Beyond the Basics: Advanced Cup and Handle Variations for the Experienced Trader

The classic Cup and Handle is just the beginning. There are many variations of the pattern that can be just as profitable. This guide is for the experienced trader who wants to take their Cup and Handle trading to the next level.

Double Handles

A double handle is a variation where the stock forms two handles before breaking out. This is a sign of a very strong stock.

High Handles

A high handle is a handle that forms in the upper 1/3 of the cup. This is a sign of a very bullish stock.

Low Handles

A low handle is a handle that forms in the lower 1/2 of the cup. This is a sign of a weaker stock, but it can still be a profitable trade.

Entry Rules

Entry rules for these variations are the same as for the classic pattern. The breakout from the handle is the entry signal.

Exit Rules

Exit rules are also the same. A trailing stop-loss can be used to lock in profits.

Profit Targets

Profit targets are the same as for the classic pattern. The depth of the cup is added to the breakout point.

Stop Loss Placement

Stop loss placement is the same. The stop loss is placed below the low of the handle.

Position Sizing

Position sizing is the same. The 2% rule should be applied.

Risk Management

Risk management is the same. You should always know your risk per trade.

Trade Management

Trade management is the same. You should stick to your plan.

Psychology

The psychology of trading these variations is the same as for the classic pattern. You need to be patient and disciplined.