What is Market Replay?

Recent articles on my session review process mentioned the use of a market replay feature. I've been asked for some information on this tool. Not surprising really - it's something that most forex traders will not have experienced.

Market replay is a feature that has appeared on many futures platforms in recent years.

It allows you to replay the trading session in a simulated environment. Price bars appear tick by tick, exactly as they did when trading live.

It will typically offer controls, as displayed below for play, pause and fast-forward, as well as a slide control to move to any particular chart time period.

We are also able to re-enter and manage trades all over again, this time in a simulated environment.

This is an ideal tool for implementing deliberate practice.

Our post-session review allows us to identify error within our analysis or decision making. The market replay then allows us the opportunity to re-trade our setups again with the benefit of perfect hindsight; reinforcing correct behavior, enhancing our intuitive pattern recognition abilities, and advancing us further along our path of trader development.

Let’s look quickly at an example of the use of the market replay tool.

Without going into details of the analysis and decision making (that's what the ebook is for), the following chart example displays a test of resistance.
 

My expectations for a strong area of resistance lead me to largely ignoring the signs of strength and weakness within the price action, which should have warned me of this lower probability setup. I entered short, and despite a feeling of unease and further warning signs, plus a scratch and re-entry, I still managed to hold the trade for a small loss.

The use of a market replay after the session allowed me to trade this setup again. I was able to start the replay a couple of minutes prior to entry in order to feel the bullish pressure that existed in swing A, noticing the ease with which price moved higher. I then experienced the difficulty with which price fell during swing B; and the stall (and failure to follow through) when price dropped to the swing low area.

I also felt the ease with which price again moved upwards in swing C.

I did this again entering and managing in the same places as when I traded the original action, in order to feel how wrong it was.

I then repeated the action with ‘perfect hindsight’ trade entry and management, entering long after the spring between swings B and C, where I should have reversed my original position.

While the exact price action will not occur again in future (every setup is unique), many very similar situations will occur over the remainder of my trading career.

Through taking these actions post-session, I have reinforced the lessons from this trade, as well as experienced perfect trade entry and management.

And I have taken another small step forward in my development as a trader.

If you don't have a market replay feature, seriously... consider changing platforms!

The example provided here is from Ninja Charts, but it's certainly not the only provider. It's the only one I've used, so I'm not qualified to comment on others. But, I believe a similar feature is provided by Sierra Chart, Open E-Cry, Ensign Windows and Investor RT (thanks Stan!!!). If you know of any others, please advise and I'll add them to this list on the website.

There is a difference in how the feature works through other charting applications. Some like Ninja require that you record the session data. Others allow you to download it from an archive. Similarly, there could be variations in the quality of data. So, don't take my word for anything; carry out your own due diligence checks if you're in the market for a new charting application.

Happy trading,

Lance Beggs

18th March 2011 Update: Market Replay for Forex Traders

A year or so after first using market replay, it's still a favorite tool of mine. It plays a part in almost every trading day - actually I can't remember one in recent memory in which I didn't use it.

At the time of writing this article I wasn't aware of any forex platforms which provided this tool, unless you accessed the forex markets through a futures platform such as NinjaTrader.

This week, I've received email notification of a few market replay tools that are available for forex traders, courtesy of YTC Newsletter reader Ivan. Thanks mate!

Here's the info he provided:  (please note: I have not tested any for quality of data or execution)

Excerpt from email:

I am interested in this, but I use MT4 platforms for charting, so I have found the following useful links, which I include for your readers if you consent to use them:

(1) http://www.forexfactory.com/showthread.php?t=70742

Comes free with:

* Trade Simulator Setup.pdf explanation

* Trade Simulator Files.zip

* Trade Simulator Installer.zip

(2) http://www.forexfactory.com/showthread.php?t=60849

Comes free with:

* vTerminal.zip

and the thread is quite long - trouble-shoots and good suggestions.

(3) Forex Tester 2

This is a professional tester and is the one I am going for:

* Full website

* Download free trial (with limitations)

* Tests any time period

* Test a strategy

* Stop-start testing - resume any time

* Control speed of testing
* Test strategy on the same period of history with different parameters many times

* Much more ...

Cost: Free Trial - limited time period and data, and fewer features.

Paid version: USD$150 ... requires a Registration Key

I am going to purchase the Forex Tester, because it allows smoother testing/pausing/charting of results etc, and I can view the higher timeframe while testing. This is important because I always check the higher timeframe when deciding entries.

Cheers

Ivan

NOTE: Unlike the first two options, please note that Forex Tester is NOT installed as part of your MT4 platform. Consequently it has a data feed that is independent. There appears to be various options to import data in either text or MT4 formats, or subscribe to a data service (see the Data Sources and Data Services menu items on the LHS)

NOTE 2: The above price is as at 18 Mar 2011. Please check the Forex Tester website for changes.

13th August 2011 Update: Further Market Replay options for Forex Traders

The following great advice was received by YTC reader Phil. Thanks Phil! Much appreciated.  (As with the previous update, please note: I have not tested any of these methods for quality of data or execution)

Excerpt from email:

Here's something I do from time to time to practice analysing price movement and practice drawing S/R and trendlines. I'm aware that there is some software you can buy to "replay" markets over a period of time and I know you've covered it before in previous newsletters. Here's a very cheap (free) method of doing it.

I use MT4 which of course has the built in strategy tester. I go to this site (http://sufx.core.t3-ism.net/ExpertAdvisorBuilder/) and built myself a little EA that buys/sells. I'm not a coder, but it's easy with this site as there is a link to a basic tutorial at the top. The EA could be anything, for example buy eur/usd at 1.3800 and sell at 1.3900 - absolutely anything.

Then I get the EA into MT4 and save and compile it then run it in visual mode. For example run the above EA for the month of March this year on your preferred timeframe. It doesn't matter if it trades or not - that's not what I'm interested in. What is does is replay the market. Then I have fun plotting S/R and trendlines on the slowly developing chart and see if you're right/wrong. A 4hr chart on high speed takes about 10 seconds to complete 1 candle, but you can slow everything down, use anytime frame you want etc. It's just a great, easy and free way to practice drawing the lines. (I actually just looked and it would trade - but the trades are totally irrelevant and to be ignored).

Here is another useful tool - a free trading simulator which is called LFH Simulator. This allows you to replay the charts and actually place trades, targets, stops etc at your own pace. Free download from:

http://www.system-forex.info/2011/03/lfh-trading-simulator-become-trader-pro.html

With the link at the bottom.

Not much explanation, but it comes as a .rar file, so extract it. Once extracted it has 2 folders - the contents of one put into scripts and the other into experts. Folders are called "contentsintoexpertscripts" and "placecontentsinexperts". Make sure you close then open the MT4 platform again, then open up strategy tested and select LFH_Trading_Simulator_3 as the EA to run. The scripts to trade are found in the Navigator under Scripts.

You basically run the EA with the Visual box checked, then select the scripts from the Navigator for what you want to do. For example, to buy at a particular price, click on the Stop_buy and drag it onto the chart where you want to buy. A line will appear and it will trade should price get to that level. You can set TP, SL and lot size.

It can be used off line, but if you're not aware, if you connect to the internet and open you platform at the weekend, Strategy Tester will pick up what ever spread is there and use that for testing. Normally 10 pips or so. So when I'm testing things out on a weekend, I stay off line with my real account platform. If I really must see what's happened during Friday night on the charts, I connect and open a demo platform only. Then you can go offline again, use the simulator and test with proper spreads.

Hope that helps.

Cheers
Phil

20th August 2011 Update: Further Market Replay options for Forex Traders

The great advice on use of market replay tools continues... this latest update from YTC reader Stan.

Excerpt from email:

Regarding Market Replay, it’s also worth noting that NinjaTrader has 1 year of replay files available for download, not only futures, but forex as well. All the major pairs and crosses are there. The source data is Gain Capital which is a market maker, so the spreads are not the best, but for simulation, harder is better anyway. Both NinjaTrader and the replay files can be downloaded free, so it’s undoubtedly the cheapest way to practice.

Dukascopy and Gain also make historical tick data available for free from their sites for those using other platforms with replay feature. (Dukascopy, in particular, seems to have extremely high reputation as a broker and for the quality of its data).

Best Regards,

Stan