Let's see how to trade the double bottom
The simple way to trade this pattern is to look for the neckline that is marked on the
chart below. Once the price breaks and closes above the neckline, you can then
enter the market with a buy order. Stop-loss is set just below the 2nd bottom
Now let’s look at the second method, this is my preferred and recommended way of trading a double bottom
Method 2
In this case, we wait for the price to trade above the neckline (broken resistance)
and then look to place a buy order on a retest of the neckline as support (broken
resistance becomes new support). The stop loss would go below the new support as shown below
I recommend the second method for entry because it ensures a favourable risk-reward which is an essential ingredient if you wish to succeed in this business over the long-term. Let’s compare the stop losses for both entries;
Looking at our chart above you can see how the Stop loss on the second method was cut from 185pips to only 43 pips. This means you risk less and make more profits since the target stays constant. This the main reason why I recommend this method of entry.
The simple way to trade this pattern is to look for the neckline that is marked on the
chart below. Once the price breaks and closes above the neckline, you can then
enter the market with a buy order. Stop-loss is set just below the 2nd bottom
Now let’s look at the second method, this is my preferred and recommended way of trading a double bottom
Method 2
In this case, we wait for the price to trade above the neckline (broken resistance)
and then look to place a buy order on a retest of the neckline as support (broken
resistance becomes new support). The stop loss would go below the new support as shown below
I recommend the second method for entry because it ensures a favourable risk-reward which is an essential ingredient if you wish to succeed in this business over the long-term. Let’s compare the stop losses for both entries;
Looking at our chart above you can see how the Stop loss on the second method was cut from 185pips to only 43 pips. This means you risk less and make more profits since the target stays constant. This the main reason why I recommend this method of entry.