book

Mastering Financial Pattern Recognition

by Sofien Kaabar

October 2022

Beginner to intermediate

288 pages

7h 2m

English

O'Reilly Media, Inc.

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Why This Book?Target AudienceConventions Used in This BookUsing Code ExamplesO’Reilly Online LearningHow to Contact UsAcknowledgments
Installing the EnvironmentCreating the Importing Algorithm Putting It All TogetherSummary
Coding the Primal Functions The Function to Add Columns to an ArrayThe Function to Delete Columns from an ArrayThe Function to Add Rows to an ArrayThe Function to Remove Rows from an ArrayThe Function to Round NumbersCoding SignalsCreating the Signal ChartsCoding Performance Evaluation FunctionsThe Hit RatioThe Rate of ReturnThe Profit FactorThe Risk-Reward RatioThe Number of TradesCreating a Performance Evaluation FunctionA Hypothetical Example: Appraising Performance
Charting AnalysisIndicator AnalysisMoving AveragesThe Relative Strength IndexPattern RecognitionCommon Pitfalls of Technical AnalysisWanting to Get Rich QuicklyForcing the PatternsHindsight Bias, the Dream SmasherAssuming That Past Events Have the Same Future OutcomeMaking Things More Complicated Than They Need to BeTechnical Analysis Best PracticesHarness the Power of Different Time FramesUse More Than One Strategy or IndicatorChoose the Right Type of Strategy for Current Market ConditionsDon’t Underestimate Default Parameters
The Marubozu PatternThe Three Candles PatternThe Tasuki PatternThe Three Methods PatternThe Hikkake Pattern
The Quintuplets PatternThe Double Trouble PatternThe Bottle PatternThe Slingshot PatternThe H Pattern
The Doji PatternThe Dragonfly DojiThe Gravestone DojiThe Flat DojiThe Double DojiThe Tri Star DojiThe Harami PatternThe On Neck PatternThe Tweezers PatternThe Stick Sandwich PatternThe Hammer PatternThe Star PatternThe Piercing PatternThe Engulfing PatternThe Abandoned Baby PatternThe Spinning Top PatternThe Inside Up/Down PatternThe Tower Pattern
The Doppelgänger PatternThe Blockade PatternThe Euphoria PatternThe Barrier PatternThe Mirror PatternThe Shrinking Pattern
Heikin-Ashi SystemDetecting the Doji PatternDetecting the Tasuki PatternDetecting the Euphoria PatternDetecting the Double Trouble PatternK’s Candlesticks SystemDetecting the Doji PatternDetecting the Tasuki PatternDetecting the Euphoria PatternDetecting the Double Trouble Pattern
The Symmetrical Exit TechniqueThe Fixed Holding Period Exit TechniqueThe Variable Holding Period Exit TechniqueThe Hybrid Exit TechniquePattern Invalidation

Combining the Double Trouble Pattern with the RSICombining the Three Candles Pattern with Moving AveragesCombining the Bottle Pattern with the Stochastic OscillatorCombining the Marubozu Pattern with K’s Volatility BandsCombining the H Pattern with the Trend Intensity Index
Combining the Doji Pattern with the RSICombining the Engulfing Pattern with Bollinger BandsCombining the Piercing Pattern with the Stochastic OscillatorCombining the Euphoria Pattern with K’s EnvelopesCombining the Barrier Pattern with the RSI-ATR
Basics of Risk ManagementStops and TargetsTrailing StopsPosition SizingEconomic CalendarBehavioral Finance: The Power of BiasesCognitive BiasesEmotional BiasesTrading Framework

Overview

Candlesticks have become a key component of platforms and charting programs for financial trading. With these charts, traders can learn underlying patterns for interpreting price action history and forecasts. This A-Z guide shows portfolio managers, quants, strategists, and analysts how to use Python to recognize, scan, trade, and back-test the profitability of candlestick patterns.

Financial author, trading consultant, and institutional market strategist Sofien Kaabar shows you how to create a candlestick scanner and indicator so you can compare the profitability of these patterns. With this hands-on book, you'll also explore a new type of charting system similar to candlesticks, as well as new patterns that have never been presented before.

With this book, you will:

Create and understand the conditions required for classic and modern candlestick patterns
Learn the market psychology behind them
Use a framework to learn how back-testing trading strategies are conducted
Explore different charting systems and understand their limitations
Import OHLC historical FX data in Python in different time frames
Use algorithms to scan for and reproduce patterns
Learn a pattern's potential by evaluating its profitability and predictability