AI Trading: LL-095: Pre-Trade Pattern Validation Wired In

#ai #trading #python #machinelearning

LL-095: Pre-Trade Pattern Validation Wired In

Date: January 7, 2026
Severity: CRITICAL
Status: FIXED

Problem

TradeMemory.py existed with excellent pattern validation code but was NEVER CALLED from any execution path:

query_similar() checks historical win rates before trading
The code was designed to block trades with <50% historical win rate
But alpaca_executor.py never imported or used it

Result: System was trading blindly without learning from history, leading to -3.04% average daily returns.

Root Cause

TradeMemory.py was written during December 2025 research but never integrated:

Code in /src/learning/trade_memory.py - fully functional
Execution in /src/execution/alpaca_executor.py - never imported it
Gap: Writing to memory happened, but QUERYING before trades did not

Solution

Added pre-trade pattern validation to alpaca_executor.py:place_order():

# Query TradeMemory BEFORE executing - learn from history
from src.learning.trade_memory import TradeMemory
memory = TradeMemory()
pattern_check = memory.query_similar(strategy, entry_reason)

if pattern_check.get("found") and sample_size >= 5 and win_rate < 0.50:
    raise TradeBlockedError(f"Pattern has {win_rate:.1%} win rate - below 50%")

Changes Made

alpaca_executor.py (lines 406-448): Added pre-trade pattern validation
test_alpaca_executor.py: Added 4 new tests for pattern validation
This lesson learned

Verification

Tests added:

test_pattern_check_blocks_losing_strategy - blocks <50% win rate
test_pattern_check_allows_winning_strategy - allows >60% win rate
test_pattern_check_allows_new_strategy - allows no-history patterns
test_pattern_check_warns_marginal_strategy - warns on 50-60%

Impact

Before: Trade blindly → lose money → record after
After: Check history → only trade winning patterns → compound gains

This directly implements Phil Town Rule #1: "Don't Lose Money"

Prevention

Before coding ANY trading feature, ask:

Does this QUERY history before acting?
Does this BLOCK losing patterns?
Is this wired into the ACTUAL execution path?

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