Metastock Chart Pattern Recognition

I've just received the Metastock Add-in by John Murphy of TA of Futures Markets Fame.

There are two explorations which identify head and shoulders tops/bottoms, double/triple tops/bottoms and ascending/descending/symmetrical triangles.

The small booklet that accompanies the software is refreshingly honest about how difficult it is to define and identify patterns and there are three tables of results for 3 selected years (with varying market conditions) that give an average hit rate of around 50%.

This can be improved by the user by judicious selection of patterns.

For current market there is one signal.

SMWH - double top breakout

My first thoughts on the software are positive.

I too have used John Murphy's CPR in the past. On the odd occasions that it does identify chart patterns, they are certainly definitive patterns. One small qualm I have though is that I do truly believe that it is near impossible to mathematically quantify all permutations of a group of chart patterns. With all the variations in time horizon, depth and width, I prefer to keep the process of identifying chart patterns manual. I do like to automate my filtering for breakout patterns (or other dpending on current market charachter). From that point, after having a short-list of possible candidates, I will visually assess the chart pattern situation (as the chart pattern will generally dictate my entry and exit strategies).

Irrespective, it's always good to have another tool in your arsenal, and like they say, if it leads to just one good trade, then it's paid itself off!


SMWH was on my watch list from the weekend as a possble short for the competition.Looks like everything is topsy-turvy now with the Feds rate cut today.Closed up 6 today on good volume so could be a turnaround against TA. There's going to be a lot of this tomorrow and Friday.

with a few weeks experience of the CPR add-in I have to agree that it lets a lot of patterns thorugh the net.
However do feel that my TA skills have benefited from using it over the last few weeks.

I have already paid for the package out of my profits and look forward to using chart patterns more regularly. They are simply magic.