Could Market Replay Be Useful for Learning Pattern Recognition?

[HighStakes 10]

Hello everyone,

 

Could replay of historical markets at high speeds be a valuable practice for learning pattern recognition?

 

I intend to experiment with this myself and I would like to hear if anyone has any experience or ideas in this area.

 

Best regards,

 

HighStakes

[Head2k 10]

Hello everyone,

 

Could replay of historical markets at high speeds be a valuable practice for learning pattern recognition?

 

I intend to experiment with this myself and I would like to hear if anyone has any experience or ideas in this area.

 

Best regards,

 

HighStakes

I use replay for testing and for pattern recognition training, because it is quite a difference between identifying a finished setup in a hindsight chart and identifying the setup as it unfolds. I think that replay, even at higher speed, is good for learning to identify the setup in "real time", as opposed to "hindsight".

Replay can also tell you whether you were honest when you defined what is and what is not your setup in hindsight, that is whether you didn't overlook too many cases when your setup didn't work.

On the other hand, I don't think that replay, particularly at higer speed, is good for trying to define a setup, if that's what you mean by learning pattern recognition. I think that a setup should be first defined after carefully studying static hindsight charts.

[jashanno 10]

If I try to practice on a replayer on anything > 3x I miss a lot of things that I would notice otherwise. I also find that I trade completely different. Markets are fractal and make waves within waves within waves. So I would think it would be more valuable to look at a faster chart in real time versus a slower chart replayed at a faster pace.

 

Might work for you... doesn't for me.

[TheDude 10]

I'd agree with the above. When testing new ideas, I sometimes trade on past data to get a feel.

 

I found at higher speeds, I have to rush and come to a decision even more quickly (obviously!!) meaning I often some subtle context is missed, so results arent as good. Im a discretionary trader.

 

If you're new to trading, I'd start off by slowing down the data, not speeding it up. When youre consistently profitable in slow mode for a few weeks or a month, try normal speed for a month before going live.

[AmCan1 10]

I'd like to offer my 2 cents. I believe everyone has made great points. There are good things that could come out of replaying a market quickly but I think you need to be aware of the limitations as mentioned above.

 

What I like about replaying a market quickly is that it can teach you how to be a quick thinker and to take decisive action. If we allow ourselves too much time to analyze, it is easy to become prey to over analysis, or as the cliche goes, analysis paralysis. A quick replay forces you to take fast action.

 

I do believe though that you should already have a very tight set of rules that you are trying to master. Kind of like learning the mechanics of some sport maneuver. You should already know what you want to practice. Repetition is the thing you want to gain from this excercise imo, and you can get it in this way.

 

I like to think of driving my car and seeing a hazard of some sort in the road. I don't have to think about it before I react. It has already become reflexive. My reflexes just react and I can depend on that reaction being a good one. If one could get their trade decisions to be like that, I think it could only help. That to me, is the most positive thing one could get out of replaying and practice trading in faster time. What do you guys think?

[tjnoon 10]

I agree AmCan1. I like your analogy. I play music (drums, actually) and I have noticed very similar things about learning a new drum pattern and learning the mechanics of trading. If I have a new pattern I am trying to learn, at first it is tricky getting the independence between my 4 limbs to work together in sychronization. I feel like I am learning to walk all over again, even though I have been playing for many years. Little by little I learn the feel of how my arms and legs are supposed to work together to play that pattern. After finally working it out though, I can only play it slowly. I have to really work hard at it and not until I can play it about 20 or so times in a row, in tempo, without making a single mistake, can I then play it without having to think about it.

 

When I am trying to practice my maneuvers with a trade plan or method, I find it invaluable to go through a similar exersice. It is easy to lose confidence and 2nd guess your rules, for example. Or to hit the buy button when you meant to hit the sell button. Or any other number of mistakes that we make when trading. Being distracted is a big one, too. So I set out to try to make 20 to 30 mistake free trades, consecutively before I will trade one penny of real money with that particular idea. Replaying the market at a faster speed is ideal for that type of exercise, just like trying to play a drum pattern perfectly. If I make a mistake before I finish my 20 in a row, I have to start over from zero again. It is incredible how the human mind works. This exercise works great and can only improve a trader's performance, I think. It's one thing to know what you want to trade and how. It is a different thing to physically be able to do it without mistakes, over and over again. Great stuff!