HOW TO TRADE A - W - TYPE LOW
A - W - type low is simply a double bottom pattern.
It makes what looks like a W when it forms.Always be looking for a market low when it is coming
into a previous support level.A good indicator to use to help make this stand out
on the chart is the Bollinger Bands
LOOK AT THE MOMENTUM OSCILLATORS
Looking at the momentum ocsillator is
also helpful in spotting the low.On this chart the 14 day RSI is showing
a clear bullish divergence on the second low.Less momentum means the selling pressure
is not as great on this double bottom.
CANDLESTICK CHART HELPS TO SEE THIS LOW
The candlestick chart helps to make the W type low stand out.
Another chart you could look at would be a chart of closes only.
A close only chart will help us see things going on with the chart.
That we might not see on a regular chart.
THE DOUBLE BOTTOM IS THE SETUP ONLY
The W type double bottom is the setup only.
We still have to use one of our short term buy signals to get long.
Then if we would get a buy signal we still need to use a stop if wrong.
No matter how good a trade setup looks we can be wrongTRADING THRU SUPPORT - ANOTHER OPPORTUNITY
What if we get our buy signal and the market hits our stop.
#1 - Still look to take another buy signal
as sometimes it takes a couple trys to catch a low
#2 - If the market breaks thru support and starts trending lower
Start looking for short entry signals.Hey if this was easy everybody would be doing it. :-)
TO SUM IT UP
A double bottom - W type low - is a trading opportunity.
When ever a market is coming into a previous support level
It is a place to watch the market closely.Watch how it trades off the support for signs of a market turn.
We may have to try and take a couple buy signals to get long.
If the market trades thru support it is a shorting opportunity.ONE LAST THING
The market is not always going to make perfect double bottoms.
Alot of times it will make a double bottom at exactly the last low.
The second low can also come in a little lower than the first low.
===================================================================
4 SP500 4 StockOptions 4 Forex 4 Futures Software 4 StockTraders
4 CommodityOptions 4 ShortTermTrading 4 Futures 4 ForexPairs
===============================================================
Page Trading - FREE SP 500 Trial
The World's #1 SP Forecasting Service - Please Click Here !
=================================================================
10 Steps to a Successful Trade - Please Click Here !
Disclaimer - I am not a commodity trading advisor. The information on this site is for trading education only. There are no trading recommendations for any one individual made on this site and this information is paper trades for trading education. All trades are extemely risky and only risk capital should be used when trading.
U.S. Government Required Disclaimer - Commodity Futures Trading Commission Futures and Options trading has large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in the futures and options markets. Don't trade with money you can't afford to lose. This is neither a solicitation nor an offer to Buy/Sell futures or options. No representation is being made that any account will or is likely to achieve profits or losses similar to those discussed on this web site. The past performance of any trading system or methodology is not necessarily indicative of future results.
CFTC RULE 4.41 - HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, SINCE THE TRADES HAVE NOT BEEN EXECUTED, THE RESULTS MAY HAVE UNDER-OR-OVER COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFIT OR LOSSES SIMILAR TO THOSE SHOWN.