Welcome to the
ATmatix, a blog dedicated to our technical analysis tool – an automatic price chart patterns detector. Here, we are going to present the features of our application and publish own thoughts, ideas and research results concerning the
Warsaw Stock Exchange (WSE), as well as other, hopefully interesting and helpful information about technical analysis.
A few words to begin with the application itself – we point at automatic detection of price chart patterns, such as the most popular ones: double bottoms/tops, head and shoulders bottoms/tops, triangles, wedges and many more, for WSE-listed stocks.
Of course, you may find them yourself, but browsing through tens or even hundreds of charts everyday is rather tiring – and what is the most important – it takes your precious time that can be spent on other, most likely more interesting, activities.
This is the reason why we decided to create an application that will make this process automatic and will even inform the users not only about the patterns detection but also about prices approaching a breakout level. It determines the price targets after breakouts, estimate their probability (oh yes, we have the historical and statistical data that allows it), inform you about the volume trend during pattern creation and during breakouts – and most importantly, it sends you notifications of the most important pattern events.
MotivationThe tool of technical analysis is undoubtedly really helpful while making decisions concerning purchasing or selling stocks and other financial instruments. Technical indicators, oscillators and candlestick charts are probably the issues most familiar to most traders. Many technical analysis applications and web portals calculate and make such data available for various world-wide markets.
Of course, many people also use fundamental analysis of a given stock and probably take into account various factors, such as the current market situation or even current economic and political issues. You can find this information (financial results and indicators, analyses, recommendations) on many web pages.
However, we focused on a matter that seems to be slightly omitted on the Polish trading market. While detecting, for example, a candlestick pattern (consisting typically of one or more candles of a specific price scheme) or computing the RSI or MACD indicators does not represent a considerable technical challenge.
What requires much more effort is recognizing price patterns such as: flags, triangles, wedges and others – and this is not just purely technological effort. In my opinion, the problem lies in almost no formalization of this methodology. Everyone knows how, more or less, should a double bottom or a triangle look like, but no one has tried to comprise them with, for instance, a formal mathematical definition, so as to using it would give you always the same result. We had to find some of the answers ourselves. Because of the nature of automatic algorithms, sometimes we can’t really recognize some of the patterns at first glance; in other cases, the ones that we think are matching the template don’t meet the formal definition, thus have to be rejected (for instance, the price goes beyond the pattern slightly too far, or the rise between the bottom and the top of the pattern is too small etc. - with the manual chart examination such details may be easily missed). Therefore, the results of the algorithms’ output don’t have to be acceptable to everyone, but some assumptions must have been made.
A good clue and also an inspiration for creating ATmatix, were the works of an American trader Thomas Bulkowski. His website and books are a source of information on technical analysis patterns in an organized and methodological way. Of course, not all the information could be verified and you don’t have to agree with all of them. What is more, they may be inadequate for the reality of the Polish stock market, but in my opinion, it is the best database of technical analysis knowledge, so far.
Undoubtedly, there are various plug-ins for technical analysis programs or other tools searching for patterns in the charts, but not all of them are free of charge and not all of them will give you information, which are the most valuable for traders. I’m sure you would like to know, for example:
- What is the probability of upward/downward breakout in a given pattern?
- How high (or how low) can the price go after breakout?
- Which patterns are the most/the less effective regarding the likelihood of meeting the price target after breakout?
Clearly, no one is able to foresee the future, but having access to some historical data concerning the stock price behavior in the past may rise the chance of good trading setup recognition and making the right conclusions – and this is what investing is all about.
This is the moment to inform that any information published on this blog and the ATmatix service are not investment advice, and users are alone responsible for their decisions. We are not going to create an illusion of owning a crystal ball, which can tell “sell this now, buy that then”. However, we try to inform about the way our application works in the clear and accessible way.
I encourage you to give ATmatix a try.
Founder at ATmatix.pl