FAQ

FAQ

Here are some commonly asked questions and answers about PatternCast

If you have a question that’s not covered below, please email PatternCast@gmail.com and we are happy to help.
Question: If I take the 2-week trial for $29 and decide the service is not for me, how do I cancel?
Answer: We believe PatternCast is a tremendous value, however if you decide it’s not for you, simply cancel the billing at PayPal or email us and we will cancel it for you. There’s no obligation and you can cancel at any time.
Question: Do you offer refunds?
Answer: No. Simply cancel at any time and you will not be billed subsequently. Your membership will continue up to the following rebill date.
Question: Does PatternCast use chart patterns and technical analysis to determine which direction the market is most likely to go the following day?
Answer: No. PatternCast does not use chart price patterns.
Question: Does PatternCast just give signals for SPY?
Answer: Yes. PatternCast was originally developed to provide “next session” guidance on SPY exclusively. However our recent testing indicated that PatternCast also works great with the price of oil. So we have added oil to the Signals for members that trade oil.
Question: Do I have to trade SPY to use PatternCast?
Answer: No. You can trade whatever instrument you prefer using the SPY guidance from PatternCast. Many of our members trade ES Futures using the Signals.
Question: What do I get with the PatternCast service?
Answer: You get a nightly email that provides the results from the “scan” and additional insight on how we interpret the information. You also get access to the Discord “chat room” if you wish to see how others are trading the Signals. The Discord room is “strictly business” and there is no discussion of any topics not related to PatternCast and the Signals.
Question: How was PatternCast developed?
Answer: Let me say this about how we got here. I know that a lot of people, when you hear about these gee-whiz black box systems, you hear that people spent a lot of time and energy creating it. We spent in real dollars – nearly a quarter million dollars developing PatternCast over the years. That was actual dollars in development costs, not sweat equity, but real money and programming to get us to this point. PatternCast been in development for almost 10 years and it’s something which we didn’t even go public with until we had six or seven years of testing behind us. So I just want people to understand that what we’re talking about is not just a couple of guys and a spreadsheet. We have put more money into this project than most people put into buying a house. I wanted to find a way to get an edge and everything I ever tried previously failed. I mean, all of my technical analysis and tea leaf reading and all the CNBC talking heads over the years – I’d follow it all and then over time my trading success just reverted back to the mean. I’d make money then lose money, make money then lose money. And I just did not find a way to use my own intuition to get a consistent edge. And it’s kind of embarrassing to say this. I tell people this all the time – if you have an intuition and you’re consistently making money trading – Fantastic. That’s great. I just didn’t have that. So I decided to start looking at things from a quant perspective. And the more I analyzed the market, the more I realized that there were “non-technical” patterns and the more we dug deeper, we found that there were patterns upon patterns upon layers of patterns. PatternCast came from losing lots of money and admitting I didn’t know what I was doing. And then developing algorithms to point me in the right direction.
Question: What makes PatternCast different than anything else out there?
Answer: Well, nowadays you’ve got a lot of people that are using all sorts of diverse and (what they think are) sophisticated technical analysis and indicators. There are order flow traders and market profile traders – and traders using classic technical analysis and standard indicators. And, then there are others that use historical analysis to try and figure out what the market’s most likely to do. But the most fascinating thing about PatternCast is that it’s not, I mean, it’s literally not using any of that – which sets it apart from anything most traders have seen. And I want to point something out. All those different technical analysis tools that people use and most traders that use them – They all end up reverting back to the mean too. They say something like 95% of day traders lose money. So I’m gonna share a little secret here. One thing that we’ve found, is that whatever system you’ve got, you have to test that system against itself in multiple scenarios. And I know some people might not understand that. And again, I don’t want to get into a long drawn-out explanation of all of our algorithms, but imagine that someone came to you and said “Listen, I think using stochastics is a great way to get buy and sell signals”. Well, it may be, but the way you’re using stochastics over a short period of time produces a certain set of results. At PatternCast we test our algorithms each evening using 120 different scenarios. So if we have a pattern, we’ll call it pattern ABC 123, it is that pattern will then get placed in 120 different scenarios to then test the results of each instance over the last 30 years. And it’s in that amalgamation that we find our answer for what to expect for the next days market session. I know algorithmic trading, quant trading, futures trading is not supposed to be sexy, right? But serious traders use numbers and probabilities and odds, to find an edge in order to be consistently profitable. Another thing that sets PatternCast apart from everything else is that we analyze the data on the S&P 500 along with 150 different vehicles going back 20-30 years, using what I call a 3-D analysis of what transpired. We are measuring statistical probabilities with an enormous data set in a way that no one else is doing.
Question: An algorithm that tells us what to expect the following market session sounds pretty amazing, but what are the caveats?
Answer: You have to realize that there will be certain times where PatternCast tells us that there’s really no edge for the following session. In other words, the analysis might determine that the odds of a move in either direction are 50/50. But think about how that might actually be a benefit to you. Maybe you decide to take that day off. We do not deviate from what the signal is with our opinion or anything arbitrary at all. The signal is what it is. For example, if we have 60 or 70 instances of a pattern which gave a 50/50 proposition on market direction – and the winners were on average, say 0.2% and the losers were 0.2% – Then my opinion as a trader would probably be to not trade that signal. PatternCast has indicated there’s not a lot of low hanging fruit there. Does that make sense? I don’t want to trade a market session where I think I might make 0.2% as opposed to saving my capital for the next day when I could trade and potentially make a whole percent. Certain days PatternCast will say that there’s really no quantifiable directional bias for the market the following day based on the data. Then other days it might indicate there’s like an 85 to 90% probability the market is going to move in a certain direction. Those are the days I choose to trade more aggressively. One of the biggest benefits of PatternCast is that it not only gives us an idea of what direction to expect for the following market session, but the degree of probability that it’s going to move in that direction. And this is all coming from extremely sophisticated quantitative analysis – based on what transpired in the past. I truly believe this will give traders an edge. I created it to use for myself – and I am trading the signals myself every day using my own money. Traders that have been doing this for a long time know it’s imperative to first find the system that works for you, and then you have to trust the system with no second guessing. And of course like with any system, there will be good days and there will be bad days. The idea is that that the slight edge that PatternCast provides is all I needed to turn my trading around and become consistently profitable. Having a good idea of what to expect from the market the following session – and the odds of that happening – along with the expected ranges – are why I created it in the first place.
Question: Since PatternCast doesn’t use chart patterns or technical analysis or typical historical data analysis, can you give some further insight into how it actually works?
Answer: Imagine that on one table, you’ve got a triangle and a square and circle. But that’s just one set of what could be patterns on the table. Those are your standard chart patterns and indicators everyone else is using. At PatternCast we have a pyramid, we have a cube and we have a sphere. PatternCast is a three-dimensional look at the market in ways that nothing out there that I’ve ever seen comes close to doing. And as far as computing power, this runs on computers that are the fastest and most robust we could buy. Obviously NASA has some better computers, but we are crunching data in ways that most people would not even be able to comprehend. Here’s an analogy. One of the ways I like to describe it, and what PatternCast does, is this. Most people will say, look, there’s a bird and I’m going to follow the direction that bird is flying. And when he points his head to the left, he flies to the left. When he points his head to the right, he flies to the right. Here’s the thing. If you’re a hunter and you want to shoot a duck, you can either follow the one individual duck – or you can look at where the entire flock is going. And here’s the strange thing about a flock of birds. Within that flock of birds, you can have one bird leaning to the left, one bird leaning to the right – one is moving down and one moving up. All at the same time. And none of that information would have given you the direction of where the flock ends up. So you would be much better off looking at the bigger picture – the direction of the entire flock. A flock of birds moves in what looks like a living entity. The market moves in the same manner. And it’s in the aggregate movement of all the birds together – the whole flock. It’s in that broader movement that gives you insight into knowing where those birds are heading now. Not any one individual bird, but watching the entire flock will tell you, well, they’re probably all headed over there. If you see a large school of fish swimming in a certain direction, perhaps you can ascertain where the shark is. If you see an entire school of fish, turn on a dime and go in a certain direction, you might deduce there’s something chasing them. We want to look at the entire school of fish. Now you may have a fish at the back of the school who’s still pointing straight, but most of the fish at the front have already made a turn. You don’t know that if you’re only watching the fish at the back. And so for most people, for any system I’ve ever seen, they’re looking at that fish, that fish in the back. And you’re going to be too late before the shark gets you. PatternCast looks at the entire school of fish, the entire flock of birds, with some moving left, some right, some up some down. But somehow imperceptibly, they’ve all decided to go in a certain direction and that’s how the market behaves in our opinion. PatternCast analyzes each bird in the flock – each fish in the school – and the aggregate of all the combined movements to predict where they will end up at a certain point in time.
Question: Ok, so I’m convinced there’s a lot going on behind the scenes that makes PatternCast an extremely sophisticated algorithm, but how can I use it in real-life trading?
Answer: Basically it’s just putting the odds in your favor, giving you a little statistical edge. Say you get a Buy signal on a certain night and the next day when the market opens it makes a move down. Then it goes up a bit, moves sideways and then it goes up and then it goes down again. From my experience, there’s any number of ways to trade that. You could buy at the open and just hold it to the close and sell. That would be a sort of a binary way to trade. If PatternCast tells you the likely direction for today’s session is up, once the market goes up a certain amount you could go ahead and take your profits and say “Hey, this is great, it went up, I took profits and called it a day”. You don’t necessarily have to be involved the entire session. In addition it looks at the median move – Up or down. There’s a lot of data that gets crunched through to get these “averages” on what to expect. In the nightly email for the next session, we tell people not only the direction PatternCast thinks the market should go the next day, but the average expected ranges and maximum potential moves – based solely on what has transpired in the past. I’m always impressed at how PatternCast gets the direction right so much of the time. But I’m most honored when someone posts something in the discord room about how PatternCast nailed almost the exact range of the day. Having an idea of what the likely “range” will be is almost as useful as knowing the direction. We’ve seen PatternCast predict the range of the day to within an ES point. There have been days where it got the close exactly right. Or it got the open down to a certain point and then up a certain amount. That’s why I love following it – the entire dataset come alive. It’s not always just what the market will do from open to close – but gives me insight into what I might expect to transpire intra-day. In addition there’s always a Target. Actually, we don’t, we don’t like to call it a target. We prefer to call it “maximum potential”. So instead of saying, well, here’s a specific price to which price will go, since we don’t know where the market open will be the following day from the prior close, we use SPY “max potential points” of movement. So everything starts with the open, the next session. So we are looking at the PatternCast output in terms of a move the following day – for the cash session. So if the previous close was 4500 on ES and the open is 4520, and we have a “max potential” of say 65 points. Then from the open to the maximum potential would actually be be 45 that session, not 65. It’s not the same as a target, but it’s very similar in effect. So as a trader, how I would use that information?. If I took a signal and the market moved in my favor and I knew the expected max potential, Wow. If it reached that level then that would be be a good place to take profits and call it a day most likely, or at least take some off the table. At times the PatternCast Alert may also suggest a certain price level to hit before before you would enter a trade, which adds sort of a another dimension to the whole thing.

These are some additional questions that were sent to us about the PatternCast “Quad Scan”. These answers specifically apply to the “Quad Scan,” and generally apply to other PatternCast scans, insofar as we understand them.

(1) Question: Does the PatternCast Signal give a simple, straight-forward “buy at the open” because PatternCast expects the market will rise from the open and close higher?

Answer: Each pattern seems to indicate properties for the next trading session. Our interpretation is “open to close.” The use of the word “expects,” adds a certain human quality to the equation, though, that we don’t use. There is no “expectation” by these algorithms because they are not psychic, have intuition, or are imbued with hope or fear.

The way we look at the algorithms’ output is historically-significant evidence that a statistically-likely set of parameters are probable. This is our best attempt at the moment to describe what PatternCast does.

Consider this, “If a pebble is dropped into a pond, can you predict how far, and where, the ripples will spread?” You could spend a lifetime on that question. PatternCast attempts to quantify what came before the pebble hit the water – the size of the pebble, the distance to the water’s surface, the wind speed and direction, the movement of the water below. The result is output that describes most-likely outcome scenarios.

(2) Question: Is there experience from prior signals the market will move down near the suggested entry point before the move up?

Answer: There is evidence and a great desire to find more. With our current testing the best results with these signals comes from an “at the open of the next session” approach, though.

We find net returns overall, and winning percent, favor a “wait to make a decision” for the open the next session. Yet, the difference we find for trades taken at the close of one session, or the open the next session, is slight enough that it could be statistical noise to assume the “at the open” scenario is best.

More testing will be done to explore this concept.

(3) Question: How significant is the suggested entry point?

Answer: The word “suggested,” needs to be defined. “Suggested,” is not used as in, “It is suggested you take vitamins for optimal health.” Rather, “suggested,” is used as in, “It is suggested – by data – that over the last 100 years, people who took vitamins got sick less often.” The distinction is, we don’t make suggestions for you to personally do anything, rather, the data (and, our interpretation of it) suggests statistically-relevant parameters to consider.

Thus, we now look at “suggested entry” prices in context: The “suggested entry” prices are based on filter sets we apply to the “raw” PatternCast signal. This is where we get the terms “raw signal” and “filtered signal.”

And, yes, we do find significance with “suggested entry” prices. We find higher win rates, larger returns, and smaller losses per trade. The tradeoff we find in the data is less trades triggered in our current understand of these signals.

The gross returns were larger with “raw signals,” and “at the open,” as they were created, but the more efficient trades we saw utilized “suggested entry” prices.

Either way, over time, we saw a move higher in the total returns. It seems to us the decision to take one at the open, or wait for an entry is personal, and, goes beyond the scope of PatternCast.

(4) Question: Does the market tend to gravitate down to these areas in the pre-market? Is there a futures opportunity to the downside before market open?

Answer: That is something we tested, but not enough to make a hard, definitive answer. We see some people who seem to have good results with pre-market, or overnight, trades – where they either sell into a buy, or buy into a sell. But, to be very, excruciatingly clear, there is no hard data we have to back those ideas.

(1) Question: When you indicate the number of positive and negative trades, their percentages are calculated assuming to open the position based on the signal until the close of the session. On a day like yesterday there were several opportunities to exit the position with a great gain but waiting for the closing the gain would have been different (in this case better). There could therefore be big differences between theoretical statistics and real operations. Do you have statistics on real operations? Or, in other words,do you have any statistics assuming you close the trade for example if you gain 1% or if you lose 0.5%? They could be useful for set a correct stop loss.

Answer: This question is so good, so deep. This gets to the heart of why PatternCast exists. The very foundation of PatternCast is built on the answers to these questions.

Let me start with a dry, “by the numbers,” answer: All PatternCast back-testing shows it was less-profitable to cut winners short. There is no other way to put this.

Over and over, we found two things were true.

The first truth we uncovered was there was no way to cherry-pick times to get out before either a target was hit or the close. For every time we found a market gap-up – with a PatternCast “buy” signal – where our intuition would say, “Take profits early to keep our gains after an overnight gap,” – and it seemed to work, we’d find another time where letting a trade run put the most money in your pocket. The truth we found is: there was no non-arbitrary method to cut trades short of the “max potential,” and return anything close to a “hands off” approach.

Does this mean the future will be the same? No. Clearly, not. Maybe the decades of data were simply a reflection of those times. Maybe the signals now only SEEM to work best with the parameters we use. But, these are not concerns we can solve without them being solved in hindsight.

The second truth we found was the system, algorithms, formulas, and, the very essence of whatever it is that seems to make PatternCast work, do NOT include stops. We tried to find a stop-loss methodology that was not arbitrary. We tried to find one where there was a percent drawdown the system would accept. Yet, like the target issue described above, what we found was only an illusion – what seemed to work over any period seemed to break down over time.

Then, we had what we thought was a breakthrough: We found that if any signal was under water at 10:00 AM EST, it was a better idea to stop that trade then hold for a “max potential” return or the close. This was a difficult thing to test, so we first tested about 200 trading days, and, it seemed like a serious contender for that Holiest of Grails; the “what is the best stop loss” Grail quest looked like it was complete. The overall equity curve on returns moved up about 10 to 15% over the period, and, most serious drawdowns were snuffed-out.

That was all until we tested the next 300 trading days. After that test, the equity curve not only reverted back to the original, but, actually lost some more and would have turned into a less-profitable set of returns.

Why was that? Well, come to find out, there were many days where the early moves against the original signal reversed. And, on THOSE REVERSAL DAYS, big profits were left on the table with that 10AM stop.

Let me stress how important I believe our findings are. If all this was purely digital; if all this was just numbers; if chaos could be solved at every level; there might be way to figure out how to stop the progress of a moving thing like the market. Yet, after thousands of tests, over millions of patterns, and BILLIONS of potential setups it’s clear to me some things are unknowable.

Well, maybe not unknowable – more like unstoppable.

If PatternCast finds a pattern indicates a direction, well, try as we might to find ways to cut short that progress, it will go the way it goes. If we choose to cut out early, it looks like we miss the big moves.

See, PatternCast finds patterns that indicate where things will END UP on the day, but… and, PLEASE read and understand this… BUT, HOW it gets there is a mystery. Like water to the sea, that flows down a mountain, we KNOW the water will find a path of least resistance to get to the ocean, but, we CANNOT know every rock in the way. To try and predict the PATH water takes may mean more chaos than all the “super computers” in the world can solve.

Yet, we CAN find evidence of the DIRECTION the water will take.

If you have further questions, please email patterncast@gmail.com. Thanks!