trading money rules by Divyanshu Verma

 

Height and width combinations. 

The best performance comes from the short and narrow combination for both bull and bear markets. Avoid tall and narrow ones in a bull market and short and wide triple bottoms in a bear market. They underperform.

Table 50.7 shows volume statistics for triple bottoms.

Volume trend. The results are close, but in a bull market, triple bottoms with a rising price trend tend to outperform. In a bear market, the results swap, with falling volume showing the better performance. Volume shapes. In a bull market, triple bottoms with dome-shaped vol

ume perform significantly better than the other shapes. In a bear market, triple

bottoms with U-shaped volume do well. Breakout volume. With triple bottoms, it seems that patterns in bull

markets act one way and in bear markets, they work the other way. Triple bot

toms with light breakout volume do well in a bull market, but heavy breakout

volume works well in a bear market.

Average rise. I computed the 5-day average volume surrounding the sec ond and third bottoms and then mapped performance. I found that when vol ume on the last bottom was below the center bottom, performance improved in a bull market but deteriorated in a bear market.

Table 50.8 shows miscellaneous statistics. I looked at the price of the lowest low in the middle (bottom 2) and last (bottom 3) valleys in the triple bottom. The best performance in a bull market (43% rise) came when the last bottom had a higher price than the middle bottom. In a bear market, that same combination resulted in the worst performance (21%).