Quick Start With PatternDNA
Video Tutorial for Pattern DNA
Getting started with Zignals PatternDNA
PatternDNA Setup
The PatternDNA application is split into 4 components; main chart displaying matching
patterns and where new patterns can be selected; a summary display of the selected
or created pattern; performance bars for short term pattern returns and trade returns
as governed by use of stop and targets.
Select your own trading pattern from the Open menu;
A-E represent bullish patterns,
F-J for bearish patterns and X-Z for neutral patterns
To select a pattern from the chart, left click and drag on the chart to select up
to 10 trading days. A chart can also be created from the Open menu and profitable
patterns saved.
Select a pattern from the chart
For every Pattern it's possible to select the Match Level. Strong matches require
an exact match to the Pattern. Weaker matches allow for gap days between character
sequence; this may offer more opportunities even if Returns are slightly less (but
net return may be higher).
Short term % win performance over 1-, 2-, and 5-day for the list of
stocks selected
from the drawdown. Performance is measured
from the last closing price of the pattern
Pattern Performance is measured using two metrics: Short Term Performance and Long
Term Performance. Both timeframes utilise the list of stocks selected from the dropdown;
this list can be customized to your own stock list.
Short Term performance looks at 1-, 2- and 5-day Returns. Pattern performance is
measured from the closing price of the last day of the pattern, to the close one,
two or five days later, using the list of stocks available in the drop-down menu.
You can select or create your own stocklists by clicking the note icon to the right
of the stocklist.
Trade performance using Pattern in combination with Target & Stops.
Pattern performance is compared to Buy & Hold for the look back period
Long term performance looks for Pattern performance in combination with Targets
and Stops. Default performance uses an initial Target of 15% and Stop of 10%, before
a trailing stop kicks in at 10% targets and 5% trailing stops for an ultimate Profit
Target of 25%. Clicking on the note icon to the right of the Target & Stops menu
will allow you create and configure your personalised Targets and Stop.
The Five performance variables are Risk, Win%, Average Profit, Average Loss and
Return. Risk is defined as Drawdown. In the case of Buy & Hold an assumption is
made a position is taken every trading day of the lookback period and held to the
last day.
Risk is categorized by Very High (above 20% Drawdown), High (15-19.99% Drawdown),
Moderate (10-14.99% Drawdown), Low (5-9.99% Drawdown) to Very Low (less than 5%
Drawdown).
Win % represents the number of profitable trades, based on the Target & Stops, for
the number of Patterns found. In the case of Buy & Hold it reflects percentage profitable
days from time of entry to the last day of the look back period, assuming a position
is taken on each day of the look-back period.
Set your Targets & Stops for your selected Pattern
Average Profit is the return for profitable Patterns, Average Loss is the return
for losing Patterns.
Return for Buy & Hold is an average for all Returns based on a daily Entry signal.
Return for Pattern & Stop is a cumulative Return for the Pattern based on the assumption
each trade is taken and Returns rolled into the next Pattern (over the look-back
period).
Performance Return data will update when the list of stocks, selected Pattern, or
Target & Stops are changed.
Target & Stops can be adjusted by clicking the Note icon to the right of the Target
& Stops dropdown.
To create your own Targets & Stop first create [New] then adjust the sliders or
type in the Targets and Stops you would like to use. Note, any changes made will
automatically save and update the selected Targets & Stops strategy.
Viewing all available Patterns in your stock list
To view all of the Patterns for your list of stocks, click [List Results]. This
will switch the main chart view into a scrollable list view of charts for each of
your stocks, showing the matching Patterns in those stocks; red Patterns are losing
patterns, green Patterns are profitable ones.
Individual Pattern performance available by rolling over the Pattern
in the main chart menu
In the main chart view, hovering over an individual Pattern will display the return
for the Pattern.
Finding Patterns in the S&P 500 using the
Market Scan feature
When you have found a successful Pattern next it's necessary to search the market
for matching Patterns. The [Market Scan] will go through the last 10 trading days
for the S&P 500 and find stocks which have Patterns matching those of your selection.
The number of stocks returned will differ depending on the selected Match Level
and the number of characters in the Pattern.