Computer based trading system and methodology utilizing supply and demand analysis
The system and methodology of the present invention operate to generate trading signals based on identifying various trading patterns referred to as setups. When these setups are detected, and depending on the specific setup detected, a supply zone or demand zone is next generated which indicates the price range for the instrument in which a sell or buy trade signal should be issued. When the underlying instrument trades within this range, and under other appropriate conditions, a trading signal is issued which may be sent directly to the appropriate exchange for automatic execution and/or sent to a graphical user interface or other display which alerts a trader to the proposed trade.
1. A computer based trading system comprising:
a market data receiving and processing engine which receives pricing data associated with at least one tradable instrument;
at least one trade setup engine which identifies at least one predefined pricing pattern based upon said pricing data associated with said at least one tradable instrument;
at least one pricing zone generator which, upon indication from said at least one trade setup engine that a predefined pricing pattern has been identified, generates a pricing zone defined by proximal and distal price points; and
a trade signal generator which signals a trade recommendation following said generation of said pricing zone.
2. The trading system of claim 1 wherein said at least one trade setup engine comprises a buy setup engine.
3. The trading system of claim 1 wherein said at least one trade setup engine comprises a sell setup engine.
4. The trading system of claim 2 wherein said pricing zone generator generates a demand zone.
5. The trading system of claim 3 wherein said pricing zone generator generates a supply zone.
6. The trading system of claim 1 wherein said predefined pricing pattern comprises a drop-base-rally setup.
7. The trading system of claim 1 wherein said predefined pricing pattern comprises a rally-base-drop setup.
8. The trading system of claim 4 wherein said distal price point comprises the price point represented by the bottom of a basing candle wick.
9. The trading system of claim 5 wherein said distal price point comprises the price point represented by the top of a basing candle wick.
10. The trading system of claim 4 wherein said proximal price point comprises the price point at the top of the highest basing candle body.
11. The trading system of claim 5 wherein said proximal price point comprises the price point at the bottom of the lowest basing candle body.
12. The trading system of claim 1 wherein said trade signal generator signals a trade execution rather than a trade recommendation.
13. A method for generating trading signals comprising the steps of:
Receiving, via a trading system implemented on a computing platform, market data associated with at least one tradable instrument;
identifying, via the trading system, at least one predefined pricing pattern associated with said market data;
based upon the identification of said predefined pricing pattern, generating via the trading system a pricing zone defined by a proximal price point and a distal pricing point; and
generating, via the trading system, a trading signal indicating a recommended trade.
14. The method of claim 13 further comprising the step of communicating a trade execution request to a brokerage platform.
15. The method of claim 13 further comprising the step of communicating a trade execution request to a market exchange.
16. The method of claim 13 wherein said pricing zone comprises a demand zone.
17. The method of claim 13 wherein said pricing zone comprises a supply zone.
18. The method of claim 13 wherein said predefined pricing pattern comprises a drop-base-rally setup.
19. The method of claim 13 wherein said predefined pricing pattern comprises a rally-base-drop setup.
20. The method of claim 16 wherein said distal price point comprises the price point represented by the bottom of a basing candle wick.
21. The method of claim 17 wherein said distal price point comprises the price point represented by the top of a basing candle wick.
22. The trading system of claim 16 wherein said proximal price point comprises the price point at the top of the highest basing candle body.
23. The trading system of claim 17 wherein said proximal price point comprises the price point at the bottom of the lowest basing candle body.