This is a trading strategy that can often give the trader a good risk to reward ratio. It can also have a high winning rate.
For those who do not know what a bottoming tail is, you can refer to the article bottoming tail.
A bottoming tail is a bullish reversal signal. So when that happens we want to buy the stock if it trades above the bottoming tail.
But with a double bottoming tail, we wait for the presence of two bottoming tails.
In the chart above, we can see how AJG forms two bottoming tail at the rising 20 MA. It resulted in a rapid run up.
Once you are in a profitable territory you should raise your stop loss to breakeven when you reach a 1:1 profit loss ratio. This means that if you risk $100 for the trade and are now making $100, you should raise your stop loss to breakeven.
Take 1/3 to 1/2 of the profits off the table when you reach a 1:1 profit loss ratio.
Ride the other 1/3 or 1/2 half up.
The setup works better if you see the double bottoming tail happening at significant technical areas such as the 20 MA, 50 MA or 200 MA or when your technical indicators flashes a buy signal.
If you are more resourceful you can also take a look at lower timeframes to find confirmation.
For example, the chart above shows the 60 min chart of AJG. Here we can see that it broke above a 60 min downtrend line. It also formed a double bottom and was finding support at the 60 min 200 MA. The stochastics was also oversold at the moment.
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