What Is the Pattern Lab?

In this article, we would like to introduce you and describe one of our currently available products, the Pattern Lab application. This application is the best choice for advanced traders who wants to play the so-called “unfair game”.

Pattern Lab is a straightforward application made to help you trade candlestick patterns. Thanks to its backtesting feature, it is used for finding candlestick pattern trading strategies giving you a statistical advantage over the rest of the market.

Candlestick patterns are unique formations created by movements of the price on candlestick charts. There are many different types of these formations that are universally recognized. Traders use these patterns as reliable signals for entering trades. Some patterns predict that the price of an asset will go up and others predict that the price will go down. There are also patterns predicting both the downward and upward price movements depending on the current market trend.

The big difference between Pattern Lab and other tools used for technical analysis is its backtesting feature. Backtesting allows you to test your trading strategy on historical data. Historical data cannot always predict future price movements, but they are still one of the best indicators.

In the application

In the first step, you choose the combination of the asset you want to trade, the pattern you consider reliable, and the timeframe on which this pattern appears. After a quick search, you find how many of these patterns appeared during the manually adjustable time period. You will also find how many bullish and/or bearish signals the pattern produced on the chart.

Now comes the backtesting part. Enter your initial capital and the amount of money you want to risk per each trade. You can search for your ideal strategy by adjusting your exit strategy and the direction of your trades. The take profit and stop loss orders define your exit strategy. You can set these orders as a percentage or dollar amount. The direction of your trades can be set as buy, sell, or both. This defines if you take long, short positions or one as well as the other. Each of these parameters will affect the final result. You can try out many different combinations of assets, patterns, timeframes, as well as exit strategies, and trade directions.

Whenever you find a profitable strategy, you can click on the bell icon next to your backtesting result to get notified via e-mail whenever your chosen pattern occurs. The obvious advantage is that you do not have to constantly monitor the price movements and still have enough time to place your order on the exchange. This feature is also useful for traders who use candlestick patterns as only one of many trading signals.

Conclusion

Anyone interested in trading candlestick patterns should take a look at the Pattern Lab. It’s free to use for everyone and allows you to find profitable trading strategies via backtesting on historical data. Another bonus is the notification e-mail you get whenever your chosen candlestick pattern appears on the chart in real-time.