Trendline and Stock Pattern Scanner Software

Posted on June 10, 2008
Filed Under Trading Software |

Many traders are discretionary traders in that they scan stock charts looking for trade setups and then put on a trade if they feel there is a good enough risk to reward ratio.This type of stock trading is more subjective and takes a lot more skill than system trading and those that are successful at it have lots of practice at identifying profitable chart patterns with many trades under their belt.

I have read countless books on trendlines and chart patterns and have come to the conclusion that trend lines, support and resistance lines and various chart patterns do exist and repeat themselves over and over again allowing a savvy “chart reader” to make profitable trades.

One of the downsides to this type of trading is that the eager trader looking for action often sees patterns on a chart that just aren’t there because they want to get in the game instead of waiting on the sidelines.

Not taking a trade is just as valid as taking a trade from a professional trader’s perspective. A wise trader knows when to pass on a trade and stand aside. They know that they do not have to be in the market every day.

One of the main problems is trying to quantify just what makes up a chart pattern. While it might be relatively easy for the human mind to quickly determine if a triple bottom has formed on a chart it is extremely difficult to create an algorithm to mimic what our brains can do so effortlessly.

There are a few software programs available that do a pretty good job of automatically identifying trendlines and patterns like OmniTrader’s Chart Pattern Recognition Module and another that I would like to talk about.

About four years ago I stumbled on a program called RAMP that did basic trend line and support and resistance scanning. I trialed the product and while I thought it was pretty good I did not buy it because it did not fit into my trading plans.

Every now and then I get an email from Andy the author describing new features and capabilities so I thought I would take another look at RAMP to see what’s changed.

My impressions of RAMP have not changed. In fact, I think that a great program has gotten better and more powerful over the years. First, this shows that Andy is dedicated to making an excellent product and second it shows that he recognizes the need to keep adding features to the product in order to stay on the cutting edge.

Ramp will quickly scan from a wide variety of data sources and identify support and resistance lines, trendline breaks, Fibonacci retracements (cool) and some chart patterns.

It is fast and worked flawlessly while I was testing it and Andy was very responsive to any questions I had. While I do not own RAMP it is only because of my style of trading and not because it isn’t a great technical analysis program, it is.

I have never run across any mention of RAMP during my travels on the web that I can remember so I thought I would write a little post about it to raise awareness about a neat program that would benefit many traders.

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