Читать книгу Encyclopedia of Chart Patterns - Thomas N. Bulkowski - Страница 48

Figure 2.4 shows a sample trade using the AB=CD pattern.

Jacob poked me in the ribs, then pointed to the screen to discuss his trade. “See that? It's a double bottom.”

His fingers traced the twin bottoms at EA with a nice peak (F) between them. “I can make money trading that.”

He placed a buy stop a penny above F. That order triggered at G, putting him into the stock near the breakout price. Immediately, he placed a stop a penny below the lower of the two bottoms, which in this case, was A, at 37.12. If the trade went bad, he'd lose about 10%.

“That's bigger than the 8% I like to see, but you have to be flexible,” he told me.

Figure 2.4 Jacob used the bearish AB=CD pattern to exit a trade.

For about a week, the stock cooperated and climbed to B before starting to retrace.

“The throwback and drop to C made me nervous. I started sweating bullets because I thought I'd be stopped out. Don't believe me? The sweat started pouring off me, and the furniture started floating. I'm not kidding. You can see the watermark.” He pointed to a smudge on the wall. His wide grin made the Grand Canyon look like a small ditch by comparison.

“I thought of selling, but I invariably sell a week or two before the stock bottoms. It's annoying. What helped me this time was when I noticed the bearish AB=CD pattern.”

His software helped by providing the location for him. Let's run through the numbers. The low at point A was 37.13, the high at B was 43.14, and the low of price bar C was 38.42. Crunching the numbers said that the ratio of BC to BA was (43.14 – 38.42)/(43.14 – 37.13) or 78.5%. That was close to the 78.6% Fibonacci number, so the turn matched the identification guidelines (Table 2.1).

If the pattern worked as he hoped, the CD leg would equal or exceed the AB leg and make for a tasty profit.

The height of the AB move was 43.14 – 37.13 or 6.01. Added to the low at C (38.42) gave a target for turn D of 44.43.

“I doubled my position right there,” he said and poked the screen, leaving a fingerprint behind. The second buy was near C, and he set a target to sell both positions at 44.43. “I raised my stop, too, to a penny below C. Just in case…”

The stock took off in a straight‐line run up to D. The stock sold at the exact high at D, 44.43, cashing him out of the AB=CD trade and also out of the double bottom trade.

“Let's do lunch,” he said. “I'll let you buy.”