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Tom,
What distribution of moves as a
perecentage of the triangle you found? For example, is there any
pattern to the market making a 100% measured move, 200% measured move
etc? Have you done a distribution curve on this?
Thank You,
Norman
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----- Original Message -----
<DIV
style="BACKGROUND: #e4e4e4; FONT: 10pt arial; font-color: black">From:
tom bulkowski
To: <A
href="mailto:nwinski@xxxxxxxxxxxxxxx";
title=nwinski@xxxxxxxxxxxxxxx>nwinski@xxxxxxxxxxxxxxx
Sent: Wednesday, June 13, 2001 3:46
PM
Subject: Re: [RT] Symmetrical triangle
failures
Norman:
I look at that in my book. It's called the measure rule and it frequently
is the formation height projected upward or downward from the high or low. For
symmetrical triangles, up breakout, it works 79% of the time, down bkouts, 57%
of the time. That's for ST bottoms, which is when prices enter the triangle
from the top. For ST tops, where prices enter from the bottom, the results
are: 81% for up bkouts, 62% for down bkouts. I use the full triangle height in
the measure, that is, highest high minus lowest low in the formation.
I prefer the "absolute" measure as you describe it, but also know that STs
commonly appear near the halfway point in a move. Thus, you can often project
where the trend will end and coupled with support and resistance, you can be
quite accurate.Hope this explains things,
Tom
>From: "Norman Winski"
>To: ,
>Subject: Re: [RT] Symmetrical triangle failures
>Date: Wed, 13 Jun 2001 14:15:26 -0400
>
>Tom,
>
> If I understand you correctly, you are measuring these moves
in absolute terms, such as a percentage move for a particular stock? Given the
basic concept of the triangle, shouldn't you be measuring the performance
relative to the triangle? It is my experience that given the widest point of a
triangle, that the resulting move will tend to be a harmonic of that
measurement. For example,
>if a triangle at its maximum, $5 wide, the resulting move will
tend to be ..50, .618, 1.00, 1.618, 2.618 and so forth of the width of the
triangle. Anecdotally speaking, I would say that the 1.00 or a doubling of the
triangle is the most common. Have you taken a look at this? What say you?
>
>Thanks,
>
>Norman Winski
> ----- Original Message -----
> From: tom bulkowski
> To: realtraders@xxxxxxxxxxxxxxx
> Sent: Wednesday, June 13, 2001 12:09 PM
> Subject: [RT] Symmetrical triangle failures
>
>
> I have been asked to comment about the statistics in my book,
Encyclopedia of Chart Patterns, specifically, the failure rate for symmetrical
triangles. I separated STs into tops and bottoms, thinking there might be a
performance difference. There is, but probably not statistically different.
For triangle tops, upward breakouts, the failure rates are as follows (from
page 568 plus column results from Figure 41.6 on page 569):
>
>
>
> Benchmark, failure rate
>
> 5%, 5%
>
> 10%, 13%
>
> 20%, 40%
>
> 30%, 54%
>
> 40%, 67%
>
>
>
> For example, 40% (the failure rate) of the symmetrical
triangles failed to climb more than 20% (the benchmark). The results use 162
patterns in 500 stocks from mid 1991 to mid 1996 measuring from the low price
on the breakout day to the highest daily high before a 20% price decline,
measured high to low.
>
>
>
> More recent research but preliminary results on 354 patterns
gives the following:
>
> 5%, 5%
>
> 10%, 15%
>
> 20%, 39%
>
> 30%, 54%
>
> 40%, not available
>
> The results are similar despite 2x more samples and also for
tops and bottoms combined, not just ST tops.
>
>
>
> Another way to measure the failure rate is what's called the
Horizon Failure Rate, but David Ipperciel.
>
> 1 wk: 9%
>
> 2 wks: 17%
>
> 3 wks: 19%
>
> 1 mos: 24%
>
> 2 mos: 31%
>
> This looks at the price rise over time. For example, at the
end of 3 weeks, 19% of the stocks had closing prices below the breakout price.
>
>
>
> As to personal information, I have been trading stocks for
over 20 years, chart patterns for about half that. My first PUBLISHED trade
was in the April 1996 issue of Stocks & Commodities mag involving, you
guessed it, a symmetrical triangle. I made 27% in 4 wks. Not bad, but down
from 40% because I delayed a trading day to push profits into a new year.
Please direct questions to tbul@xxxxxxxxxxx, but I only get to the internet
once a month.
>
> -- Thomas Bulkowski
>
>
>
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