades.

Symmetrical Triangles Can Be Profitable

Incorporating these simple changes when selecting symmetrical triangles to trade short, dramatically improves the results. With an average return per trade of 1.58% in 9 days and a hit rate of 47% it is possible for symmetrical triangles to be traded short successfully.

Note: Statistics for this article have been provided by Patterns Trader after analyzing over 60,000 chart patterns on the Australian market from 2000 – 2008.

Jeff Cartridge has been trading CFDs since 2002 and created the website LearnCFDs.com A Simple Timeless Method for Huge Gains