Alternative strategy for a double bottom situation
In this article we will look at what the “Alternative Strategy for a Double-Bottom Situation” is. The scenario, when aggressive traders can try to predict the formation of a double bottom picture, is a situation in which the W-shaped form has a pronounced character, and the reference point is separated from the “trough” especially far. In such cases, taking a position when the shares form a right-sided “trench” is sometimes quite justified.
If the price stays close to or directly under the left-sided “hollow” and the trading volume confirms the presence of a reverse, then aggressive traders may try to enter the position. The position can also be entered if the presence of the reverse is confirmed by signals from pictures of other individual days. The risk in this case is relatively small, while the potential benefit may be relatively large. If the stock price falls below its lowest level, you can be sure that your bidding is failing and you need to get out of the bid as quickly as possible.Otherwise, the position should be held until the stock price reaches the pivot point.
The scenario for the shares of Hewlett Packard, presented at 9.13, may not correspond to this strategy, since the “trough” is not very far from the reference point. However, this does not prevent us from using this diagram as an example to demonstrate this aggressive alternative strategy.
The launch trigger mechanism worked on October 10, when HPQ's stock price rose from $ 11.16 to $ 11.83. Pay attention to separately taken column of the bull orientation. If HPQ shares subsequently traded below $ 11.00, one could conclude that these trades failed, and leave this position.
Many other reverse paintings are published in technical analysis websites and journals, but the paintings described in several previous sections are, in our opinion, the most reliable.
Inexperienced traders always seek to find a certain “philosopher's stone”, i.e. such a picture or indicator that would allow them to perform profitable trading operations on a V-shaped picture.In practice, however, such V-shaped paintings are not so common. And when they still meet, you can bring a lot of arguments that show that this is not the most profitable option for you.
If you communicate with other traders, you will surely witness how they discuss with each other all kinds of “esoteric” pictures. These pictures are known to us, but we rarely use them in practice. The simple methods that we told you about in this chapter will allow you to trade stocks to your advantage. There is no need to look for something esoteric, when the same result can be achieved using much simpler methods.
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