System and method for chart pattern recognition and analysis in an electronic trading environment

• US 7,685,042 B1
• Filed: 05/03/2006
• Issued: 03/23/2010
• Est. Priority Date: 06/30/2004
• Status: Expired due to Fees

• Current Assignee: Trading Technologies International, Inc.
• Original Assignee: Trading Technologies International, Inc.
• Inventors: Monroe, Charles, Tanpoco, Alvin F.
• Primary Examiner(s): Abdi; Kambiz
• Assistant Examiner(s): Fields; Benjamin S
• Application Number:
  US11/417,933
• Time in Patent Office: 1,420 Days
• Field of Search: 705/35
• US Class Current: 705/35
• CPC Class Codes: G06Q 20/10 specially adapted for electronic funds transfer [EFT] systems; specially adapted for home banking systems
• CPC Class Codes: G06Q 40/00 Finance; Insurance; Tax strategies; Processing of corporate or income taxes
• CPC Class Codes: G06Q 40/03 Credit; Loans; Processing thereof
• CPC Class Codes: G06Q 40/04 Trading; Exchange, e.g. stocks, commodities, derivatives or currency exchange
• CPC Class Codes: G06Q 40/06 Asset management; Financial planning or analysis

Abstract

A system and method are provided for chart pattern recognition and analysis. In one embodiment, a graphical interface is provided to enable a trader to select a portion of a chart to be used in the chart pattern analysis. The pattern of the selected portion of the chart could then be used to find one or more similar chart patterns in a user-defined timeframe, such as any future time period or a time period in the past. When a reoccurring chart pattern is found in any future time period, an alert signal can be generated to alert a user of a possibility of the chart pattern reoccurrence. Alternatively, chart pattern matches can be found in a time period in the past, and a set of studies can be applied to the found matches to generate a set of reoccurring indicator values. The reoccurring indicator values can be used in combination with the chart pattern to detect any similar chart patterns in the future.

Claims

1. A method for market pattern recognition in an electronic trading environment, the method comprising:

displaying a chart representing market data related to a tradeable object being traded at an electronic exchange via an output associated with a trading device;

detecting an order being entered by a trader to buy or sell the tradeable object via the trading device;

responsive to the order being entered, automatically marking the chart to define a start of a marked portion of the chart to be analyzed via the trading device;

responsive to detecting a fill related to the order, marking the chart to define an end of the marked portion of the chart to be analyzed via the trading device;

searching for at least one chart pattern match similar to the marked portion of the chart using the market data displayed on the chart via the trading device;

applying a chart pattern recognition analysis via the trading device on the at least one chart pattern match to determine at least one reoccurring chart pattern indicator that characterizes the marked portion of the chart and the at least one chart pattern match; and

storing the at least one chart pattern match and the at least one reoccurring chart pattern indicator via the trading device.

2. The method of claim 1, further comprising:

receiving market data from the electronic exchange; and

dynamically updating the chart based on the received market data.

3. The method of claim 1, wherein displaying a chart representing market data comprises displaying a chart representing quantity data related to the tradeable object.

4. The method of claim 1, wherein displaying a chart representing market data comprises displaying a chart representing price data related to the tradeable object.

5. The method of claim 1, wherein searching for at least one chart pattern match comprises searching for at least one historical pattern match.

6. The method of claim 1, wherein searching for at least one chart pattern match comprises searching for at least one future pattern match.

7. The method of claim 1, further comprising:

displaying the at least one chart pattern match; and

receiving a user input to select which of the at least one chart pattern match is used in the chart pattern recognition analysis.

8. The method of claim 1, wherein the chart pattern recognition analysis comprises determining a plurality of reoccurring chart pattern indicators characterizing the at least one chart pattern match.

9. The method of claim 1, wherein applying the chart pattern recognition analysis on the at least one chart pattern match to determine at least one reoccurring chart pattern indicator comprises determining at least one reoccurring technical indicator value including any of a rate of return, a relative strength indicator, an average true range, a standard deviation and combinations thereof.

10. The method of claim 1, wherein the chart pattern recognition analysis is user-configurable.

11. The method of claim 1, further comprising:

using the at least one chart pattern match and the at least one reoccurring chart pattern indicator to find a similar chart pattern in future market data that is being charted.

12. The method of claim 11, further comprising:

generating an alert upon detecting the similar chart pattern.

13. The method of claim 12, wherein the alert comprises a visual alert.

14. The method of claim 12, wherein the alert comprises an audio alert.

15. The method of claim 1, wherein detecting a fill related to the order comprises detecting a partial fill related to the order.

16. A computer readable medium having stored therein program instructions which when executed by a processor cause the processor to execute a method for market pattern recognition and analysis in an electronic trading environment, the method comprising:

displaying a chart representing market data related to a tradeable object being traded at an electronic exchange via an output associated with the processor;

detecting an order being entered by a trader to buy or sell the tradeable object via the processor;

responsive to the order being entered, automatically marking the chart to define a start of a marked portion of the chart to be analyzed via the processor;

responsive to detecting a fill related to the order, marking the chart to define an end of the marked portion of the chart to be analyzed via the processor;

searching for at least one chart pattern match similar to the marked portion of the chart using the market data displayed on the chart via the processor;

applying a chart pattern recognition analysis via the processor on the at least one chart pattern match to determine at least one reoccurring chart pattern indicator that characterizes the marked portion of the chart and the at least one chart pattern match; and

storing the at least one chart pattern match and the at least one reoccurring chart pattern indicator via the processor.

17. The computer readable medium of claim 16, the method further comprising:

receiving market data from the electronic exchange; and

dynamically updating the chart based on the received market data.

18. The computer readable medium of claim 16, wherein the chart pattern recognition analysis comprises a technical study.

19. The computer readable medium of claim 18, wherein the technical study comprises a technical indicator, and wherein applying the chart pattern recognition analysis to determine at least one reoccurring chart pattern indicator comprises determining at least one reoccurring technical indicator value based on the at least one chart pattern match.

20. The computer readable medium of claim 16, wherein the chart pattern recognition analysis comprises at least one user-configurable study.

21. The computer readable medium of claim 16, the method further comprising:

using the at least one chart pattern match and the at least one reoccurring chart pattern indicator to find a similar chart pattern in future market data that is being charted.