How can a Double Bottom help you profit?

Sponsored Links Swing Trading, A Scientific Approach. Option Trading handbook.

Double bottoms are exactly that, two bottoms. It is used to help determine when a trend will change. Many experts have used it to get into a trade when the stock bottom is at it's lowest. Let us look at an example of this pattern, this stock was falling until it hit a support level at $2.50 making 1 bottom. Once it did it rose up a little only fall back down to $2.50 making a 2nd bottom.

After the 2nd bottom hit the stock bounced up. You could enter the trade on the bounce or be cautious and wait for the break-out of resistance before buying. In this case ressistance would be $2.75. If you were cautious you wouldn't get in at the exact bottom and this could lead to more winning trades.

Just think of the possibilities with this strategy. If you could spot a double bottom you could get in when the stock has reached it's lowest. When you know what to look for in the market you can be better prepaired to make a profit. Feel free to continue to search this site to find out more information.