Technical Pattern Recognition for Trading in Python.

This pattern seeks to find short-term trend reversals; therefore, it can be seen as a predictor of small corrections and consolidations. Below is an example on a candlestick chart of the TD Differential pattern. Now, let us back-test this strategy all while respecting a risk management system that uses the ATR to place objective stop and profit orders. I have found that by using a stop of 4x the ATR and a target of 1x the ATR, the algorithm is optimized for the profit it generates (be that positive or negative). It is clear that this is a clear violation of the basic risk-reward ratio rule, however, remember that this is a systematic strategy that seeks to maximize the hit ratio on the expense of the risk-reward ratio.