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Today I want to stress and discuss trading to win in the long term. That means to keep risk low and reward high. There's one trading software that we like a lot and use. Its the MTPredictor trading software platform. Below is a review of the software by our friends at Active Trader Magazine.

The review below speaks about the chart patterns setups that provide low risk high reward trading. To view the charts in the review and analysis below click the MTPredictor image link below to view the charts, and read more about the features benefits, and avail of the 30 day free trial.

Software review: MTPredictor

Reviewed By DAVID BUKEY - Active Trader Magazine

MTPredictor is an analysis program that uses Elliot Wave theory to find trade setups. Elliot Wave is a complex, subjective approach based on the idea that market trends move in a series of distinct trend and countertrend waves, a technique that has intrigued (and frustrated) traders since Ralph N. Elliot introduced the idea in the 30s.

MTPredictor’s goal is to simplify Elliot Wave’s rules and increase its accuracy. Instead of identifying all Elliot Wave components, MTPredictor attempts to isolate a handful of scenarios with the highest probability of success. The platform can scan thousands of symbols for predefined trade setups, which helps inexperienced traders learn how Elliot Wave works. But MTPredictor can also search for any type of Elliot Wave pattern and lets advanced traders draw patterns manually.

Although MTPredictor automatically identifies trade setups, these signals aren’t strict “black-box” recommendations. The program’s developer, Steve Griffiths, warns that Elliot Wave analysis only works half the time. While MTPredictor can find a potential setup, it’s still up to you to confirm the trade with other tools or ideas.

Data

MTPredictor uses end-of-day (EOD) or delayed intraday data, and it also offers real-time versions via eSignal, TradeStation, and RealTick. These real-time versions are basically add-on tools for eSignal and TradeStation, meaning they only include some of MTPredictor’s features. (MTPredictor offers a stand-alone platform for RealTick data customers.) We reviewed MTPredictor’s real-time version with eSignal and delayed data from Genesis Financial Technologies.

You can plot symbols (stocks, futures, currencies, etc.) in any time frame, depending on your data source. MTPredictor also handles a wide variety of delayed EOD and intraday data from Worden TC2005, CSI Data, Reuters DataLink, and Paritech, among others. The platform can also import data files in MetaStock and text formats.

MTPredictor doesn’t integrate real-time and delayed data, so real-time users must juggle the stand-alone program and a third-party, real-time platform. The real-time versions simply focus on trade setups and risk management, while the main program also scans for trade possibilities and includes advanced Elliot Wave drawing tools. While this isn’t a major complaint, it’s somewhat awkward. However, this arrangement makes it easy to move updated data from an eSignal chart into MTPredictor.

Methodology: As easy as A-B-C

According to traditional Elliot Wave theory, markets trade in combinations of “impulse” waves in the direction of the trend and “corrective” waves against it. The basic pattern is a set of five waves, where waves 1, 3, and 5 are impulse waves and waves 2 and 4 are corrective waves, which often consist of three-leg (A-B-C) subwaves. In an uptrend, for example, the market should rally higher in waves 1, 3, and 5, while giving back some of these gains in waves 2 and 4. (A complete five-wave pattern in one direction is then expected to be followed by a three-wave corrective pattern in the opposite direction.) Elliot Wave followers try to discover where the market is trading within this overall pattern so they can predict the market’s next move. (See “Key Concepts” on p. 80 for more information on Elliott Wave.)

But MTPredictor’s developer Steve Griffiths believes this theory doesn’t always work; even if Elliot Wave patterns appear as expected, where will one wave end and another begin? Instead of trying to identify an entire five-wave pattern, MTPredictor attempts to identify the A-B-C patterns that make up corrective waves 2 and 4 (Figure 1, below). These A-B-C patterns are potentially good trade setups because stronger impulse waves can follow them. Therefore, MTPredictor’s main goal is to confirm the end of any A-B-C pattern.

Features

Layout and charts. Figure 1 shows a typical layout with an A-B-C trade setup on a daily chart of the Russell 2000 tracking stock (IWM) in June. Above the chart, there are shortcuts to MTPredictor’s analytical tools — scanners for pivot points, Elliot Waves, advanced A-B-C patterns, and automatic trade setups. The platform’s navigation and drawing tools appear at the chart’s right side.

You can quickly browse among charts using the black arrows. And after you load a chart, it’s easy to navigate and modify. You can adjust the chart’s X- and Y-axes automatically to view any historical time period, and chart labels can be applied or removed in a couple of steps. You can manually draw Fibonacci retracements, projections, and extensions or apply Fibonacci time analysis (i.e., when current trends might change) to any chart.

Indicators. You can plot a limited set of about 10 indicators and change their parameters (stochastics, on-balance volume, moving-average oscillator, RSI, MACD, Bollinger Bands, CCI, ADX, etc.). MTPredictor also has a proprietary oscillator called the Strong Trend Filter that can highlight potential trend changes. However, you can’t create indicators from scratch.

Trade setups. Figure 1 shows an A-B-C trade setup that MTPredictor found on June 2. Each trade setup has three components: a wave price target (WPT, pink box) that suggests the minor A-B-C wave could end, a reversal bar that helps confirm a possible wave change, and an initial reward-risk ratio of at least 2:1.

MTPredictor calculates WPTs using Fibonacci retracement and extension levels from prior waves. The WPTs’ colored boxes highlight areas where various Fibonacci levels cluster and represent possible market turning points. For example, in Figure 1, IWM closed just below the A-B-C pattern’s typical wave price target (pink), suggesting the market might weaken at that point. On June 2, IWM also formed a reversal day (basically a new high with a lower close), so MTPredictor generated a sell signal.

MTPredictor emphasizes money management — from basing position size on risk tolerance (Figure 1, upper left) to selecting trades with risk-reward ratios of at least 2:1. (Figure 1’s trade example had an initial risk-reward ratio of 3.61:1.)

Scans. MTPredictor’s strongest feature is the trade scanner, which can search thousands of symbols for a wide variety of patterns — trade setups, specific waves within a larger Elliot Wave pattern, and minor scenarios that help confirm reversals such as Dojis, 80/20 bars (weak open, strong close, or vice versa), inside days, volume spikes, and minor pullbacks.

Figure 2 (below) shows the trade scanner’s options. Each of the five waves often break down into minor patterns, which adds to Elliot Wave’s complexity. But MTPredictor can find these patterns in any size — minor, intermediate, or major. The figure’s lower window shows the scan’s results — just five symbols in the S&P 500 had trade setups during this test.

MTPredictor can also draw any element of a trade setup on a chart, which adds flexibility. For example, you could simply highlight reversal bars on a chart, add pivot points (short-term moves upon which wave patterns are based), or plot a wave 2 (or its wave price target). Or you can draw complete Elliot Wave patterns manually that MTPredictor’s algorithms might miss. While identifying these patterns from scratch may be difficult, drawing lines and labeling various waves only takes a few mouse clicks.

Historical scans. MTPredictor can also scan for any previous trade setups and Elliot Wave patterns, not just current ones. Its historical search tool is easy to use, and you can search for these scenarios by clicking back or forward in time. When MTPredictor finds a historical pattern, all “future” price bars disappear, which helps evaluate prior trade setups. Now you can either plot additional price bars or erase them using the “+” and “-“ buttons.

Real-time charts. MTPredictor’s real-time version can find trade setups, calculate initial reward-risk ratios, and size positions on eSignal charts. However, more advanced analysis such as plotting individual Elliot Waves is limited to MTPredictor’s main platform. To use all of MTPredictor’s features, real-time users need both programs open, which seems unnecessary.

Figure 3 (below) shows an A-B-C trade setup on a five-minute chart of the Russell 2000 E-Mini (AB U6) on July 13. This shows how MTPredictor uses Elliot Wave theory to find trade opportunities without depending upon its strict interpretation. For example, the Russell 2000 dropped consistently on July 12 before it rallied the next morning to form a minor A-B-C pattern. The platform generated a sell signal when the market reached a potential end to this corrective wave, and the Russell 2000 reversed direction and traded lower.

MTPredictor helps you manage risk in real-time with the same tools included in its main platform. If you compare Figures 1 and 3, you’ll notice MTPredictor labels the trade’s entry and stop-loss points (including position size) and calculates its reward-risk ratio the same way in both EOD and real-time versions. You can plot these statistics directly on the chart, or MTPredictor can list them in a separate window (Figure 4, below).

Real-time scans. The program uses eSignal’s existing features in clever ways. For example, eSignal’s alert window appears when real-time trade setups emerge, and its Bar Replay feature helps you evaluate historical trade opportunities one bar at a time (similar to MTPredictor’s historical scans). However, eSignal only monitors open charts for trade signals, and you can only open about 20 charts without affecting performance.

Help resources

MTPredictor’s help documents are actually called trading manuals, because the developer focuses more on how MTPredictor interprets Elliot Wave than how to use each feature. But the manual is quite detailed and easy to follow, and the company offers several videos on their Web Site that explain how to operate the platform’s tools.

The company also offers phone and e-mail support, posts daily reports that discuss possible trades, and maintains a forum where new users can ask questions.

Bottom line

MTPredictor simplifies Elliot Wave theory by focusing on a handful of scenarios that don’t always fit traditional interpretations of this approach. But the platform also accommodates Elliot Wave experts who identify patterns from scratch.

While MTPredictor isn’t for everyone, traders who are interested in Elliot Wave analysis won’t have trouble finding potential trades and conducting their own analysis.

MTPredictor Trading Software
High Reward Low Risk Trading
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MTPredictor Trading Software that finds, evaluates and manages high reward low risk trade setups in stocks, forex, futures, options, indexes, currencies and commodities. For margin leverage trading accounts, the software comes with an automatic money management function to correctly position size and not over leverage.

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