# The Wyckoff Method



## motorway

I have had a few PM's asking about the Wyckoff Method

I have not had time to give them a proper ( useful response )

So I thought I would just start this thread to at least post a few resources ...

On this page is a link to the first 5 pages of unit 1 ( Yes the introduction is still available, It is unit  1  .. Though it is really much more than an introduction )

http://tradingsuccess.com/blog/richard-wyckoff-iii-104.html

here is the link itself

http://www.tradingsuccess.com/pdf-pub/wyckoff.zip

Here is the website of Wyckoff-SMI

http://wyckoffstockmarketinstitute.com/corner.htm

It is one of the pages with some info on the 5 steps ( 3 so far )
This website is only recently new

I don't know if SMI have ever had a web site before now.

It also seems to be still being step up.


Wyckoff's first writings on his method started approx 1907.

Significant and influential... Was studies in tape reading  ( 1908 & 1910 )

His work culminated in "Stock Market Science" and the setting up of the SMI in 1931.
Which has continued to operate and enhance the material.

A start for those interested

http://www.moneymaximizer.com/pdf/MTA_Journal_Issue_43_Forte.pdf

http://www.moneymaximizer.com/pdf/MTA_Journal_Issue_44_Coppola.pdf

http://www.tsaasf.org/images/stories/newsletters/tsaa newsletter spring 2001.pdf

http://www.hankpruden.com/MTWyckoffSchematics.pdf

http://www.tsaasf.org/images/stories/newsletters/tsaa newsletter summer 2001.pdf

......................

http://www.hal-pc.org/~tradesig/presentations/2007-10.pps

This is a power point presentation... It is related to this topic
( it is about cobweb oscillations )

Price , volume time & position are used by Wyckoff

To measure  the shifting and rotation
of  Demand and Supply curves.

To identify "Cause" 

Behaviour and Change of Behavior

each move has a 

--Certain price range
--A quantity of volume traded
and 
--Take a certain amount of time ( this is duration )
--Have a start and end . This is the context of position.


Principles of Demand and Supply

motorway


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## julius

m/w my man,

Interested to see a intraday demand/supply analysis ala wyckoff if possible...


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## Timmy

Hi Julius,

I will jump in here briefly if I may as I am a user of Wyckoff analysis on an intraday basis in my trading.  I wont presume to speak for Motorway, not will I presume to say that what I do is even correct application of Wyckoff.  I have learnt Wyckoff with Motorway's direction, from his many posts on the matter and pm between us.  Whether I have learnt, and apply, it properly is another matter entirely and is my responsibility!

The way I apply Wyckoff analysis is in the principles he speaks of, applied to the market I trade.  I make this point because it is not as if you can learn some nifty "set ups" (buy when the blue line crosses the red line type stuff) and away you go - no, using Wyckoff is more about understanding what is going on in the market (i.e. with the price & volume within time).  The aim of Wyckoff analysis is a low-risk entry point to capture a move that is is going to happen imminently.  Always there is risk, so always there is a stop loss.  Wyckoff analysis can also be used for exits (stop placement and profit-take price) although I must admit I am not this far advanced ... I can see where to place a logical stop with Wyckoff but am placing targets for my profit exits.  This is a big area for improvement for me and is a work in progress.

Wyckoff speaks of the 3 laws:
1. Supply and Demand
2. Cause and Effect
3. Effort and Result

I use various tools (charts) to view these 3 laws.  You ask to see "intraday demand/supply analysis ala Wyckoff" - understanding supply/demand is getting to grips with law 1 (above), and is done by also using laws 2 and 3.

I wont presume to instruct on how to understand and apply Wyckoff, but this is an idea of how I use it intraday.

Law 2 is Cause and Effect - that is a sustainable effect (price move) will only come from a Cause (a reason for the price move).  To understand Cause and Effect it is necessary to understand the 4 stages of a market 'cycle': accumulation, mark-up, distribution and mark-down.  A point and figure chart is a good tool for viewing these stages.

The first chart shows Friday's trading (most of it) in the Emini S&P contract (the "ES").  Circled areas are areas that show accumulation taking place.  After accumulation you would expect the mark-up phase.  (Just to re-iterate, any mistakes in application and understanding are entirely mine).  Accumulation is demand overcoming supply.







Law 3 is Effort and Result.  You may have seen some of the posts on the board referring to VSA analysis, tech/a has posted much info on this.  Much of VSA is related to effort/result.  Basically it is looking at how price interacts with volume behaviour and again can be used to ascertain probable demand and supply.  For effort/result a 'vertical' chart is most readily used, such as a bar chart or candlestick chart (bar charts are the preferred tool of Wyckoff analysts, the 'open' is not deemed to be of any relevance (what does 'open' and 'close' mean on an intraday bar anyway? ... Not a rhetorical question).






Chart 2 shows some of Friday's ES trading on a 3-minute candle chart.  I have highlighted a bar which shows huge volume and might well be termed as a climactic sell.  At the time this bar formed you would be alert to the potential for a reverse in the downtrend (demand overcoming supply).  Note that all we got was a sideways move for a few bars before another move down.  This where the P&F chart can qualify the bar chart, the P&F showed no accumulation (I speak here with hindsight of course ... when you are live at the right edge it is more difficult and is where being disciplined and sure of your application of principles is important).  Of course this is just one chart of many possible - there are many times, especially in the ES where a much shorter timeframe chart is of more value (well, to me anyway).  And who is to say that a bar based on time divisions is th best anyway?

Chart 3 I have highlighted another role of effort/result, looking for continuation in the trend, the dots above the bars highlight one method of entry into the trend (these bars highlight the prevalence of supply over demand, what we want in a downtrend for it to continue).  Also on chart 3 is a bar highlighted at the bottom of the downtrend with an "X".  In effort/result terms it is very important.  It is also important in Wyckoff terms as it shows clear "Change of Behaviour".






Obviously, there is much, much more to Wyckoff than what I have shown here, but I hope it gives you a view of how it may be used on an intra-day basis.


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## Timmy

Also Julius, the Point and Figure chart I put in the above post uses a 1 box reversal.  Much of Wyckoff analysis uses a 3 box reversal in addition to the 1 box.  My using the 1 box reversal says a lot about my approach to trading and the magnitudes of moves I am trading.






This chart shows a 3 box reversal of the same day.  This is also applicable to intra-day trading, but for those looking for a move of a greater magnitude, on a different scale, to what I am doing in my trading.  Note the boxed area is accumulation on this different scale, followed by a "Spring" move, another Wyckoff principle.  

Following are three areas of "re-accumulation" in the mark-up after the spring, all circled.


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## tech/a

Timmy you've come a long way.*Good stuff*---always good to post up instruction helps consolidate your learning.

Those P&F charts have some fantastic "Darvas" type boxes in moves.


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## julius

timmy,

Cheers for putting the time into your reply, I've been wanting to see wyckoff applied intraday for a while.

I use range bars for day trading and will admit volume forms no real part of my analysis - not that I think it couldn't be done, but currently I focus purely on price. lately I've been tracking range wrt. time but thats for another thread.

My only question is whether volume was a necessary component in the examples you provided - what changes if you weren't looking at the volume?


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## motorway

Volume relates esp to what Wyckoff calls "character"
Price is related in a larger degree to what he calls "appearance"

( The P&F is to be understood as being woven by Price volume & time and Wyckoff P&F is understood more like "market profile" than what most people think of when they think of P&F )

Volume and Price can be

harmonious -- moving together at similar speed 
inharmonious -- moving at different speeds

( eg the example given in the 5 pages of introduction )


*Abnormally large and swift volume expansion marks a turning
point - either temporary or permanent.*

volume represents the action of those who are followed

Wyckoff Principle of the Composite Man ( or Operator )

Volume is the other side coming in
demand starting to meet supply
supply starting to meet demand

Before price bottoms in a down trend
There will often be "Preliminary support" showing up

volume and price will start to get inharmonious...



> At the time this bar formed you would be alert to the potential for a reverse in the downtrend (demand overcoming supply). Note that all we got was a sideways move for a few bars before another move down.




Tim's comment on his chart...........Tim was on alert  , because accumulation was likely underway ALREADY....

The principle of Preliminary support was judged to be occurring..



> The study of responses ... is an almost unerring guide to the technical position of the market."
> - Rollo Tape (Richard Wyckoff




every action is a test and a response...........

With PS identified some sort of ending action is anticipated as a response

Selling climax ...again defined by "effort and result"

anticipates an automatic rally.... is that rally the  response strong or weak ?

ie ... in terms of price range, volume, duration and  position. 

Secondary test

an accumulation phase identified as starting at Preliminary support
is unfolding...

Without the price volume principles
A trading range could be 
accumulation distribution
or nothing

Identifying price volume principles

Accumulation will see signs of strength SOS and last point of support

The Wyckoff terms relate to the price volume character
and not just the appearance of price...

The principle of preliminary support...is Price and volume becoming inharmonious... The principle of a "Sign of strength" is price and volume in harmony and becoming more "urgent"

Demand and supply involves gauging price movement ( thrusts duration retrace etc )
effort and result involves the "character" of that price movement.

Where the Volume ( THE OTHER SIDE ) comes in or is starting to come in

Cause and Effect

is about what is the reason those holding have for holding
strong or weak hands 

"It won't go up until after you sell"  

ie until reasons for holding change

wyckoff gives emphasis

To Price movement
volume & Time

not just price
not just volume

motorway


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## Timmy

Tech/a - thanks very much for the kind words.  WRT Darvas, it might be difficult to come up with a style of chart more suited to Darvas than P&F; in its construction P&F acts a filter on the price itself and as a filter on the price movements.  Wyckoff analysis focues on very different things to Darvas, but the P&F could serve both very well.

Julius, Motorway's reply to your point re volume says it all really.  For my part if I was to split up the relative importance I place on assessing the volume moves compared to the price moves I would put it at 50:50.  The two, for me, are inseparable.  Also, if I see a price move without what I expect in the way of a volume move I will side with my volume assessment, I will call that price move "wrong" (thats not the right word, I think Motorway's distinction between appearance and character are the right words) and expect the price to retrace the "wrong" move.  Maybe thats where the term "correction" comes from?

Julius, a question if I may - what instrument(s) are you day trading?

Motorway - your post in reply (#7) is rich in meaning thank-you.  Maybe it is because I have been studying this stuff for a while now but that post in itself has turned on more lightbulbs for me.


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## Timmy

julius said:


> My only question is whether volume was a necessary component in the examples you provided - what changes if you weren't looking at the volume?




Julius, once again I fail to answer the question asked! 

In the candle chart where I have placed a dot above bars I have termed provide a strong signal of continuation it is the volume on these bars that provide the alert.  Each of these bars has an upper shadow (I don't think I will ever not use candlestick terminology) - this is "test" to take the pricie higher.  Each of these tests is on low relative volume (a good definition of low relative volume is volume lower than the prior two bars).  Each of these bars too gives a response to the test in itself - they all tried to go up (demand) but failed.  Note the final bar I have marked didn't then go down much ... this is an important indication in itself.

Also, I try not to read each bar individually, rather I will try to assess the 'wave' (a series of bars) as a whole.  

Also, note how the volume jumps before and near the termination of the down move, this is a clear warning to me; note what Motorway says about volume change like this:
*"Abnormally large and swift volume expansion marks a turning
point - either temporary or permanent."*


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## julius

timmy i trade SPI futures and I follow the YM & ES

I can see the volume that corresponds with your analysis but I guess I am curious to see it incorporated into a trading set up in real time - in other words, is the price volume relationship significant enough to be tradeable on a real time intraday basis

Completely agree with your point in regards to price movement wrt. volume and retracements - in practise im more aware of this in terms of time vs price movement, but the temporary drop in liquidity is the real cause, as i've said on another thread I think.

look forward to more from both of you - food for thought


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## nomore4s

Timmy said:


> Motorway - your post in reply (#7) is rich in meaning thank-you.  Maybe it is because I have been studying this stuff for a while now but that post in itself has turned on more lightbulbs for me.




I also got a lot out of this post just like most of your posts M/W, but it sometimes takes awhile for things to sink in properly. The more I study the better understanding I get of some of the things you are saying.



Timmy said:


> The way I apply Wyckoff analysis is in the principles he speaks of, applied to the market I trade.  *I make this point because it is not as if you can learn some nifty "set ups" (buy when the blue line crosses the red line type stuff) and away you go - no, using Wyckoff is more about understanding what is going on in the market (i.e. with the price & volume within time).  *The aim of Wyckoff analysis is a low-risk entry point to capture a move that is is going to happen imminently.  Always there is risk, so always there is a stop loss.




This is an important point.

It took me a while to get my head around this (due to being programmed to look for patterns etc for trade set ups without understanding the patterns character), Wyckoff isn't about patterns or "buy or sell" set ups. I have found that while the Wyckoff principles are very simple, the application (your favourite word Tech) and true & deep understanding of the principles & method (like M/W) require alot of study and hard work.

Keep it coming Timmy and M/W always enjoy your posts and am constantly learning from them, even your old ones.


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## RichKid

Great thread on Wyckoff guys, keep it up. Thanks a million for those links to the articles motorway and for your tutes.....and to you too timmy for the charts and detailed explanations.


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## motorway

> In the Wyckoff Course, Wyckoff teaches that the most important thing anyone can know about a market or an individual issue is its trend and the position that it occupies in the trend.  The trend is the line of least resistance.  It indicates the direction in which the price wants to move.  Profits are more likely to be realized when positions are established that are in harmony with the direction in which the price has already indicated it wants to move.
> http://www.wyckoffstockmarketinstitute.com/wyckoff_step1.htm





Trend and Position in the trend..

Trend =  The Line of Least Resistance = *the direction in which the price wants to move*


At it's most immediate the Line of least resistance is simply , where is down hill !

Not in the sense of price moving down..........But in the sense of a price series moving with EASE..

The line of least resistance is always ( in this sense ) down hill..

It is effortless..........it needs no impulse........
eg water simply RUNS down hill...

The Trend is determined by observing where the "Ease of Movement" occurs

DOWN , UP OR SIDEWAYS

eg higher highs higher lows ?
                or
    lower lows lower highs ?


 What is the spacing on the bars ?
which direction congests . where do they overlap ?

Where are the closes ?

what about duration ?

on the figure chart.......where are the water falls ?
Where is the congestion ?

EOM (ease of movement) should jump out at you with clarity.



> To be used effectively, trends must be defined correctly.  Wyckoff tells us that trends are defined by two consecutive support points or resistance points of equal importance.




These lines are not used to trade mechanically from.
They are frames of context... They are straight edges . The position of which are defined by the action of the stock and nothing else...

They are not like a moving average that have  a time frame .

A trend is the line of least resistance It is where  the ease of movement is --------------------->The next few tics or a 1000% move.

Down Hill however does not last for ever..
At some point the behavior will change...COB ...Change of behavior

DEMAND & SUPPLY
CAUSE & EFFECT
EFFORT vs  RESULT


motorway


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## doogie_goes_off

So would Wycoff Method agree that MCR is in the bottom of a progressively higher peaking and higher support level cycle that could see my predictions come good? and is the path of least resistance upward with a spiking nickel price?


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## eieio

Just found this thread. I bought the SMI course some 10 years ago. Three thick binders worth of instructions and lessons back then. Started with it but you had to be terminally anally retentive to progress to completion imo. Not for the faint-hearted imo Read some of his books instead; found his ideas helpful and a good basis for a sector-based trading strategy for the long term. I found his book "How I Trade and Invest in Stocks and Bonds" (Fraser Publishing reprint) quite a good read.

jmo dyor


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## tech/a

MCR.

Looks un likely to progress much further to the long side.




Watch for price action at these levels in the "Playing field" a break out of it would be weak.

Elliott sees this is a wave 4 with a wave 5 to complete.
Anything on the long side is against the trend.


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## motorway

doogie_goes_off said:


> So would Wycoff Method agree that MCR is in the bottom of a progressively higher peaking and higher support level cycle that could see my predictions come good? and is the path of least resistance upward with a spiking nickel price?




I will try and post a chart later



eieio said:


> Just found this thread. I bought the SMI course some 10 years ago. Three thick binders worth of instructions and lessons back then. Started with it but you had to be terminally anally retentive to progress to completion imo. Not for the faint-hearted imo Read some of his books instead; found his ideas helpful and a good basis for a sector-based trading strategy for the long term. I found his book "How I Trade and Invest in Stocks and Bonds" (Fraser Publishing reprint) quite a good read.
> 
> jmo dyor




I have found it amazing stuff


All His books are good ,,,, But it is Stock market Science that is where he 



> offering the cream of what I have learned in forty years of active experience in Wall Street.
> By the methods herein explained, I have made a great deal of money for myself and my clients and subscribers who numbered in excess of 200,000. By
> making this available to those who desire to learn the business of trading and investing in stocks -- for it is a business just like law, medicine or any
> other -- I hope to be of still greater service, not only to my former patrons, but to others who have not had an opportunity to invest under favorable conditions.
> You can learn from this how to develop independent judgment, so that you need never ask anyone’s opinion or listen to anyone’s tips, or take anybody’s advice. You can so train your judgment that you will know just what to do and when to do it. When you are in doubt you will do nothing.





It is this course that masters of the markets study..




> Elliott sees this is a wave 4 with a wave 5 to complete.
> Anything on the long side is against the trend.




An important Wyckoff Princple is the Composite Man ( or Operator )

The CM transfers risk in return for reward,,

Markets go up in bubbles so people max out on debt and take on all the risk
They then crash into bear market lows where they then transfer all the future reward.


The idea of smart money is an aspect of the Composite Man.
The CM draws the columns on the figure chart..

And uses every known and unknown methodology for his purpose..

That is he uses the liquidity that those methodologies generate.

His purpose is to transfer risk to YOU and take the rewards
It is what financial markets do...Or what people allow them to do 




> Richard D Wyckoff  Went to work in Wall Street in 1888
> when the entire list of the transactions of the exchange for a whole YEAR could be shown in less than one two inch column..




There was no TA or even FA there was just inside knowledge
manipulation tips and rumors.........and tape readers.


doogie_goes_off............In a wyckoff sense... You look for the principles
You don't look for bargains...  Identify Principles ...


The thread is about the Wyckoff Method for those interested..
It is not about anything else.. It is certainly not about motorway 





motorway


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## Timmy

Hi Motorway,

At the risk of getting a very prominent placing on the list of the "Usual Suspects" that respond to your posts, thank-you very much for these latest additions.  

There is a lot of talk on this board and in the media about aggressive short-selling, mainly from offshore hedge funds, so profiting from the recent falls, and perhaps (most likely) even contributing to them.  (I don't want to start a debate on this point, plenty of threads, one could even say bolts of fabric, devoted to this at the moment).  Looking at this short-selling from the perspective of the Wyckoff model you would say these short-selling interests were representative of the Composite Man (or Composite Operator if you prefer) in action.

I believe, my 'job' in participating in the market is to make money.  In order to do this I need to limit my risk and seize opportunity.  By having a model in place (the Wyckoff method), and correctly applying the methodology of this model,  I can uncover the activities of the CM/CO and coat-tail these activities.  It is a very powerful method.


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## CFD

motorway said:


> ~~
> The thread is about the Wyckoff Method for those interested..
> It is not about anything else.. It is certainly not about motorway
> motorway




I deservers to be, I don't think I will ever think of the Wyckoff Method without reflecting on your teachings.


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## nomore4s

Okay I thought I'd post up this chart of CEY that I've been using to get a better understanding of some of the Wyckoff princples involved in the accumulation and mark up phases.

While this is a hindsight view of CEY I have found it very helpful in learning to identify accumulation in other stocks.

Also remember just because you can identify a trading range with a SC, AR, ST etc doesn't mean it's accumulation - it could also be distribution or even nothing. It's about the character and substance of the TR not the "pattern".

A few things about the chart. (Please note this is a chart before the $1.88 capital return to holders and is also a couple of months old)

The possible buy zones marked are put there in hindsight and obviously would be harder to identify when trading "live", also they are only buy zone areas where you would be looking at getting into the stock after you have identified acc going on and have established some support and resistance zones.
The interaction between price and vol also provide alot of insight to this TR. Where does the vol come in and what is the effect that vol has?
I find this chart helped me greatly to understand the 3 laws of Wyckoff as they are all on this chart.
DEMAND & SUPPLY
CAUSE & EFFECT
EFFORT vs RESULT

I was in this stock at around $2.70 shortly after the SC marked on the chart, but I was bored/scared out of this stock a few months later for a very tiny profit(hence my sig) . But I didn't know anything about Wyckoff or much about trading in general then, boy do I wish I had though. Ah well you live and you learn.

One last thing, as eieio stated this method is not for the faint hearted and requires alot of study, time & effort (read hard work) to understand its principles (I'm only just begining my journey), hence why it's probably not as popular as it should be. Like MW and Timmy have stated, I also find it an amazing eye opener and a very powerful method.


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## motorway

Very good contribution ..

It is about identifying the principles

whether it is on Tim's 3 min chart
or a daily chart.....

The difference between the trading of the two
is seen in terms of aggressiveness , frequency , and magnitude .

Not a difference in principles..

eg Tim might buy in a Selling climax after a clear Preliminary Support
     nomore would be wise to wait for at least a clear LPS

        It is the SC that ends the down trend

The trader   identifies  a cause large enough for the effect ( the move ) they want to capture...

The terms used may seem familiar but strange

A LPS  ( last point of support ) is what it signifies... The last point of support
it is not support "NOW"  but the last point where demand was seen to overcome supply....... Important aspects of a LPS is the depth , duration and of course always the volume......




> Remember what Wyckoff teaches in step one of the Wyckoff method.  Knowing the position of the price in the trend is as important as knowing the direction of the trend.
> 
> All up trends and down trends are the result of a series of trusts in the direction of the trend separated by corrections.  Some individual issues that are in harmony with the market from the stand point of the direction in which their trends are pointed will make relatively larger thrusts and experience relatively smaller corrections than the market as a whole.
> 
> These are the issues that are most likely to have the best potential to produce a profitable trade.  Relative strength or weakness can be measured as soon as the first thrust in a trend has been completed.  This will likely be even before the trend channel has been clearly defined.
> 
> http://www.wyckoffstockmarketinstitute.com/wyckoff_step2.htm







> Traders respond to input based on the model of the market they have
> built for themselves. A positive response grounded in Wyckoff's
> theory of the Composite Operator will have distinctly different--and I
> would argue, consistently more profitable--outcomes than will a
> negative response to input based on the theory of Contrary Opinion.
> Understand and work with the Composite Operator--rather than against
> the Public.
> 
> Pruden




I would add rather than against or with the public

nomore's chart is a tool to track this Composite Operator ..

High Volume should always be noted

it is effort and some result will follow......



> So would Wyckoff Method agree that MCR is in the bottom of a progressively higher peaking and higher support level cycle that could see my predictions come good? and is the path of least resistance upward with a spiking nickel price?




Here is a start the bottom chart is the XAO
The Volume is of MCR.......

It is a Study of Responses
Is the large volume bar telling in anyway ?
when seen in some context .

What was the CO doing on that day when the XAO went down !

or is there some simple explanation for that volume ( I am only looking at the chart  )

The CO ( or CM ) is they, is professional money , it is those who know.. But it also Mr Market. It has away of making people buy at tops and sell at bottoms

Fear Greed and Boredom.... 


Because it is a comparative study  I have used a log scale

motorway


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## Timmy

nomore4s said:


> Okay I thought I'd post up this chart of CEY that I've been using to get a better understanding of some of the Wyckoff princples involved in the accumulation and mark up phases.
> 
> Also remember just because you can identify a trading range with a SC, AR, ST etc doesn't mean it's accumulation - it could also be distribution or even nothing. It's about the character and substance of the TR not the "pattern".
> 
> The possible buy zones ... are only buy zone areas where you would be looking at getting into the stock after you have identified acc going on and have established some support and resistance zones.
> The interaction between price and vol also provide alot of insight to this TR. Where does the vol come in and what is the effect that vol has?




Hi nomore4s ... the quotes above from your post are the specific points that will be going in my notes - really great stuff thank-you.

Re your sig ... when I read it a little while ago I thought ... that's a very Wyckoff perspective ... very nicely put.


Edit:  Just thinking some more about your post and chart so wanted to add: your perspectives are so different to mine, and the chart is so different; its a stock not a future, day chart not intra-day ... but the principles are instantly recognisable ,and when you put the chart and post in these terms the chart becomes 'just another chart', not a futures contract, not a stock, not a currency pair, not a commodity ... not anything but something to buy and sell ... if I think in those terms, that's very,very powerful going forward...


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## nomore4s

Timmy said:


> Re your sig ... when I read it a little while ago I thought ... that's a very Wyckoff perspective ... very nicely put.




Thanks Timmy.

My sig was actually stolen from one of MW posts : but it just struck very true for some of my early trades.


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## motorway

OK 

Chart marked with some Wyckoff Principles

IF SC is a selling Climax

was there Preliminary support PS ?

ND = No Demand

AR = Automatic rally... reasonable duration and thrust

Now do We have a successful Secondary Test  ST ?

Volume is falling and lower than the SC
The thrust is shortening SOT

Also The B% ( inductive analysis ) is tending to confirm..

Buy support , Sell resistance
Support is "buying pressure" overcoming selling pressure


Trading range ..

Volume while falling is still high..

TEST RESPONSE TEST RESPONSE....

motorway


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## motorway

Last Bar shows DEMAND

remember



> Support is "buying pressure" overcoming selling pressure




Support is NOT any of the lines .. They are only frames ( justified though)

http://wyckoffstockmarketinstitute.com/chart-series-points_interest.htm

Different index

But I have marked the four waves
and the commentary is  applicable 




The only waves Wyckoff Practitioners are interested in 
are the Buying and selling ones..

They don't have to do anything..
We measure

DEMAND & SUPPLY
CAUSE & EFFECT
EFFORT vs RESULT


Effort and result ...........The ease of movement changed in the last bar.

read the comment of effort and result in the 
5 pages of the SMI course ( just reverse the example )

Downhill is starting to become Uphill
line of least resistance 

But the Wave is still to be completed...

Secondary test is still in play

motorway


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## josjes

motorway said:


> Downhill is starting to become Uphill
> line of least resistance
> 
> But the Wave is still to be completed...
> 
> Secondary test is still in play
> 
> motorway



Meaning that we still have another wave down that will test and break the 11 March bottom ?


----------



## motorway

> Meaning that we still have another wave down that will test and break the 11 March bottom ?




No.. ( though there might )

It has not started to go up..
The "thrusts" are still down
and there are only corrective moves up SO FAR

That is why We need to see a successful "secondary test" 

All we can say for sure is that the  ease of movement is not so easy now.
And demand met supply in that last bar..

There was support.........

The wave down is not completed as in the sense used in the article in the link.

Any move up will reveal more "points of interest" and reveal "character"

I will try and keep the chart updated

Each move is a test and a response. see ?



motorway


----------



## josjes

motorway said:


> No.. ( though there might )
> 
> That is why We need to see a successful "secondary test"




So what consitutes a succesful "secondary test". What I am trying to get is if we can know what this secondary test in advance then we can take appropriate action. 

Cheers.


----------



## motorway

josjes said:


> So what consitutes a succesful "secondary test". What I am trying to get is if we can know what this secondary test in advance then we can take appropriate action.
> 
> Cheers.






The Secondary Test should have less selling then on the selling climax, We should see  decreased price weakness, a narrowing of the spread and most importantly decreased volume.  A Secondary Test confirms  that the down move has been stopped.

( It is not only the bar but the entire thrust down..compare No-3 to No-4 )

Now ... If this is a ST ... It is then the question of  stopped for what purpose.

This is Cause and Effect

Three possibilities 



motorway


----------



## Timmy

motorway said:


> The Secondary Test should have less selling then on the selling climax, We should see  decreased price weakness, a narrowing of the spread and most importantly decreased volume.  A Secondary Test confirms  that the down move has been stopped.
> 
> ( It is not only the bar but the entire thrust down..compare No-3 to No-4 )
> 
> Now ... If this is a ST ... It is then the question of  stopped for what purpose.
> 
> This is Cause and Effect
> 
> Three possibilities
> 
> 
> 
> motorway




Hi all,

This description of the Secondary test is very useful, almost like a checklist of what to be on the lookout for.
So the decreased price weakness is reflected in less price weakness (shortening of the thrust for example), check
narrowing of the spread (looking across a number of bars, not individually), check
decreased volume, check.

One of the things I grapple with is not just applying a checklist but keeping front of mind what it all means.  Having a checklist-type approach works for me, but I also must constantly and consciously remind myself of why these checklist items are important.  This may not be relevant to others, in which case please allow me to talk to myself for a few moments, but watching out for these indications of lessening of price weakness, reduced volume on the ST down leg, and so on shows me that either the selling is lessening in intensity, or buying is increasing in intensity, or both are occuring.  I have to remind myself of this because it is changes in the level of supply and demand and buying and selling that is important, not the actual checklist items themselves.  

For example, I may see a bar or two that have wide spreads, for example, and this might raise questions in my mind about the validity of the ST, is it actually happening, doubts etc.  But maybe the wide spreads are on low volume, and maybe the close on each bar is strong or at least not too weak - these are signs that the push down in price on these bars may well be transitory, there is still good demand - and this is what I am looking for, not the actual checklist items themselves.  


----

Motorway - you say here that a ST confimrs down move has stopped, and ask 'stopped for what purpose' ....

Let me have a go at this.  Hope I am on the right track.  I think I see 6 possibilitites, so I know I am on the wrong track somewhere !   

Price stops falling because demand and buying has increased
OR
supply and selling has decreased
OR
Both.

Price has stopped falling so it can now go :
Up
Sideways (probably most likely at least for some time as accumulation continues).
or down after a pause (probably the least likely given this is an ST).


----------



## CFD

Timmy I think you have 2x3 there rather than 6.
3 reasons for it stopping and 3 possible outcomes.
If prices fall looking for demand, the question is did they find it? If yes then prices could trend back up. If no (the fall stopped due to no supply) then the fall is likely to continue when volume returns. If it's your 3rd reason for stopping (both) then a sideways move could be on.

I wonder what the real answer will be


----------



## motorway

> The advisability of having even a news feed in the room, is a subject for discussion. The conclusion is that ‘news’ is ‘news’; the recording of what has already taken place, no more, no less. It announces the cause for the effect that has already been more or less felt in the market. On the other hand the tape tells the present and future of the market. Money is made in Tape Reading by anticipating what is coming - not by waiting till it happens and going with the crowd.
> 
> The effect of news is an entirely different proposition. Considerable light is thrown on the technical strength or weakness of the market and special stocks by their action in the face of important news. For the moment it seems to us that a news feed might be admitted to the sanctum, provided its whisperings are given only the weight to which they are entitled.
> 
> RDW 1908




Did We have some news ? Was it good ?

Do downtrends end with good or bad news ?

There was very little "good Buying" in the small rally from the low..
That Bar closed in the middle on highish volume---> Supply

There was demand emerging in the previous  down bar that broke below the "point of support" and set up a shakeout  ( how many would have gone short there ,  but where was resistance ?)

There is no successful Secondary test completed yet

Tomorrow could be very revealing...

Stopping is not the same as Starting

It can stop.. to consolidate the down move, back and fill, build more cause
and continue on down..

The positive is the lower volume in this last bar

The three reasons ?

Accumulation.........Not proved
re-distribution
nothing

People can just lose interest in a stock ( no sponsorship )
But  with this being the XAO... nothing is not a real option...

Now If the DOW falls 300 pts tonight
and headlines are all doom

And the XAO spikes down but meets demand ...Then that would be a real successful test..





> If prices fall looking for demand, the question is did they find it?



 Yes , but in the shakeout bar...( the fact it seemed to break a support line produced the high volume )



> If yes then prices could trend back up




we got the "good news" Supply withdrew and demand ( short covering ? ) chased....

But then the demand that was there was overcome by an almost continuous
flow of supply...With only "buying pressure" matching the selling near the close

( see the little P&F ....it is 2pt 2 rev chart..
No reversals on the way up, why  ?
But all the way down the move was tested )




> then the fall is likely to continue when volume returns




We are at a critical point and no doubt follow US lead
But it is then when the volume comes in that will reveal..

The Selling Climax marked is only a SC if it is proved by a secondary Test..

Test Response Test Response

Building cause.. 


discussion 

motorway


----------



## motorway

http://www.wyckoffstockmarketinstitute.com/wyckoff_step4.htm



> In each case, the primary trading position represents a last point of support following a sign of strength if an up move is anticipated, or a last point of supply following a sign of weakness if a down move is anticipated.




Demand and Supply , supply and demand  ( all there is )

Waves of Buying and selling.........



Price moves in waves 
A wave begins when the preceding wave finishes ( simple )
They last as long as they gather a following        ( obvious )    
when the following comes to an end
the next wave  ( a contrary wave ) begins

4 down waves still

Thrust on the fourth wave 
is still less

Still not much "new ground"  achieved

Last bar small range higher volume close near  the middle
What is the context ?

This wave is running into opposition

BUT (That is all )



> In each case, the primary trading position represents a last point of support following a sign of strength if an up move is anticipated, or a last point of supply following a sign of weakness if a down move is anticipated.







motorway


----------



## motorway

> 4 down waves still
> 
> Thrust on the fourth wave
> is still less
> 
> Still not much "new ground" achieved
> 
> Last bar small range higher volume close near the middle
> What is the context ?




And What do we see on a much smaller magnitude ?

4 waves down
Thrust shortening
NO new ground

Coiling

even some rising points of support...

tomorrow We will see the response

On this chart
the behavior changed..

motorway


----------



## josjes

motorway said:


> And What do we see on a much smaller magnitude ?
> 
> 4 waves down
> Thrust shortening
> NO new ground
> 
> Coiling
> 
> even some rising points of support...
> 
> tomorrow We will see the response
> 
> On this chart
> the behavior changed..
> 
> motorway



How is the response today Motorway. Do we see a successful Second Test ?
Look forward to your latest analysis. Cheers.


----------



## motorway

josjes said:


> How is the response today Motorway. Do we see a successful Second Test ?
> Look forward to your latest analysis. Cheers.




We saw some "good buying" and  (imo) a Sign of Strength..

Look at the 2x2 P&F

unlike the move at the left that was rejected

There is "work" at the top ( small congestion zone )
which did not produce weakness

( ie .. the profit taking was absorbed a little re-re accumulation zone )

Adjustment to the new price level
CONSOLIDATION

the last 5 columns are a "strong pattern" 

Do we have a successful secondary test ?

too early to say on the daily chart

we need to see  the red trend line negated..

However

There was volume off support
Demand did over come supply
There was an increase in  volume and range 
and the close was at the high of the bar.

imo we Need to see a rally into the middle of the larger trend channel
or support continue to hold



> In each case, the primary trading position represents a last point of support following a sign of strength if an up move is anticipated, or a last point of supply following a sign of weakness if a down move is anticipated.




You have to define the size of the trends you want to ride..

and look for that Last Point of Support..
I see a Sign of Strength...

on the scale of the 2x2 there was a LPS already and a good move up

motorway


----------



## Broadway

Motorway,

In a down trend with a selling climax I imagine volume being made up of 4 groups,

1. people selling their longs in a panic
2. people shorting but coming late to the party
3. people entering longs for the immediate rally up - 'wait for the herd, expect one third' type traders
4. people entering longs for the eventual ride up once the full wyckoff corner has completed.

I always wonder how much of the mass of volume at a selling climax is group 4? 

Because when I see a selling climax with seriously large volume, I wonder if the size of the volume allows us to label subsequent consolidation as a reversal, rather than a continuation?

Or to rephrase, can the level of volume at the SC be predictive of reversal?

thx.


----------



## motorway

> 1. people selling their longs in a panic
> 2. people shorting but coming late to the party
> 3. people entering longs for the immediate rally up - 'wait for the herd, expect one third' type traders
> 4. people entering longs for the eventual ride up once the full wyckoff corner has completed.
> 
> I always wonder how much of the mass of volume at a selling climax is group 4?




You start to see 4 even at preliminary support...
The wider the price spread the higher the volume in the SC

the more positive anticipation can be

But what really reveals is the strength and duration of the Automatic Rally

ie does the dead cat have any life ?


eg a small lateral move would be a negative sign

 An Automatic rally that is able to make ground back and have some duration

Is cause for positive anticipation.... Because there is not just short covering
and weak longs...there is suggestion of some of your number 4


A SC is only a potential SC until proved by a AR and ST

A ST is only a ST until proved by a SOS

and a SOS needs a last point of support

such that then ( as you have put it ) the




> full wyckoff corner has completed.





You are referring to the "character""  of the SC

The answer is I think yes.... It is always about the character

The probability is higher

and short term traders can take the a position in these individual waves

But until proved it is only potential

TEST RESPONSE TEST RESPONSE

motorway


----------



## motorway

Point and Figure
is a very instructive tool

imo It can almost teach you how to trade

I have used P&F for ages

even before i ever heard of Richard Wyckoff.

P&F is P&F
no matter what the scale ( ie. this chart could encompass days or decades )

Support and Resistance
is dynamic

The P&F chart reveals that S & R is not really above or below

But up ahead

the chart flows it meets obstacles
it congests
it speeds and slows

and when it dams up
it finds a new line of least resistance
or the wall collapses

Here is what is happening now
The flow has slowed and stopped
the flow ( No need to wonder imo why the term creek arose )
is meeting an obstacle here..

Support and Resistance always lie ahead
they are forces met..

We can see later what wins out here

It is not only congestion analysis
but also the speed...


motorway


----------



## motorway

> We can see later what wins out here




Supply 



> the chart flows it meets obstacles
> it congests
> it speeds and slows
> 
> and when it dams up
> it finds a new line of least resistance
> or the wall collapses




motorway


----------



## happyjack

Hi All
Some time ago when I was reading this thread I came across a trading system that had an Acronym for a name. I think it was 5 or 6 letters the letters and the name described the system. Only shares that paid dividends were considered so one letter was a "D" only shares that had an institution as a major shareholder were considered, so another letter was "I" I know that it came from an American university but that is all I can remember.

Can anyone give me a lead on this?

Happyjack


----------



## brty

Hi Happyjack,

Did you mean CANSLIM?

C - Current quarterly earnings per share has increased sharply from the same quarters' earnings reported in the prior year. (Beware of items in financial statements that can cause earnings distortions.)

A - Annual earnings increases over the last five years.

N - New products, management, and other new events. In addition, the company's stock has reached new highs.

S - Small supply and large demand for a stock creates excess demand, and an environment in which stock prices can soar. Companies acquiring their own stock reduces market supply and can indicate their expectation of future profitability. Look for low debt-equity ratios.

L - Choose leaders over laggard stocks within the same industry. Use the relative strength index as a guide.

I - Pick stocks who have institutional sponsorship by a few institutions with recent above average performance. Be cautious of stocks that are over owned by institutions.

M - Determining market direction by reviewing market averages daily.

bye

brty


----------



## motorway

hello Happyjack

The only thing that rings a bell

with letters acronym and method
is William O'Neil's

CANSLIM



> C = Current earnings per share. They must be up 18 to 20% or more.
> 
> A = Annual earnings. They should be up 25% or more in each of the last three years.
> 
> N = New. The company should either be under new management, have a new product, or have a new service. It should also have a new high for its stock price.
> S = Shares of common stock Outstanding:Keep it small. The price of a common stock with 300 million shares outstanding is hard to budge up because of the large supply of stock available.
> 
> L = Leader or laggard? Within an industry, always choose the company that is leading the way, not one that is following in another's footsteps.
> 
> I = Institutional sponsorship. Make sure large mutual fund companies (and other institutions) are investing in your stock - you can ride on their capital. Also, focus on the better performing institutions buying your stock.
> 
> M = Market trends and market indices. Recognize the cup and handle pattern, as well as other market correction footprints. Know when a stock has peaked out. Also, buy stocks only when the Dow, S&P 500, and Nasdaq are going up.




Not completely off topic
Here is  Richard Wyckoff 's 1920 version



> *The " Ten Vital Trends " Wyckoff 1920*
> 
> Corporate
> 
> 1 to financial strength or weakness ..........
> 2 of management ............ positive or negative
> 3 earning and dividend power......................up or down
> 4 to or from leadership in industry.............A leader or laggard
> 
> Trends of the Sector
> 
> 5 of The Industrial Group..........
> 6 Of business in general ( esp money and interest rates ) ...
> 
> Technical....( Graham's Mr Market But instead of a suggestive anecdote ,, A method )
> 
> 7 trend of Market...
> 8 trend of intermediate
> 9 trend of short term
> 10 accumulation distribution , trends of manipulation  ..........




On Mr Market



> Ben ) Graham's association with ( Richard ) Wyckoff began in 1919. When he Submitted an article
> entitled " Bargains in Bonds " to the Magazine of Wall Street and Quickly became a regular contributor.
> 
> Eventually Graham was offered the publication's chief editorship, with a generous salary and a sizable share of the profits. After considering the offer seriously ,he turned it down, perhaps influenced by the lure of a junior partnership that he received in 1920. Graham capitalized on his friendship with Wyckoff, however, to land his brother Victor a job in the periodical's advertising department.
> 
> Victor swiftly rose to head the department , then rode the crest of the Magazine of Wall Street's soaring circulation during the twenties. Advertising sales climbed and Victor prospered. Unfortunately ,he then fell in love with a young woman, whom he married in 1928.
> 
> Carrie (Ceclia G. ) Wyckoff was furious. According to Ben Graham, she had amorous designs on Victor, or hoped he would marry her younger sister, or both. Victor left her employ and embarked on a far less successful career in investment banking. Throughout it all, Ben remained on good terms with both Wyckoff's .....
> 
> 
> From...
> It Was a Very Good Year: Extraordinary Moments in Stock Market History
> By Martin S. Fridson




motorway


----------



## happyjack

Hi Brty and Motorway
That is the one I was thinking of, God knows where I got the Dividend bit from.

This time I will write it down but the last time I found it I was trying to concentrate on the Wykoff side of it I just pushed it to the corner of my mind.

Thank you for the time and effort you put it researching it for me

Happyjack


----------



## Broadway

Hey Motorway,

I have another question.

I think you mentioned that P+F charts and Wyckoff methods can be used to set a target. This would be good to learn.

Hypothetically, let's say last week (Monday) was a successful Secondary Test.
And I entered a long SPI position at 5100. (like many did!)
Where would the target(s) be according to P+F analysis? Or is this something you work out depending on what you see as the price goes up?

thanks again.


----------



## motorway

Broadway said:


> Hey Motorway,
> 
> I have another question.
> 
> I think you mentioned that P+F charts and Wyckoff methods can be used to set a target. This would be good to learn.
> 
> Hypothetically, let's say last week (Monday) was a successful Secondary Test.
> And I entered a long SPI position at 5100. (like many did!)
> Where would the target(s) be according to P+F analysis? Or is this something you work out depending on what you see as the price goes up?
> 
> thanks again.







> The law of cause and effect states that the excesses that develop in supply and demand are not random but are the result of key events in market action or the result of periods of preparation.  Wyckoff teaches what these developments are and how to judge when they are unfolding in time to take advantage of the excesses in supply or demand that will follow.
> 
> http://www.wyckoffstockmarketinstitute.com/goal_article.htm





P&F is used to quantify this unfolding imbalance.
It is measuring the "differences of opinion"' that when resolved will result in the price moving to a new level

Price moves to the new level by the principle of  markup and markdown..

( inventory can be simply marked up or down it does not have to trend..That is why the imbalance in demand and supply... The cause that will have an effect is important to identify )

This quantity is the  objective ( like the target of an archer. The bow is an energy storage device that releases and flights the arrow.

How important is it to recognize the energy in the bow before the arrow is shot.. rather than when the arrow is in flight esp if that bow was pointing at YOU )

What is the Wyckoff Method ?

It is identifying imbalances of demand and supply
it is not moving averages
it is not buying breakouts
it is not any indicators

it is 

demand and supply
cause and effect
effort and result

The best way to get a grip of a P&F chart 
is watch one in real time unfold

those differences of opinion.. arise and are resolved

the chart flows , it congests-----> pressure builds ( the bow is drawn )

The most important differences are those between

Strong and Weak hands

A stock goes down there is selling overcoming demand
But the transfer of ownership builds a "cause"

stability creates instability ( sub-prime excesses ? )

The P&F and esp the areas of congestion identify this cause building




> We have defined a Tape Reader as one who follows the immediate trend.
> This means that he pursues the line of least resistance.
> 
> A mechanical engineer, given the weight of an object, the force of the blow that strikes it, and the element through which it must pass, can figure approximately how far the object will be driven.
> 
> So the Tape Reader, by gauging the impetus or the energy with which a stock starts and sustains a movement, decides whether it is likely to travel far enough to warrant his going with it - whether it will pay its expenses and remunerate him for his boldness.
> 
> 
> When a stream breaks through a dam it goes into new territory. Likewise the breaking through of a stock is significant, because it means that the resistance has been overcome.
> 
> The stronger the resistance, the less likelihood of finding further obstacles in the immediate vicinity. Dams are not usually built one behind the other.
> So when we find a stock emerging into a new field it is best to go with it, especially if, in breaking through it, it carries the rest of the market along.




That is early Wyckoff from 1908/1909 

The best measure of this resistance is the congestion on the P&F

It it not a horizontal line drawn from a top or bottom

It is the differences between Strong and Weak hands
It is opposing forces being overcome

Demand meeting Supply
Supply meeting Demand

Sentiment and Ownership changes.

P&F is very instructive
If you have the opportunity to watch 

A P&F chart "FLOW" through through time

You  will soon appreciate what 
resistance is and what happens when it is overcome

It is always something met up ahead
It is the running into the opposite force

The more congestion on the P&F
The more new ground that will be
achieved

Bull markets are the "cause" of bear markets
Bear markets are the "cause" of bull markets

An important Wyckoff principle is the springboard.

Where is the spingboard for a move really ?
It is  not the breakout to new or highs or low.

That is the move itself that will gather a following
It has already sprung already..



motorway


----------



## motorway

> These articles are directed at two audiences.
> 
> The first are those traders who are unfamiliar with
> the Wyckoff method. While they may have read articles or books about Wyckoff  *or interacted with others who profess to be knowledgeable about the Wyckoff method*, they have never embarked upon a step by step course of study intended to result in a working knowledge of the Wyckoff approach to technical trading in the stock market.
> 
> The other audience that can benefit from these
> articles is the previously educated.  These are traders and investors who have made a comprehensive study of the Wyckoff approach and who are endeavoring to employ it in their market operation.
> 
> http://www.wyckoffstockmarketinstitute.com/corner.htm




I would totally endorse those sentiments

The WYCKOFF-SMI course is the real deal imo

Just point out I am not pushing myself forward as any type of expert

SMI are posting some very nice articles...

I recommend you grab that small bit of unit one linked in the first post

It contains a nice definition of the three laws.

sharing and discussion

motorway


----------



## motorway

Charts might be marked a bit different

( had some problems lost some saved charts )

Bar chart

A large Volume down bar

BUT rising bottoms and second and third bars
deem that volume to be demand

You need to see the last three bars as one bar
A three day bar... But only these three

The next four bars might be a theme
and then the next six ....
if only We had a chart that could do that for us

Adapt to the support and resistance  as it unfolds 

and only change columns as the themes change---------P&F

The 2 box  2point chart over these three days as been a very strong pattern

We left it with the other side turning up ( demand ) the chart slowed and congested...But at the end of the day the "ladle" overflowed
But not by much

From there ( a higher low ) a strong move up above the last high
a "back-up"  and then a strong move pushing through supply

Demand was moving higher "absorbing" and pushing through supply..
A strong pattern

USA mkts will again have the ability to whip this around
BUT  strength is still strength..

And atm this thrust down ( this wave ) still has not made much new ground.

motorway


----------



## ceasar73

*R.WYCKOFF*

"Stock prices are made by the minds of men."

I'm no expert, but I tend to agree.

Any thoughts on R.Wyckoff?

thanks

ceasar73.


----------



## motorway

The Link to this Pruden Article is not longer available
It was available for a significant period of time..

It is from --->  TSAA Newsletter August, 1995

I would refer always to the SMI-WYCKOFF original material

You are always getting a bit of someone else ( which does not mean it is not valuable ) When the material is from a second hand, and a different emphasis.

motorway included  

motorway




> MENTAL STATE CONTROL
> 
> AND THE COMPOSITE OPERATOR
> 
> by H. O. Pruden, Ph.D
> 
> We gain some substantial degree of MENTAL STATE CONTROL/EMOTIONAL CONTROL if we train ourselves in the attitudes and actions of the COMPOSITE OPERATOR.
> 
> 1. a. Wyckoff/SMI argue that "…rigid self-control is half the battle…"
> 
> b. Van K. Tharp concludes that investment success "…comes when the investor realizes that investment success does not come from external control, but from internal control."
> 
> 2. a. Wyckoff/SMI counsel: "Until you can learn to trade and invest without hope or fear, you will not meet with all the success you should."
> 
> b. Van K. Tharp observes the "investment problems result from emotional states such as impatience; compulsiveness; anger; fear; being stuck; or depression…In fact, most investment problems that I can think of result from an inappropriate state of mind."
> 
> 3. a. Wyckoff/SMI state: "…you must operate with no emotions whatever."
> 
> b. Van K. Tharp states: "Discipline is (mental) state control."
> 
> 4. a. Wyckoff/SMI report that "…the qualities essential to the equipment of a speculator (and an investor), are: judgment, self-reliance, courage, prudence, and pliability. To these could be added another quality, patience."
> 
> b. Van K. Tharp concludes: "Achieving excellence usually occurs as a result of attaining states, such as confidence, that are appropriate…"
> 
> 5. a. Wyckoff/SMI: "If you find you do not possess courage, self-reliance, patience, prudence, and pliability, cultivate those qualities."
> 
> b. Van K. Tharp: "What you really need is the ability to call upon that state at will and to maintain it."
> 
> 6. a. Wyckoff/SMI: "…you must train yourself…Make a searching analysis of your own mental process."
> 
> b. Van K. Tharp: "My primary goal in this volume is to help you develop state control. Focus on what is going on within you instead of what is outside of you. Become aware of what is going on inside you. When you do, I think you will be amazed at what you discover."
> 
> 7. Van K. Tharp: "State control is not that difficult. At least six major methods include:
> 
> 
> 8. Tharp: MODEL OTHER PEOPLE
> 
> Thinking about someone who can easily attain the state that you want also can help you change your experience.
> 
> 9. The person you model may even be a FICTIONAL character in whole or in part.
> 
> Tharp:
> 
> You can even do this for a fantasy figure. Imagine a super investor. How would that person handle the situation that is bothering you? How would that person look? What would that person feel like? What state of mind would your super investor be in to deal with the situation confronting you? Again, get the answers to these questions and then role play.


----------



## motorway

continued



> 10. Wyckoff/SMI provide us with just such a "fictional" *SUPER TRADER: THE COMPOSITE MAN:*
> Composite Man
> 
> In studying, understanding, and interpreting market action, we consider all market action as a manufactured operation in which the buying and/or selling is sufficiently centered and coming from interests better informed than the generally untrained individual investor/speculator. The many large interests which do have an effect on the market place (trust companies, banks, mutual funds, investment trusts, investment companies, hedge funds, specialists, position brokers, etc.) are best thought of as the "Composite Man."
> 
> This Composite Man causes the market to act and react. Or, what actually happened is the market responds to the ageless, natural Law of Supply and Demand. The Composite Man and the effects of the Law of Supply and Demand are relay synonymous. It is the result of the motives, objectives, hopes, and fears of all the buyers and sellers whose actions produce the net effect upon the market.
> 
> Other terms which may be thought to be synonymous with the Composite Man would be the "Market", the "Sponsor", the "Operator", or "They". These terms are used interchangeably throughout the text. The selection of the terms is determined by what is most meaningful to the student. It should be your objective to think of the Composite Man as the primary force in the marketplace. Thinking of him in this light should enhance your analysis of the action resulting from the dominant groups operating within individual stocks and their total effect within the general market place.
> 
> 11. Richard D. Wyckoff based the COMPOSITE MAN, and based his own trading philosophy, upon his observations and intimate understanding of such famous old-time professionals as James R. Keene, Russell Sage, Edward H. Harriman, and Jesse Livermore.
> 
> 12. Indeed, Edwin Lefevre's Reminiscences of a Stock Operator, which is based upon Jesse Livermore, is an excellent model of the COMPOSITE MAN or COMPOSITE OPERATOR.
> 
> 13. Dubin examines how fictions enable decision makers to more adequately cope with the unknown.
> 
> Organization fictions are those fictions that are necessary in order that action within the formal organization may proceed.
> 
> 
> 14. The concept of the COMPOSITE OPERATOR serves a function similar to the role or organization fictions.
> 
> 15. Playing the role of the COMPOSITE OPERATOR enables the market decision-maker to escape his/her "egocentric predicament".
> 
> There is no more serious error that a marketer can make than to allow himself to be caught in the "egocentric predicament". In the realm of philosophy, from which the expression is borrowed, the egocentric predicament simply describes the basic situation in which each one of us finds himself, namely, that he has to look at the world through his own eyes. In marketing, the implication of the phrase is that any seller who succumbs to the natural temptation to look at his problems solely from his own viewpoint and who does not make a conscious effort to overcome the natural limitations of his own outlook will indeed find himself in a predicament. Look at every problem from the standpoint of the COMPOSITE OPERATOR!
> 
> 16. Overcoming the "egocentric predicament" by playing the role of the COMPOSITE OPERATOR automatically neutralizes the emotions by placing one is a dissociated position. Tharp notes that:
> 
> One of the biggest secrets of trading success is to remain cool, detached, and unemotional. Most traders who obtain and maintain that detachment do so by being dissociated. In other words, instead of actually experiencing the ups and downs of the market, they watch themselves having that experience. When Dick, the trader introduced in the opening story, became anxious, he moved to a dissociated position to observe himself. Other traders who undergo extreme emotional ups and downs as the market fluctuates go through those emotional swings because they remain associated. Simple dissociation is an effective way to neutralize your emotions.
> 
> 17. Playing the role of the COMPOSITE OPERATOR forces us to reframe our perceptions. As Robbins explains, "…The meaning of any experience depends upon the frame we put around it. If you change the frame, the context, the meaning changes instantly. There are ways to see our biggest problems as our greatest opportunities -- if only we can step out of our trained patterns…If we change our frame of reference by looking at the same situation from a different point of view, we can change the way we respond in life. We can change our representation or perception about anything and in a moment change our states and behaviors. This is what reframing is all about."
> 
> 18. By assuming the role of the COMPOSITE OPERATOR we can create dissociation and cause reframing. We will see market events differently; we will talk to ourselves about those events differently and in a different tone of voice, and we will feel differently about those events. As a consequence, our behaviors will more appropriately move us toward our objectives.
> 
> 19. Wyckoff/SMI implore us to follow in the footsteps of the COMPOSITE OPERATOR -- to think like him and to act like him:
> 
> a. Like individuals, stocks have certain characteristics with which one becomes more and more familiar as he studies intensively their past and present movements. *The market is made by the minds of men, and all the fluctuations in the market and in all the various stocks should be studied as if they were the result of one man's operations.* Let us call him the Composite Man, who, in theory, sits behind the scenes and plays the stock to his advantage. It's to your disadvantage if you do not understand the game as he plays it; and to your advantage if you do understand it.
> 
> Not all of the Composite Man's moves can be detected. Not all of the moves are made by the Composite Man. In fact, it does not matter to the tape reader or the chart reader whether the moves are real or artificial, that is, the result of actual buying and selling by the public and long term investors or buying and selling by large traders. Most of the important trades in the market are prepared, executed, and concluded. It is our business to show you how a large number of these trading and investment opportunities may be spotted in time to take advantage of them.
> 
> b. The Composite Man carefully plans, executes, and concludes his campaigns.
> 
> c. A 'broad market' is created by the Composite Man advertising his stock on the ticker tape.
> 
> d. Study charts with the purpose of judging the behavior of the stock and the motives of those who dominate it.
> 
> e. To study charts, look for the motives behind the action which the chart portrays.
> 
> f. But, the market behaves naturally in this very manner. And, if you learn to understand this market behavior of a so-called Composite Man, you can learn to make judgements, then conclusions, which should have a positive effect in your stock market operations.
> 
> 20. To attain the perspective of the COMPOSITE OPERATOR, we should ask ourselves such basic questions as: "What is the motive of the COMPOSITE OPERATOR?" and "What would I do if I were the COMPOSITE OPERATOR?"
> 
> 21. In addition to the basic two queries about the COMPOSITE OPERATOR, we can add such complementary questions as: "What is it that the COMPOSITE OPERATOR is attempting to prepare or carry out or conclude?"; "What is the COMPOSITE OPERATOR attempting to do to the public and for what purpose?" As you gain understanding through practice with the role of the COMPOSITE OPERATOR, you'll want to add your own questions to the list.
> 
> 
> REFERENCES
> 
> 1. Brown, England and Matthews, Problems in Marketing
> 
> 2. Robert Dubin, Human Relations in Administration
> 
> 3. Edwin Lefevre, Reminiscences of a Stock Operator
> 
> 5. Van K. Tharp, How to Develop Discipline to Become a More Successful Investor
> 
> 6. Richard D. Wckoff, Wall Street Ventures and Adventures Through Forty Years
> 
> 7. Wyckoff/SMI, The Richard D. Wyckoff Course in Stock Market Science and Technique


----------



## RichKid

motorway said:


> The Link to this Pruden Article is not longer available
> It was available for a significant period of time..
> 
> It is from --->  TSAA Newsletter August, 1995
> 
> I would refer always to the SMI-WYCKOFF original material
> 
> You are always getting a bit of someone else ( which does not mean it is not valuable ) When the material is from a second hand, and a different emphasis.
> 
> motorway included
> 
> motorway




Thanks a million motorway, that article has some very practical, and hopefully, very powerful advice. The psychology behind the techniques is very interesting and is worth adopting in a suitable manner.

The fact that you refer constantly, and in detail, to Wyckoff's original material is one distinguishing feature of your writing and explanation. It certainly allows readers to glimpse the core of his teachings and judge the material for themselves instead of just swallowing someone else's gloss or simplified interpretation of the course. I'm sure Wyckoff would have been proud of your efforts. 

Thank you again for sharing your passion with us so freely in such a collegiate manner!


----------



## Timmy

RichKid said:


> Thanks a million motorway, that article has some very practical, and hopefully, very powerful advice. The psychology behind the techniques is very interesting and is worth adopting in a suitable manner.
> 
> The fact that you refer constantly, and in detail, to Wyckoff's original material is one distinguishing feature of your writing and explanation. It certainly allows readers to glimpse the core of his teachings and judge the material for themselves instead of just swallowing someone else's gloss or simplified interpretation of the course. I'm sure Wyckoff would have been proud of your efforts.
> 
> Thank you again for sharing your passion with us so freely in such a collegiate manner!




Really well put RichKid, second your sentiments.

I found the article excellent.  A lot of 'psychology of trading' works I find simplistic and less than helpful.


----------



## nomore4s

Motorway,

Just a quick question on reverse trendlines.

On the attached chart of SIP I have drawn some reverse trendlines (in White) as well as the normal TL (in red). Reverse TL are drawn between the last to thrusts down with high volume.

I've used the reverse TL to highlight the slowing of the thrusts down and change of behaviour on the chart (ease of movement). Is this use of reverse TL valid?

Thanks


----------



## motorway

> Strong day for the overall market and also a good day for SIP.




The last two bars esp I think reveal demand




> The ease of movement has very obvioulsy slowed since around July 07 - between points 5 - 7. The thrusts down have slowed considerably and the last thrust down has taken longer than the rest for not much new ground.




I would see Preliminary Support at July 07
A Selling Climax at  sep 07....Which stopped the downtrend

But 



> And look at the volume needed to push the price below $1.30. Effort & Result.
> The next few days will give more insight into whether yesterdays high vol was demand or not but todays action seems to suggest it was.




Yes I would agree



> This may not be the end of this current wave down as I would like to see a better rally than 1 day but the next rally and reaction will reveal more insight (character).




Yes We want to see a Sign of Strength




> What I see atm is -
> Slowing of momentum to the downside - shortening of thrusts (has yet to go up though)
> The volume that has come in, has slowed the descent. Ease of movement - line of least resistence revealing itself?




The line of least resistance is changing
But a new one is not just yet revealed ( to me )

There is a damming up happening



> Supply & Demand
> Effort & Result
> Cause & Effect




All there is 




> But



 now this but... I think it is very good to be questioning of all moves down in this type of mkt

The Selling climax maybe has in a sense  failed
But in the context of the market has it failed or is the ending action just been extended and delayed ?

The volume at PS  & SC was very large

The action from the SC volume subsided esp Dec Feb Mar

What was happening ?

Yes I think Your reverse trend line is justified

A reverse trend line needs a volume definition in one position
it is where the other side ( the reverse ) came in

Here it is demand !

So if you take the lower line of the reverse use
and the upper line of the normal use

What have you drawn ?

A valid APEX

The thrusts are not only making less ground
But the action is narrowing

My take on that would be that supply withdrew had been overcome
But where we could have expected a SOS we got very little

Did the Character of the market delay the appearance of demand ?

You can see the price drifts down with three rejections of lower prices
( like springs But these are in a down trend )

The stock is moving down with the market
But not being driven down with urgent supply

The stock is just sagging ( A RED FLAG at a TOP but at a BOTTOM ? )

This changes around the 20th mar..

( Supply will always turn up )

The last two bars tend to confirm buying..

BUT what are the buyers' time frames ?

Maybe much longer than yours? 

What would tell us would be urgency.. 

A SOS ( Sign of Strength )

Note also the recent strength in the mkt
and the relative weakness in this stock

The Sellers reached down to the buyers
The last bar puts the positive case.

discussion 
motorway


----------



## Whiskers

Timmy said:


> Really well put RichKid, second your sentiments.
> 
> I found the article excellent.  A lot of 'psychology of trading' works I find simplistic and less than helpful.




Yes indeed. I thirded o) it. 

As you can probably tell, this quote is high on my 'remember list'. 



> 16. Overcoming the "egocentric predicament" by playing the role of the COMPOSITE OPERATOR automatically neutralizes the emotions by placing one is a dissociated position. Tharp notes that:


----------



## nomore4s

motorway said:


> now this but... I think it is very good to be questioning of all moves down in this type of mkt
> 
> The Selling climax maybe has in a sense failed
> But in the context of the market has it failed or is the ending action just been extended and delayed ?
> 
> The volume at PS & SC was very large
> 
> The action from the SC volume subsided esp Dec Feb Mar
> 
> What was happening ?
> 
> Yes I think Your reverse trend line is justified
> 
> A reverse trend line needs a volume definition in one position
> it is where the other side ( the reverse ) came in
> 
> Here it is demand !
> 
> So if you take the lower line of the reverse use
> and the upper line of the normal use
> 
> What have you drawn ?
> 
> A valid APEX
> 
> The thrusts are not only making less ground
> But the action is narrowing
> 
> My take on that would be that supply withdrew had been overcome
> But where we could have expected a SOS we got very little
> 
> Did the Character of the market delay the appearance of demand ?
> 
> You can see the price drifts down with three rejections of lower prices
> ( like springs But these are in a down trend )
> 
> The stock is moving down with the market
> But not being driven down with urgent supply
> 
> The stock is just sagging ( A RED FLAG at a TOP but at a BOTTOM ? )
> 
> This changes around the 20th mar..
> 
> ( Supply will always turn up )
> 
> The last two bars tend to confirm buying..
> 
> BUT what are the buyers' time frames ?
> 
> Maybe much longer than yours?
> 
> What would tell us would be urgency..
> 
> A SOS ( Sign of Strength )
> 
> Note also the recent strength in the mkt
> and the relative weakness in this stock
> 
> The Sellers reached down to the buyers
> The last bar puts the positive case.
> 
> discussion
> motorway




Thanks for the reply MW. 

Lots to take out of the above part of the post.



> BUT what are the buyers' time frames ?
> 
> Maybe much longer than yours?
> 
> What would tell us would be urgency..
> 
> A SOS ( Sign of Strength )




This is a very valid point, hence why I haven't taken a position yet. 

Demand does not seem to be in a hurry and is willing to wait for supply to come to it atm. But in the current market conditions why would it be in a hurry? Plenty of time to accumulate and plenty of supply around at these levels atm, no need to chase prices up yet.

But someone is willing to slowly soak the supply up atm. Early stages



> First they scare you out, then they bore you out, and then if they can they scare you out again.



This quote readily comes to mind with this stock atm.

ATM I'm using this stock as yet another learning expirence. As it has been unfolding I've learnt quite abit in regards to the Wyckoff principles. My understanding continues to grow. Posting the chart and analysis up helps to crystalize my thoughts, also feedback from other posters always helps.

Thanks all.


----------



## motorway

The Principle of The Composite Operator is central to why the other Principles exist and why they unfold...

Why ?



> The "Method" takes for granted:
> That those who know more about it than the observer cannot conceal their future intentions regarding it. Their plans will be revealed in time by the stock's subsequent action.
> Victor De Villiers, "The Point and Figure Method of Anticipating Stock Price Movements", Published 1933, pg 8




If we see the market ( for anything ) as like a pendulum we see that 

IT SWINGS..... But for why and for who ? 

note------>







> Stock Market and sector forces together typically cause 80% of the price movement in a stock. That means the company fundamentals usually account for less than 20% of a stock’s price movement. This is the reason a company’s stock price sometimes seems to move independently of the fundamentals!Source: “The Latent Statistical Structure of Securities Price Changes”Benjamin F. King







> Most people, however, spend 80% of their time on stock evaluation and only 20% on sector and market evaluation. In other words, they ignore where the greatest amount of risk lies –the market and sector forces. Source: “The Latent Statistical Structure of Securities Price Changes”Benjamin F. King





The why and for who is The Composite operator..
This makes it so important that we identify accumulation and distribution
So we can be in harmony with these swings ( the biggest swings are bear and bull markets )... 

 imo A Wyckoff trader does not want to follow or fade... A Wyckoff trader trys to be in harmony...

When the CO is accumulating He can not wait for the swing down to stop
he has to buy on the way down.... That is why if we think we see a Selling climax... We have to ask was there preliminary support and why a Sign of strength should follow a test etc

The CO can not wait for the Buying Climax to sell . He has to start to sell on the way up.. So if We see a buying climax there should be preliminary supply
and after a test Signs of weakness.......



> Richard D. Wyckoff introduced the concept of the composite operator in the early 1900's, when pools
> (manipulators) were in existence. These pools routinely worked with each other for the purpose of influencing
> a particular stock.
> 
> It’s under these conditions that Wyckoff began to interpret all market action as a
> manufactured operation, in which the buying and/or selling is sufficiently centered and is coming from
> interests better informed than the generally untrained individual investor/speculator. (Pruden 1994)
> 
> These
> big money players, in this case, the “elephants” (Central Banks, Investment banks, FX broker/dealers, Hedge
> Funds and CTA/CPO types) exert an enormous amount of influence over the global currency market. In fact,
> the methods of manipulation practiced by Richard D. Wyckoff and other old-time professionals, such as
> James R. Keene and Jesse Livermore, are the same type of manipulations that are practiced globally in
> today’s currency market.
> 
> These manipulations are often considered normal business activity, as they are
> necessary for the proper functioning of the markets.





Anticipation is not the same as prediction..
We anticipate by identifying the technical position that is unfolding.
We observe accumulation and distribution 
Principles of demand and supply things that are real

Because, "They" really cannot conceal their future intentions regarding it.

They have to accumulate or distribute ( Buy or Sell ) FIRST..

This is want is a CAUSE




> A recent article in the Economist told the story of Felicity Foresight, a woman gifted with the ability to see the future. Since 1900, Felicity invested one dollar (one time) and succeeded in picking the best performing investment class every year.
> Today, she would be 110,000 times richer than Bill Gates (For those who are curious, she would have $9.6 quintillion - 96 followed by 17 zeros). It took her 55 years to become a millionaire and 86 years to become the first trillionaire. Over the last century, her incredible gift earned her a 55% average annual return. Even if we take away taxes and trading costs, she would still be worth $1.3 quadrillion (only 14 zeros).
> 
> Now lets take a look at Felicity's friend Henry Hindsight. Henry was different because he did not possess the ability to foresee the future. Henry had to resort to strategies much more typical of the average investor. Henry always picked the best performing investment class from the previous year. I call Henry the trend follower.
> 
> Unfortunately for poor Henry, his investment strategy led him to poor investment choices. Over the past 50 years, chasing last year's winners led to a loss approximately every other year. Henry's dollar in 1900 is now a mere $783 - a far stretch from Felicity's quintillions. As sad as this sounds, most investors think they can be Felicity Foresight but wind up being Henry Hindsight.
> 
> The proof is in the fact that last years winners always attract the most money from new investment dollars.





So we see accumulation PS SC AR ST SOS LPS
We get in harmony we step out of the "egocentric predicament" 
And seeing strength in weakness ( B% at 6.6% ! ) We do not fear

and when we see PSUPPLY BC ARc ST SOW LPsupply , seeing weakness in strength ( B% at 80% !) We do not hope...



> Anyone who buys or sells a stock, a bond or a commodity for profit is speculating if he employs
> intelligent foresight. If he does not, he is gambling.
> Richard D. Wyckoff, American pioneer in technical stock analysis.
> 
> 
> Richard Wyckoff's first instruction to students of his stock analysis method published in the 1930s was
> quite simple and specific””forget all the decision-making factors you ever used.
> 
> All you need to know is
> in the table of stock prices and volumes in your daily newspaper.
> With this back-to-basics approach, Wyckoff promised to show his students "the real rules of the game"




file attached which shows a nice dynamic

Why and for who does the market Swing ?
Does it swing for YOU

motorway


----------



## motorway

OK

think of that cycle of emotions

when looking at this chart
and note the postion of the B%

( remember the B% is the percent of stocks in the XAO which have found support, moved up made a test down and then moved above a point of resistance... demand and supply )

price has moved above the half way point ( a measure of the real relative strength )

My last comment was Strength is strength... price has moved higher on good volume ..Prices moved up and found supply..l A little congestion zone was encountered..

Look at the volume ... look at the range of the bars.. look at the volume ( fade ) look at where the closes of those bars where and look at what the B% was doing !

ABSORPTION ..

What is happening NOW

narrow range bar higher volume close in the middle

The thrust of this bar is shorter ( SOT )
Volume reveals that the good demand has met much more supply

look left .. what is there ?

So we have a turning point and a move back down ( maybe another secondary test ... or set up a Last point of support ? )

Or will demand again absorb this supply and after some "resting" move even higher

Price will always swing.. because the waves of buying and selling gather a following.... and these followings have a life cycle... early adopters to laggards

The last bar is not a NO DEMAND bar...

more later

Discussion 

also the P&F 
what does it suggest ?


motorway


----------



## motorway

The P&F chart..is like a bell around the neck of the CO
and like a ball and chain around his ankle

No matter what the CO does 

The P&F is always moving exactly the same


The move up from the congestion zone ( congestion zone = risk to what has been ... and a Cause for what will be )

Is a strong pattern ( one step back = absorption )

motorway


----------



## motorway

> The Principle of The Composite Operator is central to why the other Principles exist and why they unfold...
> 
> Why ?







> IT SWINGS..... But for why and for who ?




The CO has to sell on the way up and he has to buy on the way down.

( At least he starts to... 1- No turning points otherwise 2- The CO's volume is the volume of the mkt ...The CO is the one on the other side of the spread to "Mr Market" )

The pendulum swings Up and Down...

Each swing up is building a cause for the next swing down
Each swing down is building a cause for the next swing up

The CO uses the liquidity that is generated by those swings .
Liquidity created by  emotions & by  corners  ( opes prime ?, poor FA & TA , broken investors, stupid investors  greedy investors !)

Technical positions are being constantly created

People under water ( The press is full of it... ) Hold their breath for as long as they can  , but until they stop , those waters will not recede..

( Risk risk RISK , Money is put at risk, always there is risk)

"It only goes up after you sell,
 It only goes down after you buy"


Mkts can move in only three active ways ( they can also do nothing )

UP
DOWN
& SIDEWAYS

We define movement by a series of highs and lows

UP is a series of higher highs and higher lows
Down is a series of lower lows and lower highs

Sideways is a series Higher Highs  & Lower Lows
         or
A series of lower lows and lower highs

here defined are all possible patterns
trending , expanding . contracting ( dampening ) 

By measuring these swings
their thrust their duration & the Volume

In the context of position

We can identify the actions of the CO

and Hitch a ride on these swings

Keeping our heads above water
Riding waves not being smashed by them

The largest participation occurs at tops and bottoms
like moths to a flame or lemmings to a cliff

when trends are just about to enter Corners

( Just read through Saturday AFR , You name it it blows up ------The corner is always up ahead  )

The action of the market unfolds by a series of waves
because action always gathers a following

We can measure this following
and so we can identify when the following meets opposition ( selling into the trend ) or simply wanes ..

how urgent , climatic etc

Price .... how far ( result )
Volume.... how much ( effort )
Time......how long ( duration )

backing and filling
information and  manipulation , create following

The swings build causes

And in the context of STEP ONE  ( That is why it is No-1 )

Are we coming or going ( what is the trend and what is the position in the trend )

Little swings build into bigger swings,, Same principles just different degrees

So The small trader can wait for those swings , those waves .
and ----->



> Figuratively speaking, therefore the small trader should imagine himself as a hitch-hiker in the market. For the ordinary hitch-hiker, someone else supplies the car, chauffeur, oil and gas. When he thinks the car is about to go in his direction, he jumps aboard and rides as far as he thinks the car will go.
> 
> When he notices the machine has been stopped by a red light, or is about to turn a corner and go in some other direction, or that the car is running out of gas, or the brakes failing to work properly, he steps off and figures he has secured about as long a ride as he may expect.
> 
> All he has supplied in this transaction is a modest commission and whatever brains were necessary to observe and recognize the opportunity when to get on and off.
> 
> So it is with the market. The observer, whether a small trader or large operator, watches for his opportunity. When he sees a chance that offers reasonable odds in His favor, where the probability of profit far exceeds the risk, he buys, limits his risk and awaits developments.
> 
> So long as the stock behaves properly, in accordance with the technical action that confirms his original judgment, he maintains his position. As soon as he finds the stock has reached it's indicated objective....
> 
> Begins to waver in it's stride, or passes through a set of maneuvers that clearly indicate supply is increasing, and a reactionary movement seems imminent, he acts on the information thrust upon his attention and gets out.......
> 
> Richard D Wyckoff
> Stock Market Technique ( vol 2 I think ~ 1934 )





http://www.wyckoffstockmarketinstitute.com/corner.htm 

SMI is putting up some good material...eg all of The Five Steps

motorway


----------



## motorway

> Livermore came to wall street in 1906 confident and ready to conquer.
> Too cocky for his own good, he lost it all in his first bust. ............................Buying stocks is different from reading the tape. If he saw a stock at 20 in the bucket shops and thought it would go to 24. he could buy at 20, and when it got to 24 he could "sell" for a 20 percent profit.
> 
> But on Wall Street he would take his $50,000 and plan to buy 2,500 shares of the stock. That was a hefty position in a market much smaller and less liquid than today's and the spread between bid and offered prices was often huge. it wasn't abnormal to see a stock quoted at 20 bid, offered at 25 - a 25 percent spread. Suppose a stock traded last at 20 but was quoted 19 bid, offered at 21. He started buying at 21, plus commission.
> 
> But then his own buying would drive the stock up. It might take him until 24 to get his entire portion built. Then, if he thought it would fall and started to sell , it might be quoted at 23 bid, offered at 24. he'd then start selling but never get a better price than 23, less commission, and take a loss on his first sale. Then he would drive the stock down and take a loss on the liquidation of his remaining 2,500 shares. It's a lot harder to make money in reality than it is to do on paper - something which few people today, except for institutional money mangers, seem to realize.
> 
> For instance, investment newsletters "manage" portfolios the same way Livermore traded bucket shops. But actually operating off the newsletters' advice is like Livermore's buying on Wall Street.
> Livermore didn't get that at first. He though he couldn't read the tape fast enough on wall street.
> 
> Ken Fisher, 100 minds that made the market





So on one side of the buy - sell  spread is Benjamin Graham's "Mr Market"

Always on the wrong side 

On the other side of the spread is the Composite Operator ...

ALWAYS on the right side

Strong and Weak hands

Tops and Bottoms
Bull and Bear Markets

What is our task ?




> Traders respond to input based on the model of the market they have built for themselves. A positive response grounded in Wyckoff's
> theory of the Composite Operator will have distinctly different--and I
> would argue, consistently more profitable outcomes ,than will a
> negative response to input based on the theory of Contrary Opinion.
> Understand and work with the Composite Operator--rather than against
> the Public.
> 
> Hank Pruden





Four Phases of the Market

Accumulation ( A position has to be taken )
Mark-up        (Rallies have support)
Distribution  ( A position has to exited )
Mark-down    ( Rallies do not have support)

Signatures of Price Volume And Time
That We can observe , identify and measure.

Signs of Strength ( demand )
Signs of Weakness ( Supply )

motorway


----------



## motorway

volume traded is buyer & seller
But only one side of the spread is of "good" quality
The other side being of "poor"

Volume is the meeting of demand and supply
Two things seen as one

But 

How different is demand and supply ?

Think of any company... So many shares outstanding, of which so many are listed and even fewer available to buy...

Those available to buy = Supply

Supply is finite , it is limited .
Supply has a source , it flows , it has a speed , it can be absorbed 

It is like a "creek"  it can be "jumped"

Demand compared to supply is (almost) infinite

It surges , it waxes and wanes , it can be present or absent. We have seen it almost vanish in some cases recently..

Demand and Supply


We are always looking for where the volume comes in (  what it does )
and where it subsides.

It is the volume that gives clear defined boundaries--that mean something.



> If the history of the market were to be written, these periods of lifelessness should mark the close of each chapter. The reason is: The factors that were active in producing the main movement, with its start, its climax and its collapse, have spent their force. Prices, therefore, settle into a groove, where they remain sometimes for weeks or until affected by some other powerful influence.
> 
> When a market is in the midst of a big move, no one can tell how long or how far it will run. But when prices are stationary, we know that from this point there will be a pronounced swing in one direction or another. There are ways of anticipating the direction of this swing. One is by noting the technical strength or weakness of the market (and )... The resistance to pressure
> 
> Studies in Tape reading




Wyckoff terms are very measured and defined

Up, Down & Sideways
The (last) Points of Support  or Resistance  etc

With these last two it is important to see the difference of a last point of support and where support maybe NOW

One is a point of background & context .The other is the  point of what really matters..

Where is the "Creek" ----Where the volume comes in
It is not a horizontal line drawn from a series of tops

The creek is resistance that is met aways up ahead
It is the Supply , that has to be absorbed and Jumped.

It is the Jump that dramatically changes things and shows them to be changed. 

It is where the volume comes in ( important--it is the volume that gives the clear defined boundaries ) and what results.

Charts We saw  preliminary Support ( test )  Selling climax ( response)
We saw Selling Climax ( test ) Automatic Rally ( response )
Automatic Rally ( test ) Secondary test ( response )

Prices met supply a number of times

The light blue line is where I see the flow of supply ( creek )

As I said in the XAO thread the creek is found near the rally tops and can be divided into major and minor.... The creek is not any line or even these lines

Only the Volume can reveal where they actually are

Along the minor creek was noted "absorption"

Since then the  Volume & Price action I would say is bullish

Observe the volume in the context of the Price movements
( look at the last bar ? 







> The resistance to pressure



)

Also look at the B%  







> Strength or weakness of the market




OK where do we buy ?

On the response to the test....What in effect is a last point of support after a Sign of Strength


Note every principle is a response to what has been and a test to see what becomes.



What do we buy  ?....Step  5  ... Emerging relative strength.

motorway


----------



## goatbeater

WOW what a thread!! 

I wanted all who contributed to know this thread is why I just joined the forum.
I haven't seen so much good stuff on any other forum - anywhere!

The contributors have obviously put a lot of time and effort into the submissions and I hope everyone appreciates the great learning available

Of course it's an Aussie forum  - awesome!!


----------



## Timmy

So, should I ask what goat beating actually entails or is it to be taken literally?  Not sure I can condone it if it is to be taken literally - but welcome to the thread anyway! 

Yeah, great stuff here ... I think what I like most about the Wyckoff methodology is I can pick stuff out of it that I particularly like, and even add stuff in ...   

I keep in mind the 3 things I am trying to weigh up:
1. Supply and Demand
2. Cause and Effect
3. Effort and Result
and can play around with various different ways of looking at the data to measure these things.  It just seems to me to be a method that encourages experimentation around these 'fundamental' 3 principles/laws.

I use all 3 to weigh up the context of where price is (i.e. "what's the trend?" would be a simple way of summarising context), while leaning more on the 3rd point for the actual entry point.

Wyckoff's basic tools were the Point and Figure chart and the time-based HLC bars.  I must say I have more-or-less abandoned the use of time-based bars/candles, but really like the Point and Figure chart (and thanks to Motorway for his continual badgering me on this, took me a while to get what these charts were all about but am happy I persisted, at Motorway's encouragement).  I do use HLC bars (acually OHLC candles, just find these easier to see - literally), but either based on Constant Volume &/or Constant Range, rather than constant time.


----------



## motorway

A chart is its own interpretation  

Line of least resistance would appear UP

looking for a possible LPS to form

No JUMP as yet .

Indications are  for a "normal reaction"
Back to  support ( which is always met up ahead )

Where is the volume met
and how... Is what matters now

and will define the zone at 5650 to 5700

B% is holding up .
The negative divergence over the recent action

( B% is holding up well )

Suggests to me little more that some "waiting"
 in order
to get back in sync
before a move HIGHER

B% is not concerned with price levels
but support levels



For Discussion 
On Wyckoff Method.

Very narrow range on the last bar
With falling volume

no work on the P&F at the pivot high
but an uncorrected column

( which has now corrected )

Could even be as low as we go 
( P&F )

motorway


----------



## nomore4s

Looks like some form of support has showed up in the last few days.

While yesterdays bar doesn't look very flash, a wide range down bar on slightly higher volume, todays bar on slightly higher vol again tends to suggest there was some buying in yesterdays bar. Of course the response in the next few days will confirm or disprove this theory, but todays bar looks somewhat bullish.

There doesn't appear to be alot of conviction in the selling atm, will be interesting to see if support does form & hold at this current level or not.

Would like to see a LPS form at around these levels or else we will probably see a retest of the 5100-5200 area imo.

Had a chart but for some reason I can't attach it.


----------



## motorway

http://www.wyckoffstockmarketinstitute.com/archives.htm

some more articles here

eg the buying tests 1,2 & 3

these are PDF files too

to save them I had to open them and then save from within acrobat

..................

Behavioural Finance would appear to me to be often only
one half of tape reading..

That is it does not focus on the other side of the spread..

But considers what is two, as a one

eg in capitulation , is everyone capitulating ?

never the less a quote from one of it's practitioners
and the last paragraph maybe makes my point a little strong 

motorway



> Looks Random, Seems Random, So It Must Be Random?
> 
> The rational school of economists who postulated efficient markets assumed stock prices were random. Harry C. Roberts presented one of the earliest renderings of randomness in stocks in 1959. Of course the simplest way to prove randomness in stocks is to discredit anyone who postulates patterns in stocks.
> 
> The unlucky "patternists" in this case were the technical analysts ,Roberts's paper compared real stock prices with what we might call virtual stock prices. His virtual graphs were constructed of data obtained from a random number generator. The original graphs are reproduced in diagram 10-2. His assertion, or perhaps his assumption, is that because the real and the virtual stock chart have the "same visual appearance," stock prices are random.
> 
> " The graph seems to show a pattern, but in fact a pattern does not exist."
> 
> This may be a dubious logic.
> 
> 
> *After all, if you showed a physician an EKG graph generated from random numbers and he gave you a diagnosis, does it prove that the patterns in all the real EKG data are random or did you just put one over on the good doctor? *
> 
> Could it be that the cognitive error is on the part of those who are culturally biased against patterns whether in technical analysis, chaos, or whatever.
> 
> 
> 
> The Challenge of Chartism
> 
> Price charts only tell us what we think they tell us. Our bias interferes with the potential for an objective perception of a given price history. We see only what we have been taught to see. One may say the same thing about fundamentals. Fundamentals are perceptual, too. The terrible news of the bankruptcy of WorldCom and generally failing communications companies were negative fundamentals for the telecom sector. Yet, some would say that these bankruptcies have finally created value in telecom shares, which had been overvalued for years. The return to realism and the reduction of expectations to reasonable growth may actually provide the best fundamentals in years. Who sees what? Those with a perpetually bullish bias are victims of the adage that beauty is in the eye of the buy-and-holder.
> 
> Woody Dorsey


----------



## The Edge

Saturday  30 august 2008

Motorway:

Your posts on Wyckoff are appreciated.

Have you, or anyone else, seen or read copies of
his "Trend Letter" that he began in 1911?

TIA.


----------



## motorway

Hello Edge 

There is a reasonable description of the nature of the "Trend Letter"
in Wall Street Ventures and Adventures Through Forty Years
With some "campaign examples" .

That old material like that would be interesting to see.
The early issues of "The Ticker" as well....


.........................


The chart must reveal to us what the intention of the Composite Man really is.  Is there support here in order to sell at higher prices or is there a serious  real accumulation ?

Over this phase  there is significant volume now across this pattern
relative

There was the question asked with the move down below the line of support
and the subsequent working higher with some strength  ( Figure chart )

Now it is at an interesting juncture,,,, Can the "boy scout" get back above that "ice"  (vertical line chart)..

Note the B% significant number of stocks are above "points of resistance"
But it is at a significant juncture too ( red line ) Good place for a short ?

Unless we see continued move up with expansion of volume
We should be doubtful at this point in time

The reverse trend line ( brown line ) continues to define the larger trend.
B% is not making panic lows
There is support at this level...

I would wait for the market to confirm or negate
continue or reverse
watch for the volume...

What position would we put the XAO in...

A higher probability of a rally to 5600
Than a move down below 4800.. ?

Then we see some more response, 







> The chart must reveal to us what the intention of the Composite Man really is



..

certainly there is no passing of many of the "nine buying tests" 

motorway
Only for discussion  




> Wyckoff tells us that the most important thing that anyone can know about the market or an individual issue is its trend. The trend is most simply defined as being the line of least resistance. Prices will tend to follow the line of least resistance *until there is a significant development in the action that suggests that a change in trend should be anticipated*.





http://wyckoffstockmarketinstitute.com/wyckoff_articles/Trends/Trends.htm


----------



## motorway

> A third essential element in developing an analysis of the action is judging the character of the action. The character of the action is revealed by the relationship between the price action and the volume action. These relationships either make bullish statements or bearish statements. Each trading session makes one of these statements. Some are strongly bullish or bearish and some are more moderate.
> 
> Occasionally, when the action is an especially sensitive point in its development, the character of the action on one particular day is seen as being so important in determining how developments are likely to unfold from that point forward that the day is frequently referred to as being a key day. However, most of the time, it is an accumulation of bullish or bearish statements over a succession of days that reveals whether a move in progress is likely to continue or if a change in direction is likely.




Some good introduction to Wyckoff Price and Volume Analysis.

http://www.wyckoffstockmarketinstit.../Wyckoff_Articles/price_vol_relationships.htm

Judging the "*Character*" ....



> the price of the market or an issue is likely to move up or down on a close to close basis. It does so either in a price spread that is likely to be wider or narrower than the day before and volume that is likely to be either higher or lower than the day before.
> 
> How these three variables group themselves together determines that character of the action for that day and whether it makes a bullish or bearish statement.




motorway


----------



## motorway

> Psychology of the Stock Market
> 
> by G. C. Selden is the result of years of study and experience as fellow at Columbia University, news writer, statistician and on the editorial staff of The Magazine of Wall Street.
> 
> 
> Ticker Publishing, New York, 1912




Talking about the older material
G C Seldon was Richard Wyckoff's associate editor
at the "ticker" the name was changed in 1912 to "The Magazine of Wall Street."


Some aspects of the *Composite Operator*



> The point we fail to remember is that public opinion in a speculative market is measured in dollars, not population. One man controlling one million dollars has double the weight of five hundred men with one thousand dollars each.
> 
> This is why the great body of opinion appears to be bullish at the top and bearish at the bottom. *The multitude of small traders must be, as a plain necessity, long when prices are at the top, and short or out of the market at the bottom.* The very fact that they are long at the top shows that they have been supplied with stocks from some source.
> 
> Again, the man with one million dollars is a silent individual. The time when it was necessary for him to talk is past - his money now does the talking. But the one thousand men who have one thousand dollars each are conversational, fluent, verbose to the last degree; and among these smaller traders are the writers - the newspaper and news bureau men, the manufacturers of gossip for brokerage houses.
> 
> It will be observed that the above course of reasoning leads us to the conclusion that most of those who write and talk about the market are more likely to be wrong than right, at least as far as speculative fluctuations are concerned. This is not complimentary to the "moulders of public opinion," but most seasoned newspaper readers will agree that it is true.
> 
> The psychological aspects of speculation may be considered from two points of view, equally important. One question is, What effect do varying mental attitudes of the public have upon the course of prices? *How is the character of the market influenced by psychological conditions?*
> 
> A second consideration is, *How does the mental attitude of the individual trader affect his chances of success? To what extent, and how, can he overcome the obstacles placed in his pathway by his own hopes and fears, his timidities and his obstinacies?*





gleaned from http://www.dailyspeculations.com/wordpress/?m=200809

motorway


----------



## Marcel

Motorway,  thanks for your excellent analysis and insight into the Wyckoff Method.

I notice that there is the SMI Wyckoff Course but there is also an original Wyckoff publication (1931):  "The Richard D Wyckoff Method of Trading and Investing in Stocks"   by  Wyckoff Associates, INC.  Park Ridge, Illinois.

Would appreciate you views on this,  many of the terms present in SMI version are not there in the original course.

Also a guy by the name of Tom Williams has created his own brand of price/vol reading, based on the SMI course,    Volume Spread Analysis which appears to be vogue nowadays,  and is market via a software charting program called Tradeguider,   do you have any comments in this regard.


----------



## motorway

Marcel said:


> Motorway,  thanks for your excellent analysis and insight into the Wyckoff Method.
> 
> I notice that there is the SMI Wyckoff Course but there is also an original Wyckoff publication (1931):  "The Richard D Wyckoff Method of Trading and Investing in Stocks"   by  Wyckoff Associates, INC.  Park Ridge, Illinois.
> 
> Would appreciate you views on this,  many of the terms present in SMI version are not there in the original course.
> 
> Also a guy by the name of Tom Williams has created his own brand of price/vol reading, based on the SMI course,    Volume Spread Analysis which appears to be vogue nowadays,  and is market via a software charting program called Tradeguider,   do you have any comments in this regard.





Hello Marcel,,,



> By taking the best of what forty years in Wall Street have taught me and preparing it for others so that it can be readily absorbed and applied, I will be creating something that should aid in establishing a new standard of practice in the public’s stock market operations.
> 
> I do not claim any monopoly of stock market knowledge, but up to this time, no one else seems willing to be so frank in offering to the public the most intimate knowledge of the inner workings of the stock market.”
> 
> Thus with forty years of study and personal experience, *Mr. Wyckoff crystallized his knowledge into one writing and published “The Richard D. Wyckoff Course in Stock Market Science and Technique.” *




This is the 1931 course......



> By the methods herein explained, I have made a great deal of money for myself and my clients and subscribers who numbered in excess of 200,000.
> 
> By making this available to those who desire to learn the business of trading and investing in stocks -- for it is a business just like law, medicine or any
> other -- I hope to be of still greater service, not only to my former patrons, but to others who have not had an opportunity to invest under favorable conditions.
> 
> You can learn from this how to develop independent judgment, so that you need never ask anyone’s opinion or listen to anyone’s tips, or take anybody’s advice. You can so train your judgment that you will know just what to do and when to do it. When you are in doubt you will do nothing.






> *This is a method of judging the stock market by its own action.
> 
> It is intended for investors as well as for traders.*
> It has been planned and prepared for those who desire to safeguard
> their investment capital against, and to make money from, the
> fluctuations in the prices of stocks dealt in on the New York Stock
> Exchange or any other organized exchange.
> 
> It is applicable as well to bonds, preferred stocks and the leading
> commodity markets.




Richard Wyckoff established  *Wyckoff Associates Inc.* which became the Stock Market Institute ,*SMI*.

Richard Wyckoff died in 1934 . Robert E. Stanlaus assumed the responsibility to continue to offer the public specialized education in the stock market science and technique.  *He expanded the program with material (that) he and Mr. Wyckoff had written since the original printing.  *

This is the 1934 course published after Richard Wyckoff's death
revised by material *Mr. Wyckoff had written since the original printing*.

In 1951 Mr. Robert G. Evans began his career as the promulgator of the Wyckoff Course.  Mr. Evans  made considerable contributions to the benefit of all students of market action.  They are most notable in the further development of technical analysis, market psychology and philosophy.  *His unique talent in using analogies to explain various market phenomena and principles (has) become an inseparable part of the Wyckoff Course.  *

The ice story , the creek story etc

Now who was Robert Evans and what were his credentials ?



> The Wyckoff principles were expanded by Robert
> Evans in the 1950s and 1960s. *Evans, who learned
> the Wyckoff approach from the master himself*,
> went on to share his knowledge by opening The
> Stock Market Institute. His wonderful stories
> explained the Wyckoff strategies in easy to understand ways as he introduced "jumping the creek", "falling through the ice" and many
> other delightful phrases




It is very likely that these analogies ( Wyckoff used analogies himself ) date back to the time when Evans was learning the Principles from Richard Wyckoff

What is resistance what is support ?
Resistance is a flow of supply across the rally tops
It is not a line.......It is something met up ahead that needs to be crossed
JUMPED , *when it can be*.



> In brief, do not make the mistake of attempting to classify chart
> formations according to mechanical rules with the idea that you may
> discover automatic buying and selling signals from similar
> 'patterns'. You are being deluded if you believe that a system of
> drawing 'triangles', 'heads and shoulders', and similar imaginary
> geometrical diagrams on your charts will produce results or relieve
> you of the necessity of employing judgment and sound, practical
> reasoning.
> 
> The market is made by the minds of men, and all the fluctuations in
> the market and in all the various stocks should be studied as if
> they were the result of one man's operations. RDW




I see the Evan's analogies as the making visible of the Principles of the Wyckoff Method



> If a principle is to be a principle, it must work in all markets to be valid and reliable. The Wyckoff Course is based upon principle and laws------------Do not forget: The breaking of a trendline, by itself, is neither a
> conclusive nor an all-inclusive symptom. The significant thing is
> HOW the line is broken






> Robert Evans   talent in using analogies to explain various market phenomena and principles (has) become an inseparable part of the Wyckoff Course.




	Lloyd I. Andrews succeeded Robert Evans in 1967.

So the course is alive and has lineage ( very good one )
At it's heart is the *original* course of Richard Wyckoff

Richard D. Wyckoff text in Stock Market Science and Technique .




> . You will be able to judge the supply and demand on the basis of the price action, volume and time.




 Tom Williams 


> In the early 1960s,  Tom
> took the Wyckoff Course (written by Richard
> D. Wyckoff, a turn-of-the-20th-century bond
> trader), which was to prove the market
> revelation that would guide him from
> that point.
> Indicators such as on-balance volume and
> the like are irrelevant according to Tom. What
> counts is the reaction of price to volume.
> 
> TRADERSPEAK CD
> INTERVIEW.




motorway
DYOR   Always...


----------



## Marcel

Thanks Marcel for your detailed response.

Do you reckon that the concepts of accumulation and distribution can be applied to futures where there is no float.

If you are trading futures would appreciate if you could put up some examples as I am very much in the learning process.


----------



## Marcel

Typing error, sorry, mean to state,

Many thanks to Motorway from Marcel , a relative novice at WYckoff Methodology


----------



## motorway

Marcel 
good question

My answer of Course the principles should work..

It is not supply as such that needs to be absorbed or exhausted 
or overcome.

But the Willingness to supply....

There are some charts from Timmy
early in the thread,,,

Accumulation is about
taking a position 
and building "cause"



> Accumulation: from the Supply/Demand perspective is demand coming in to gradually overcome and absorb the supply and to support the price at a level.





supply is as much about the willingness as it is about the ability to supply..

I do not trade futures ( so just my  ), but know those who do.

It is a fast market

But there is the reality of the underlying and a settlement date..
and positions must be opened first
before they can be profited from

Accumulation is a relationship of demand and supply
that creates a "springboard"

How does it do this
it builds a cause...

A definition from the first few pages of unit 1 of the SMI course
in the link early on in the thread..

motorway


----------



## Marcel

Once again thanks Motorway for your insight.

Read this on Stock Market Trading  "Price and Vol Relationships"

"If the price spread for a day is wider to the down side leading to a poor close on increased volume, the decline is said to indicate supply entering. This action makes a bearish statement. The same price action on decreased volume is said to be the result of a lack of demand. It also makes a bearish statement. If the price spread for a day is narrower to the down side, it makes a bullish statement. If the narrower spread is combined with high volume, the action is said to indicate the meeting of demand. If the volume is lower, it is said to indicate a lack of supply. *Either combination tends to work against additional down side progress*. *That is why it makes a bearish statement*."

Should not this be a bullish statement.


----------



## paulchow2k

Guys,
I've been reading this thread with interest and have been studying the Wyckoff method since Motorway mentioned it earlier in the thread. This seems to be the missing link in the current state of trading so as a contribution back to Motorway and the rest of the crew...

This is my thanks to this group...

regards

paul



Marcel said:


> Once again thanks Motorway for your insight.
> 
> Read this on Stock Market Trading  "Price and Vol Relationships"
> 
> "If the price spread for a day is wider to the down side leading to a poor close on increased volume, the decline is said to indicate supply entering. This action makes a bearish statement. The same price action on decreased volume is said to be the result of a lack of demand. It also makes a bearish statement. If the price spread for a day is narrower to the down side, it makes a bullish statement. If the narrower spread is combined with high volume, the action is said to indicate the meeting of demand. If the volume is lower, it is said to indicate a lack of supply. *Either combination tends to work against additional down side progress*. *That is why it makes a bearish statement*."
> 
> Should not this be a bullish statement.


----------



## motorway

Hi to Paul & Marcel



> El-Erian: Sell and Get Out of the Way
> 
> Friday, October 24, 2008 12:08 PM
> 
> By: Greg Brown  Article Font Size
> 
> 
> 
> 
> Echoing predictions of a coming hedge fund massacre, bond giant Pimco’s Mohamed El-Erian said Friday that some of these hedge fund managers need to "sell and get out of the way."
> 
> 
> Once the hedges capitulate, stocks will fall to a sustainable level, he said. The Dow opened Friday down 430 points before recovering ground by midday trading.
> 
> 
> "It's ugly, it's messy ... but that's the reality when you have a system that is damaged. As it recovers it has to get rid of the damaged parts," El-Erian said in an interview with CNBC.
> 
> 
> There are thousands of hedge funds, many of them small operations run by relatively inexperienced young traders who got into the business during the recent, five-year stock boom.
> 
> 
> Clearing out that deadwood is a big part of cleaning up the markets.
> 
> 
> El-Erian sees the market trying to establish a floor, after which he says the actual recession will matter more than the ongoing panic.
> 
> 
> "We're getting close to the point where the market will finish repricing. Today we're going to take a major step toward that, but you don't reprice until you get rid of the damage," El-Erian said.
> 
> 
> Former Clinton adviser Nouriel Roubini said earlier that he expects an emergency market shutdown amid a “massive dumping of assets” as the weaker hedge funds are flushed out.
> 
> 
> *Roubini believes hundreds of hedge funds will fail and that policymakers might have to shut down financial markets for a week or more in response. *




The multitude of small traders = hedge funds ,must be, as a plain necessity, long when prices are at the top, and short or out of the market at the bottom. The very fact that they are long at the top shows that they have been supplied with stocks from some source.

In 1898 a small book was published called the Game in Wall Street

It is one of the first books on P&F , but much more as well..

That Game stays the same

someone is milked someone does the milking
markets go up and then they go down.

Risk and Reward
constantly change hands
at bottom and tops
is the ultimate transferance

Only at  tops can so much leverage be created
that could  create such dire deep bottoms

Enantiodromia

The way up IS the way down

motorway


----------



## The Edge

Friday  31 October 2008

To the Q above:

> Should not this be a bullish statement?

No.  It is correct as stated.  What is always one of the
most important factors to keep in mind in any analysis
using Wyckoff is, what is the trend?

What is the main trend, and what is the trend of the
time frame in which you are trading?  For example, you
(generic "you") may be a buyer on a daily basis, yet
price may be bumping up against resistance on a monthly
chart, something of which one should always be aware.

In a downtrend, supply has already proven itself.  A
smaller range bar with relatively less volume does not
have to mean supply is not present in that specific bar.
Because suppply is already dominating, it is incumbant
upon demand to make its presence known.  Unless, or
until demand makes its presence apparent in a down
market, the benefit most always goes to supply.

Also, in a downtrend there are fewer participants, as most
traders prefer the long side, so a measure of one particular
bar can be misleading.  This is why it is important, indeed
key, to always know the trend, and then identify where
price is, relative to previous bars, points of support or
resistance, etc.

Just a few thoughts.


----------



## motorway

Question for Those interested ?

If the recent bottom pivot is a selling climax -->  *?*
( good volume , & Price action )

Then the previous pivot would have to be preliminary Support --> ?

Some nice divergences on the B% ( technical positions of the P&F charts of all the XAO constituents )

Secondary test
and SOS 
maybe follow  , will reveal if so...

Trading range defined.....



I read two reports recently

One said all problems relate to too much debt

The other said all problems relate to not enough debt..

Hmm ( second one had some good points )
But what is thought,
maybe is or maybe isn't.

press alternate with doom and gloom

But what is being done ?

Subsequent action will always reveal..

well before what is thought..

Some good advice from RDW
take it in context
dyor

motorway



> You need pay no attention to the news, earnings, dividend rates or statements of corporations.
> You need never study the financial or the business situation.
> You need not understand railroad or industrial statistics, the money market, the crop situation, the bank statements, foreign trade or the political situation.
> You can absolutely ignore all the thousands of tips, rumors, reports and especially the so-called inside information that flood Wall Street.
> You can discard all of these completely, and finally.
> 
> *UNLESS YOU DO THIS YOU WILL BE UNABLE TO GET THE BEST RESULTS FROM YOUR MARKET OPERATIONS.*
> 
> RDW


----------



## tech/a

? to me was a pause in selling.
*?* Is also a pause in selling.Whether its permanent or not is yet to be seen.


----------



## paulchow2k

So true. So in the mean time, until a [SOS] Sign Of Strength, it's only short term trading for me.

Good luck with the market. I find the Wyckoff course really helpful. Getting it's money worth.

Paul



tech/a said:


> ? to me was a pause in selling.
> *?* Is also a pause in selling.Whether its permanent or not is yet to be seen.


----------



## saiter

Are there any good books on the Wyckoff Method?


----------



## finvik

saiter said:


> Are there any good books on the Wyckoff Method?




Hi *saiter*
I can tell you a brief of Wyckoff Method i hope it will help you to understand about the method.
Wyckoff teaches that the most important thing anyone can know about a market or an individual issue is its trend and the position that it occupies in the trend. The trend is the line of least resistance. It indicates the direction in which the price wants to move. Profits are more likely to be realized when positions are established that are in harmony with the direction in which the price has already indicated it wants to move.Once a trend has been established, the future trend is likely to be the same as the current trend until the price reaches a position in that trend or exhibits price and volume action that indicates that a change in the direction of the trend should be anticipated.Or 
The final step of the Wyckoff method is the one that actually results in a position being established. Wyckoff tells us to time trades in individual issues to anticipated trends in the general market. While it is true that there are always individual issues that make substantial moves in the opposite direction of the general market, most move with the market to some degree.
By identifying a point in the general markets action from which it is likely to turn in the direction of an established trend or begin the development of a new trend and taking a position in an individual issue at that time, the Wyckoff trader has a better chance of realizing a profit from that position and realizing a better profit than if the position is established in a more random manner.
The market is most likely to make a turn that can benefit a position in an individual issue if it located near but not below the demand line of an up trend, near but not above the supply line of a down trend, or near the support level or resistance level of a trading range.
It is not necessary that the individual issue in which a position is being considered be in the same position as the general market. It is necessary that the positions of both the individual issue and the general market compliment each other. For example, the general market may be in a trading range and positioned in a potential spring from which an immediate response to the up side is anticipated. If the individual issue under consideration is also in a trading range but is testing an earlier spring, the two positions compliment each other and a position in that individual issue is likely to perform better than it might otherwise perform because of the anticipated turn in the general market.
The general market and the individual issue do not have to be in the same trend to compliment each other. For example, the general market may be in a trading range and testing an earlier spring position. The test assuming it has been constructive is a position from which the market is likely to make an immediate turn.
At the same time, an individual issue that has already begun to trend higher by jumping the resistance level of a trading range may be backing up toward the former resistance. As the general market begins to respond to its bullish position, it is likely to help the individual issue complete its back up and resume up side progress possibly moving into new high ground.
The above examples are both cases in which the individual issue is ahead of the market in the development of a bullish scenario. These situations should be considered first. The second set of situations that should be considered are those where the market and the issue are in the same position that is likely to produce an immediate move at the same time.
The third set of situations that should be considered are those where the general market is ahead of the individual issue in the development of its bullish or bearish scenario. In the above examples, the positions of the market and the issue could be reversed and establishing a position in the individual issue could be justified because the markets position suggests an immediate turn.
Wyckoff traders have three tools that can assist them in judging whether a turn in the market should be anticipated. These tools are the O. P. Index. the Techno meter and the Force. The O. P. Index when used in combination with the Wyckoff Wave indicates whether the result indicated by the Wave is in harmony with the effort indicated by the O.P. If they are and the market is in a position from which an immediate turn can be anticipated, the harmony between effort and result is likely help a position in an individual issue perform as anticipated.
However, a lack of harmony between the Wyckoff Wave and the O.P. Index can be even more helpful in assisting the market make an anticipated turn. For example, consider the situation where the Wyckoff Wave has previously been in a spring position and is now testing the spring with a higher potential bottom. If at the same time the O.P. is making a lower low than it did when the Wave was in spring position, a bullish divergence is in place. The indication is that there has been too much down side effort for the result. This situation leaves the Wyckoff Wave more vulnerable to making a turn than one where the Wave and O.P. are in harmony.
Divergences should be used to confirm indications provided by the position of the market. Divergences that develop when the Wyckoff Wave is not in a position from which an immediate turn may be anticipated are interesting, but they do not provide a reason to establish a position in an individual issue.
The Techno meter and the Force are like the Wyckoff Wave/O.P. relationship in that they are intended to confirm an indication of an impending turn by the Wave. If the Wave is in a primary buying position, it is most likely to make an immediate response out of that position if the Techno meter is indicating an over sold condition at the same time. These situations are when trades on the long side in individual issues are more attractive. The same is true if there is a bullish relationship between the Wyckoff Wave and the Force.
Divergences between the Wave and the Force develop in a manner similar to the divergences that develop between the Wave and O.P. Primary buying or selling positions in the Wave that develop in conjunction with bullish or bearish divergences between the Wave and the Force are more likely to result in an immediate turn in the general market than those that develop without such divergences. The ultimate in confirmation that there is likely to be an immediate turn in the market is when it is in a primary trading position and all three of the confirmations mentioned are in place. At that point, a position in an individual issue can be established with the greatest degree of confidence that it will yield a profit.


----------



## Timmy

finvik said:


> Hi *saiter*
> I can tell you a brief of Wyckoff Method i hope it will help you to understand about the method.
> ...




Hi finvik, do you have a source for this article pls?


----------



## motorway

> a source for this article




It looks like  a few bits of at least two?  articles from here..

http://www.wyckoffstockmarketinstitute.com/corner.htm





> Wyckoff tells us that the most important thing that anyone can know about the market or an individual issue is its trend. The trend is most simply defined as being the line of least resistance.
> 
> Prices will tend to follow the line of least resistance until there is a significant development in the action that suggests that a change in trend should be anticipated.
> 
> A trader can look at the price of a market or issue and compare it to the price from the previous day, week, month or year and determine the direction in which it is trending. While this can be helpful in keeping a trader on the right side of the action, Wyckoff had something more specific in mind for determining the trend.
> 
> He provided guide lines as to the proper way to define a trend so that it could be more helpful in applying the five steps of the Wyckoff Method.
> 
> Trends can be defined in three directions and in at least three time frames.




motorway


----------



## tech/a

> Hi saiter
> *I* can tell you a brief of Wyckoff Method *I* hope it will help you to understand about the method.





How disappointing.
I thought we had another motorway!
Plagiarism


----------



## paulchow2k

Plagiarism = That's the best form of flattery...!

Yes... there can only be 1 unique Motorways... unless we are in a parallel universe



tech/a said:


> How disappointing.
> I thought we had another motorway!
> Plagiarism


----------



## Timmy

For the Wyckoff nerds (like me), an in joke.



Sorry...couldn't resist


----------



## fosezzle

Found his "Course of Instruction in Stock Market Science and Technique" on Trader's Lab:

http://www.traderslaboratory.com/fo...off-resources-wyckoff-method-tape-reading.pdf


----------



## Timmy

Thanks fosezzle.  

For those unable to access the document fosezzle has linked to, it appears you have to be logged in to TL to download it.


----------



## motorway

> Psychology of the Stock Market
> 
> by G. C. Selden is the result of years of study and experience as fellow at Columbia University, news writer, statistician and on the editorial staff of The Magazine of Wall Street.
> 
> 
> Ticker Publishing, New York, 1912
> 
> Talking about the older material
> G C Seldon was Richard Wyckoff's associate editor
> at the "ticker" the name was changed in 1912 to "The Magazine of Wall Street."
> 
> 
> Some aspects of the Composite Operator
> Motorway






Download here

http://www.archive.org/details/psychologyofstoc00seldrich

Psychology of the Stock Market by G. C. Selden.


"We suggest" ( After Reading the Seldon book ),"however, that you read the "Game
in Wall Street," by "Hoyle"; $1 postpaid. This book was written by a market
adviser who had considerable notoriety a dozen or more years ago. It cannot be
accepted as a text-book, ..."

From Magazine of Wall Street, Volume 12 1913 Richard D Wyckoff


Download the "Game" from here

Complimentary book: 
"The Game in Wall Street" by Hoyle.

http://www.tradeguider.com/bestofwyckoff/

direct download link

http://www.tradeguider.com/bestofwyckoff/The_game_in_Wall_Street.pdf

Motorway


----------



## WaveSurfer

motorway said:


> Download here....




Thanks motorway, will read those with keen interest this evening.

I voted 5 stars on this thread, some awesome reading thanks again motorway and others who have contributed. Nice work 


A quick Q for anyone that can answer...

Has anyone got any opinions on Todd Krueger? I have read a couple of his articles on SFO and like his style of writing.

I also came across his website (www.traderscode.com). I have registered for his free weekly video newsletter and noticed he's plugging a Wyckoff Analysis course. Seems to be reasonably priced too ($240 for modules 1 & 2 - 5 DVD's). Anyone bought it or know anything about it?

His video newsletters seem to be pretty good too. I have only received one so far, so my view is a bit limited at this stage.

Cheers.


----------



## motorway

A few Links 

How I trade and invest in stocks and bonds : being some methods evolved and adopted during my thirty-three years experience in Wall street (1922)

http://www.archive.org/details/cu31924031269552


Page 53  application to CANSLIM and related to the book above

http://www.mta.org/eweb/docs/Issues/44 - 1994 Winter.pdf


ANATOMY of a TRADING RANGE

Page 47

http://www.mta.org/eweb/docs/Issues/43 - 1994 Summer.pdf



Motorway


----------



## ThingyMajiggy

cheers motorway, always keen for a read on this stuff.


----------



## motorway

Not bad basics of Normal use trend lines
Wyckoff would use swing lows.
But the emphasis is right  the trend line is only an aid not a magic wand.

Does not matter what type of charts
P&F or Vertical ( bar )  The true trend is defined by the action
The trend line helps measure..

Motorway


----------



## Stock Jock

I have a question on some indicators that are used in the SMI training and I was wondering if there are common equivalent indicators that are available for the same results. The training provided by SMI stresses not to mix other trading techniques with Wyckoff's method, but it seems that they do it anyway by developing indicators of their own which are similar to indicators that are already developed by others and have given them SMI names.

I hear that the way Wyckoff's method was originally intended was to trade without indicators; however, 1) he did say always follow the trend, 2) he did say trade in harmony with the market, 3) he did teach about supply and demand, and 4) he did teach the 9 buying and selling tests. These are all covered in the four items that I have listed. He doesn't call them indicators; however, when a trader has to analyze a specific trade using his method he would have to do the same thing manually (without indicators). Call them indicator or do the same thing without indicators, it appears these concept I've mentioned are included in his method.

For example here is a quote from one of Dr. Hank Pruden's articles saying that the On-Balanced-Volume indicator is like the Optimism/Pessimism Index. 


> The Law of Effort vs. Results – divergencies and disharmonies between volume and price often presage a change in the direction of the price trend. The Wyckoff “Optimism vs. Pessimism” index is an on-balanced-volume type indicator helpful for identifying accumulation vs. distribution and gauging effort.




I'm taking a guess at the common indicator equivalents to the SMI indicators and I would appreciate anyone else's input on this.


> 1. Optimism/Pessimism Index
> Alternate: Either the On-Balanced-Volume (OBV) indicator or the Accumulation/Distribution (A/D) indicator
> 
> 2. The Wyckoff Wave.
> Alternate: The S&P 500
> 
> 3. The Trend Barometer
> Alternate: The Average Directional Index (ADX)
> 
> 4. The Pulse of the Market
> Alternate: The Relative Strength Index (RSI)


----------



## motorway

Stock Jock said:


> I'm taking a guess at the common indicator equivalents to the SMI indicators and I would appreciate anyone else's input on this.
> 1. Optimism/Pessimism Index
> Alternate: Either the On-Balanced-Volume (OBV) indicator or the Accumulation/Distribution (A/D) indicator
> .





yes and no.

The same difference between volume analysis and Wyckoff Volume analysis.

eg increasing volume on a series of descending bars
is the same  as increasing volume on a single down bar . It could show strength.

Trend analysis &  Divergence and concept of Double Divergence.

Also the use of intra day data ie the small buying and selling waves that occur during the day..

https://wyckoffstockmarketinstitute...s_id=9&zenid=ea3b54f758b0b0e45c7468c0f08b45f7

motorway


----------



## Stock Jock

motorway said:


> yes and no.
> https://wyckoffstockmarketinstitute...s_id=9&zenid=ea3b54f758b0b0e45c7468c0f08b45f7
> 
> motorway




Yes. I see.  The formula is quite simple for the OP Index.  That might be quite difficult to make as an indicator in most trading platforms, because it involves summing up the volumes of intraday activity and displaying them on a daily chart.  Both are different time frames even though with computerized data its possible to do this with all the 1 minute data for a day, whereas he only took a sample of five volumes.

I'll take a look at the others Even's lectures, but what do you think about the similarities I've mentioned of the others items on my list?  Your reply of "yes and no" is a little ambiguous for the entire list.


----------



## motorway

Stock Jock said:


> Yes. I see.  The formula is quite simple for the OP Index.  That might be quite difficult to make as an indicator in most trading platforms, because it involves summing up the volumes of intraday activity and displaying them on a daily chart.  Both are different time frames even though with computerized data its possible to do this with all the 1 minute data for a day, whereas he only took a sample of five volumes.
> 
> I'll take a look at the others Even's lectures, but what do you think about the similarities I've mentioned of the others items on my list?  Your reply of "yes and no" is a little ambiguous for the entire list.





Maybe this gets close==> 

http://www.willain.com/

http://www.willain.com/content/EffectiveVolume.html


http://www.effectivevolume.eu/EV.html

Say a bit more later



Motorway


----------



## Stock Jock

Thanks for the links.  This is interesting.

_The Effective Volume is calculated by using a formula which is a modified version of Larry Williams' A/D (Accumulation/Distribution) formula._


----------



## tech/a

I like Todd Kreugers stuff


----------



## Stock Jock

tech/a said:


> I like Todd Kreugers stuff




There's a few other very knowledgeble individuals who follow in the footsteps of Richard D. Wyckoff, but their trading analysis and strategies are somewhat different.  Some forum members, in this forum and other forums, get them confused as being Wyckoff's method.  Motorway has the best thread on Wyckoff that  I've seen.

*Tom Williams*
Volume Spread Analysis (VSA)

*Todd Kreugers*
Wyckoff Candle Volume Analysis (WCVA)

*Tim Ord*
Science of Price and Volume


----------



## motorway

Stock Jock said:


> Your reply of "yes and no" is a little ambiguous for the entire list.





Imo it has to do with a few things
One is Interpretation of Volume & price action

Convergent , Divergent ...yes 

But it is harmonious and inharmonious where Wyckoff analysis is different to what you tend to see with RSI or OBV etc. Or volume analysis. or most else...

Note the name.. optimism / pessimism  ( not accumulation/Distribution )

A new high in the OP index ( and it is not seen as an indicator  but a volume index. It trends  has support & resistance zones etc)

Is not a "Buy" signal if it is inharmonious with the instrument ( that is both might well be  making new highs but at a different times ) this  is a sign of a possible turning point.

*Also the OP index  is built from the intra day waves of buying and selling and not fixed time intervals* and technometer and force indexes too..

This different interpretation of Volume etc That is seen in Wyckoff  is because of a particular defintion of what a Trend is.

Yes we have trend lines . series of highs and lows etc
(or SOS and LPS)

But the particular definition that matters in relation to Wyckoff  is this

*The Trend is the line of least resistance*..  Ok what does this mean ?

 Where do we see  this line on the chart ? ( careful  .


An interesting way of looking at Volume was Paul Levine's Midas 

http://www.stocksharepublishing.com/products/premPlugin_MIDAS.html
tried to do away with the static time frames..


Another interesting Volume indicator is 
Negative volume index and Positive volume index.

POINT IS THIS Are you looking back or forward ?
You maybe read volume or an indicator very different depending on your answer.

Accumulation versus Optimism ? ( They are not the same )
Distribution versus pessimism ?

Maybe A falling OBV in a range could be a buy signal ? ( absorption ? )



Motorway


----------



## Garpal Gumnut

I do like the Wykoff Method.

It makes so much sense re market action and the drivers of buyers and sellers.

gg


----------



## Stock Jock

motorway said:


> Maybe this gets close==>
> 
> http://www.willain.com/
> 
> http://www.willain.com/content/EffectiveVolume.html
> 
> http://www.effectivevolume.eu/EV.html




From the links you gave me, I found this at http://www.effectivevolume.eu/



> The Effective Volume (EV) method is first and foremost a statistical method for detecting institutional accumulation/distribution at the stock level.



Which part of my question was your answer directed to?



> The Effectivevolume web site. How to monitor insiders and institutional investors.




I'm not sure what you wanted me to find at this website.  This seems to be an entirely different trading method.  I'd like to stick with Wyckoff.


----------



## motorway

Stock Jock said:


> From the links you gave me, I found this at http://www.effectivevolume.eu/
> I'm not sure what you wanted me to find at this website. This seems to be an entirely different trading method. I'd like to stick with Wyckoff.




You were asking about indicators ==>I







> I'm taking a guess at the common indicator equivalents to the SMI indicators and I would appreciate anyone else's input on this.



So I was pointing you to indicators for you to consider

 Indicators would have to cover these three areas

demand  supply
cause and effect
effort and result

OK consider Willain's  active boundaries  

There is a link here to cause and effect

http://www.willain.com/content/ActiveBoundaries.html

But yes it is not wyckoff , different yes .



> This seems to be an entirely different trading method




I would not say entirely different.. But it is not Wyckoff.

But then neither are 







> common indicators



.




> I'm not sure what you wanted me to find at this website




Idea's to work with.

If you want to go down an indicator path.

Motorway


----------



## Stock Jock

You are truely the "Oracle of Wyckoff"


----------



## joea

Hi.
For those interested in Wyckoff, there is a site.
www.readtheticker.com
On the home page, down the bottom, click, indicator library.
In the library you have:
16 the wyckoff method
19 the wyckoff method improved 1
20 the wyckoff method improved 2

In the book section it has books associated with Wyckoff.

just a thought 
joea


----------



## Wysiwyg

Thanks for that Joea. On the left side of the page at this _website_ is a scanned copy of The Game in Wall Street. Motorway posted this before somewhere but I can't find it.

With the new book out by David Weis, it is available _here_ apparently while elsewhere they say it won't be available till 2012. Before purchase I would like to know approximately how much of the book focuses on Wyckoff Waves.


----------



## pavilion103

Just wanted to confirm if the David Weis book is in fact available now. It seems strange that it would be


----------



## joea

pavilion103 said:


> Just wanted to confirm if the David Weis book is in fact available now. It seems strange that it would be




pav
As far as I know its only a pre-order.
If you click a book on the site below, it directs you to Amazon.
Says after the 25th Dec.
joea


----------



## patchau

On ebay in the US. says 4 available.

http://www.ebay.com.au/itm/Trades-H...820?pt=US_Nonfiction_Book&hash=item1c1d42a78c


----------



## joea

Hi.
Has anybody developed the correct code for Volume Wave similar to attached image?
In Metastock or BullScript.
joea


----------



## Timmy

joea said:


> Hi.
> Has anybody developed the correct code for Volume Wave similar to attached image?
> In Metastock or BullScript.
> joea




Sort of. I use Investor R/T.
I tried to program the 'Volume Wave' indicator but it was too hard (for me).
So I sent an email to Chad at Investor R/T and about 2 minutes later he wrote it and sent it to me. 

I have copied your post into these two threads, hopefully you can get some replies re MStock and/or BullCharts:

Can someone please help with Metastock formula?

Bullcharts


----------



## joea

Timmy said:


> So I sent an email to Chad at Investor R/T and about 2 minutes later he wrote it and sent it to me.




Timmy 
I can assure you that Chad did not write the code for that indicator in 2 minutes.
It is a complex indicator with a trap in it.
I have the code for both the indicator and the price trend line, but its written in another code type.
I was just wondering if I got a bite.!!
joea


----------



## Timmy

joea said:


> I was just wondering if I got a bite.!!




Bite me.


----------



## motorway

Richard==>


> THE WAVE CHART OF TAPE READINGS was designed and originated by me, in 1916, in connection with my personal operations in the stock market. It is made to provide a condensed picture of every vital development in every stock market session. It gives a graphic representation of the day's tape action which enables us to study the market's behavior at leisure, just as if we were watching the ticker continuously and setting down every essential impression.
> 
> Thus, the Wave Chart is an invaluable aid whereby we may detect changes from technical weakness to strength, and vice versa, and so determine the turning points not only of the minor but also of the intermediate swings. Richard D Wyckoff




David==>


> "When I first learned about the Wyckoff method it was told to me in hushed tones---almost whispered so no one else could overhear it. It was one of the better kept secrets of the time.Why? It worked. It was not automatic. It was not mumbo-jumbo. It worked thru hard work and study. Making and maintaining hand-made charts was indispensable. For many years, I kept hand-made hourly bar charts of silver, bonds, and soybeans.
> 
> By plotting 7 bars per day, I observed 7 x as much behavior as on a daily. (And I kept daily charts by hand.). Later I devised a method for making intraday wave charts of futures and learned a great deal more about volume. How price movement does not unfold in equal units of time---something Wyckoff obviously understood---it unfolds in waves. Price is not distorted by being chopped up into equal units of time but intraday volume is. And so on. The main lesson is to do the work of reading and re-reading parts of the course----especially Chapter 7. Like many who get involved in technical analysis I searched other methods. I was fascinated by Elliott Wave.
> 
> Any advantages I gained from knowing EW are tiny compared to knowing Wyckoff. I have dabbled in cycles but only those of the broadest sort encompassing years or decades-- an intellectual pursuit, like building yearly bar charts of cash commodities encompassing 100 years or more, that has little to do with trading. I have few books on market analysis. I am no longer a Seeker. I do not seek new methods as I know what works. I do not seek trades, I find them. David Weis





There is complete Description of Wave Charts in Richard Wyckoff 1931 Course.

I would make this point. Richard Wyckoff was the master of Volume Analysis. 
Too many focus on volume to the exclusion of other aspects  that are as Important.

There is Price , Time and Volume. All seen in relation to Position.

Note this quote form His 1932 tape reading Course..



> "You must always be on the lookout for a change in this immediate trend.
> It is likely to change its direction from one to three times in a single session.
> This is how you detect the change.
> 
> In an up trend, it happens when the selling waves begin to increase in time and distance, or the buying waves shorten.
> Either or both will be an indication of the change in the immediate trend."
> Richard D. Wyckoff, Tape Reading Course, 1932




Also note a  Question he answered in 1912 to a reader in the Magazine of Wallstreet.

The reader was very impressed with   VSA and asked about  using volume and price like that.

Richard impressed upon him that other vital factors were  just as significant and just as Important as Price and Volume.. Especially the time Element.

A proper wave chart even an EOD one is Built from the intra day waves.
To what extent using EOD data will work would depend on how much information is being lost in each particular case. Sometimes it might not matter.
Sometimes it maybe  would matter a lot. esp maybe around turning points.

A wave Chart .. Displays The Price ( Spread/range ) , Time ( Duration ) ,Volume and Activity ( Number of transactions ) of each buying and selling wave.

And in as far you understand the market ? YOU WILL THINK IN WAVES.

Motorway


----------



## pavilion103

motorway said:


> Richard==>
> 
> 
> David==>
> 
> 
> 
> There is complete Description of Wave Charts in Richard Wyckoff 1931 Course.
> 
> I would make this point. Richard Wyckoff was the master of Volume Analysis.
> Too many focus on volume to the exclusion of other aspects  that are as Important.
> 
> There is Price , Time and Volume. All seen in relation to Position.
> 
> Note this quote form His 1932 tape reading Course..
> 
> 
> 
> Also note a  Question he answered in 1912 to a reader in the Magazine of Wallstreet.
> 
> The reader was very impressed with   VSA and asked about  using volume and price like that.
> 
> Richard impressed upon him that other vital factors were  just as significant and just as Important as Price and Volume.. Especially the time Element.
> 
> A proper wave chart even an EOD one is Built from the intra day waves.
> To what extent using EOD data will work would depend on how much information is being lost in each particular case. Sometimes it might not matter.
> Sometimes it maybe  would matter a lot. esp maybe around turning points.
> 
> A wave Chart .. Displays The Price ( Spread/range ) , Time ( Duration ) ,Volume and Activity ( Number of transactions ) of each buying and selling wave.
> 
> And in as far you understand the market ? YOU WILL THINK IN WAVES.
> 
> Motorway






Great Motorway,

Funnily enough I think that is the course I've gone back over and started to read in detail this week. 
Is that the one that is broken into sections eg. 1M, 2M, 3M ......and it has charts I think section 7? pg 31,32,33? Or something like that?

In fact, you may have even given the PDF to me. 

I need to really go in depth with the TIME aspect.


----------



## joea

Wyckoff was mentioned today in Charting Analysis/Phase 1.

In regard to method of trading (the farmer), the following statement by Wyckoff in "Charting the Stock Market" is as follows.
In 1930 Wyckoff's first instruction to his students was::
"Forget all the decision-making factors you ever used.
All you need to know can be found in the tables of stock prices and volumes in your daily newspaper"............

So with all the high tech equipment most of us have in our office, together with the trading software and platforms we have purchased, we should be rolling around on the floor, covered 100mm thick in $100 notes. LOL.

just thought I would mention it!!. Maybe the farmer has the 1930 teachings.
joea


----------



## motorway

joea said:


> Wyckoff was mentioned today in Charting Analysis/Phase 1.
> 
> In regard to method of trading (the farmer), the following statement by Wyckoff in "Charting the Stock Market" is as follows.
> In 1930 Wyckoff's first instruction to his students was::
> "Forget all the decision-making factors you ever used.
> All you need to know can be found in the tables of stock prices and volumes in your daily newspaper"............
> 
> So with all the high tech equipment most of us have in our office, together with the trading software and platforms we have purchased, we should be rolling around on the floor, covered 100mm thick in $100 notes. LOL.
> 
> just thought I would mention it!!. Maybe the farmer has the 1930 teachings.
> joea




IMO You will never exhaust the full import of Wyckoff"s _Entire_ body of work.

And there's the rub

IMO
Some who claim to know WYCKOFF

DO NOT

and  For more than one reason or another  .

* For more than one reason or another*

Many would instead like to try  to re-invent the Wheel.

And why not !


Seeing it was such a good idea in the first place !

Supply and Demand
_ABSORPTION of one or the OTHER_
Here imo is the one of the KEYS TO THE KINGDOM 

Motorway


----------



## joea

motorway said:


> IMO You will never exhaust the full import of Wyckoff"s _Entire_
> 
> Many would instead like to try  to re-invent the Wheel.
> 
> And why not !
> 
> 
> Seeing it was such a good idea in the first place !
> 
> Supply and Demand
> _ABSORPTION of one or the OTHER_
> Here imo is the one of the KEYS TO THE KINGDOM
> 
> Motorway




Motorway.
I agree, but often wonder why it did not get the recognition it deserved over the years.
After all, it came to light on this forum somewhere back in 2008, I think. (yes by you.)
Actually I am looking forward to "Trades about to Happen".
joea


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## pavilion103

I have a question that I sent to Tech. Just in case he doesn't have the time to answer it I'll post it in here. Maybe someone like Motorway can offer some sound input:


_I also have a question from the Wyckoff course. 

It is in Section 20M and it speaks about "a quick rally on comparatively light volume implies a scarcity of offerings and confirms previous indications of a change from weakness to strength"

Is this often true after climactic action? I am so use to equating a rise on lower volume with no demand. How can I tell if it is no demand or if it is in fact a scarcity of offerings?_


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## Trembling Hand

Pavilion you should trade a futures market intraday for a few hours each night. Even 1 hour. You will learn and see more setups and example in real time after 6 month than 10 years of reading and practise with EOD.


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## Joules MM1

pavilion103 said:


> I have a question that I sent to Tech. Just in case he doesn't have the time to answer it I'll post it in here. Maybe someone like Motorway can offer some sound input:
> 
> 
> _I also have a question from the Wyckoff course.
> 
> It is in Section 20M and it speaks about "a quick rally on comparatively light volume implies a scarcity of offerings and confirms previous indications of a change from weakness to strength"
> 
> Is this often true after climactic action? I am so use to equating a rise on lower volume with no demand. How can I tell if it is no demand or if it is in fact a scarcity of offerings?_




I mostly agree with TH on seeing how market phases work in futes and obviously when your commited to a trade, even a one contract, you'll see things that you can't from a book......having someone explain in a live environment is far better still, in fact, unless youre going the solo route a guiding hand is the best way

my input on your question is that you can have a new steady direction that goes quiet once all the major drama is over, however you can also have a couple or even one player who excites other weak and over reactive traders to pounce on new money coming in and what they dont understand is that that one or couple of traders profile is to scrimp from the avail trader who are active at that time and once theyve done their business they leave and this all leads to comparative low volume activity despite the length or extent of the price movement.......so most importantly the context of _when_ not just _where_ ...the other obvious time is on a news item that might surround the stock/fute or the sector and again, knee-jerkers .......

2c


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## motorway

pavilion103 said:


> I have a question that I sent to Tech. Just in case he doesn't have the time to answer it I'll post it in here. Maybe someone like Motorway can offer some sound input:
> 
> 
> _I also have a question from the Wyckoff course.
> 
> It is in Section 20M and it speaks about "a quick rally on comparatively light volume implies a scarcity of offerings and confirms previous indications of a change from weakness to strength"
> 
> Is this often true after climactic action? I am so use to equating a rise on lower volume with no demand. How can I tell if it is no demand or if it is in fact a scarcity of offerings?_




Read it carefully. You have a series of actions that has put the stock into a bullish position. All that is the context.

 If that previous action has absorbed supply ?

The Climax , The Shakeout , etc.... He then makes the point then that this rally "on comparatively light volume implies a scarcity of offerings"  Confirming the previous indications of a change from weakness to strength by breaking the downward stride.

*breaking the downward stride* 

Now look at this rally. IS it braking resistance ? Is it a breakout ?
No ! Would you expect it to gather a quick following. What about all the lagging indications ? How many bars ? Not enough to create a pattern , or change an indicator. And way below overhead resistance.

Would you not want to see this rally on low volume ?
If there is no likelihood of buyers following this small wave ?
What would volume signify ?

SUPPLY... You have no defined uptrend. Many would say it is in a down trend.
many would expect selling to occur and resume.

But we see small volume on that bar marked "5"  after the two previous bars that "5" defines as Absorption and then what of the next down bar closing on the high ? "6" it is unmarked ... Would you say lack of supply here ?

He is reading the action as like a film. he makes definitions that the subsequent action confirms . If this is buying and absorbing of SUPPLY. Then that first rally will be low volume, There is no following by buyers and you are looking for signs the selling is finished. So low volume.

Now at the point where you expect lagging indications to be followed ?
When it does breakthrough the overhead resistance ?

Then you see volume. huge relative volume.
But the price action just keeps powering through.

Motorway


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## tech/a

T/H joules and Motorway fill in the gaps.

I agree with all
On Futures and I only trade index futs

I agree you see a great deal and flicking between timeframes can reveal even more.

As a motorway points out every bar can be read in conjunction with past bars
And longer term price action and volume.
But I have found that clear signals from price and volume appear at important points more often than not.


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## pavilion103

Thanks for the response guys, much appreciated. I will digest properly tonight at home. 

Pardon my ignorance but I don't really know anything apart from stocks at this stage. 

Which futures do people trade? and is there a big difference between trading futures at night or just trading one of the European Indices?
My plan is to trade a couple of nights a week. 

I am very confused about what there is to trade and the differences. Can anyone give me a simplified explanation with some opinions on recommendations?


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## Trembling Hand

pavilion103 said:


> I am very confused about what there is to trade and the differences. Can anyone give me a simplified explanation with some opinions on recommendations?




Pav there is really no difference in studding futs vs stocks. But like I stated above you will get many thousands more examples over a much shorter time than EOD ASX stocks. Your learning will be super charged. That's what you need. Then what you learn is easily transferred to any instrument.

As far as futs markets there is four types of instruments, Equity Indexes, Commodities, FX futs and Bonds.

I would be looking at the main European Equity Indexes.They have a nice balance between good volume/liquidity and movements in the our afternoon. The best especially for movements now is the DAX(Germany Equity market) which opens @ 4:00 Melb time then really gets going @ 5:00 when the cash market opens. Here's a good one from 3 nights ago (Time stamps are at Melb time),




And the FTSE futs (UK),



Then of course you have the commodities. Main ones being Oil and Gold which are 24 hr. Even the US futs are active during our afternoon. In fact you wouldn't just look at 1 instrument. You would also be looking at a few, FX, Commods and equity to start to get a hang of inter-market analysis. Again adding to your learning curve.

As for how you would go about it? If you have an IB account you just pay for the data, I think around $80 for UK & German data, then add on something free like NT, Zeroline or whatever and sim against the big boys for the cost of your monthly latte expenses.

Or you could come over to the wild side and trade the HSI (Hong Kong) with the other nutsz  for the arvo, 3-6:15


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## CanOz

In my opinion, the best times to trade indices looking for price/volume patterns are the busy times. Don't fall into the trap of trading it just because its there. There are specific times where there are real price patterns created by a nice amount of liquidity. The DAX for example is great to trade after it settles down from the initial open, up until their lunch time, exchange time right. Almost all of the big FX pairs are good during this time as well. Then there is good activity after the US markets open up until just before their lunch.

There is a lull around lunch time in Europe, it picks up for a bit after but then lulls again in anticipation of the US open. Watch the market during these times as patterns don't work as well. You can learn allot about how liquidity shows the real market behavior and the lack of it is just noise:scratch:.

The other KEY here is that TH alluded to is the SIM, use the SIM to learn the market behavior. I wasn't thinking you'd actually be trading for real, you seem very patient in your learning curve, and that's vital....even enviable!

Cheers,


CanOz


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## tech/a

> In my opinion, the best times to trade indices looking for price/volume patterns are the busy times. Don't fall into the trap of trading it just because its there




Oh I dont know---a lot to be gained around S&R


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## CanOz

I agree, pivots mostly, as well as prior OHLC. I'm just saying that tight stops will get picked off easier during times of lower liquidity when trading patterns, in my experience.

CanOz


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## Trembling Hand

It doesn't matter. Step up, do something, gain some real experiences. 
.
.
.


Repeat 10,000 times.


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## tech/a

Trembling Hand said:


> It doesn't matter. Step up, do something, gain some real experiences.
> .
> .
> .
> 
> 
> Repeat 10,000 times.




So True.


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## Joules MM1

not to derail the thread from Wycoff too much.....as we are doing .....

i would not go to a brain surgeon who just 'gave it a go for the experience' or built his/her way up from a band aid to cardiac sutures by reading a book and then jumping feet first  or a car mechanic who just popped under the hood of a couple hundred times to figure how things worked out.......experience is one thing and finding the right person to work with is another altogether and you know which one is going to give the best guidance........so if you find a surgeon who practised a few hundred times and might just have got it right go ahead and put your health at risk.......

2c


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## tech/a

Joules MM1 said:


> not to derail the thread from Wycoff too much.....as we are doing .....
> 
> i would not go to a brain surgeon who just 'gave it a go for the experience' or built his/her way up from a band aid to cardiac sutures by reading a book and then jumping feet first  or a car mechanic who just popped under the hood of a couple hundred times to figure how things worked out.......experience is one thing and finding the right person to work with is another altogether and you know which one is going to give the best guidance........so if you find a surgeon who practised a few hundred times and might just have got it right go ahead and put your health at risk.......
> 
> 2c




Pav

I think the suggestion here is that your emails are probably better directed else where.
Ducks are often undertrained.


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## pavilion103

lol I'm not sure where that is going.....

The main constraint on me jumping in and trading a Euro index is financial. I had a couple of setbacks and have been saving frantically. Hopefully a start soon. Really like the idea of doing that sort of trading a couple of nights a week to really learn. 

I understand the importance of learning from personal experience. Once it is all set up I will be investing many many hours. All the practice/education in the meantime is advancing my development in the meantime. 

I don't expect to be a gun trader overnight. My eye is on 5 years down the track.


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## tech/a

pavilion103 said:


> lol I'm not sure where that is going.....
> 
> The main constraint on me jumping in and trading a Euro index is financial. I had a couple of setbacks and have been saving frantically. Hopefully a start soon. Really like the idea of doing that sort of trading a couple of nights a week to really learn.
> 
> I understand the importance of learning from personal experience. Once it is all set up I will be investing many many hours. All the practice/education in the meantime is advancing my development in the meantime.
> 
> I don't expect to be a gun trader overnight. My eye is on 5 years down the track.




Sim trade it 
DON'T trade straight off the bat!

FTSE slower and more technically friendly than the DAX.
HSI great for Kamikaze pilots


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## Trembling Hand

tech/a said:


> Sim trade it
> DON'T trade straight off the bat!




Just to double up. I was only ever recommending you SIM Pav. You cannot learn while losing $20 a tick!!

The idea is to expose yourself to as many real time examples in the shortest possible time to gain experience. No need to lose any more than a few bucks a month on live data. That is all.


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## pavilion103

Trembling Hand said:


> Just to double up. I was only ever recommending you SIM Pav. You cannot learn while losing $20 a tick!!
> 
> The idea is to expose yourself to as many real time examples in the shortest possible time to gain experience. No need to lose any more than a few bucks a month on live data. That is all.




No worries mate. Sounds good.


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## pavilion103

motorway said:


> Read it carefully. You have a series of actions that has put the stock into a bullish position. All that is the context.
> 
> If that previous action has absorbed supply ?
> 
> The Climax , The Shakeout , etc.... He then makes the point then that this rally "on comparatively light volume implies a scarcity of offerings"  Confirming the previous indications of a change from weakness to strength by breaking the downward stride.
> 
> *breaking the downward stride*
> 
> Now look at this rally. IS it braking resistance ? Is it a breakout ?
> No ! *Would you expect it to gather a quick following. What about all the lagging indications ? How many bars ? Not enough to create a pattern , or change an indicator*. And way below overhead resistance.
> 
> Would you not want to see this rally on low volume ?
> If there is no likelihood of buyers following this small wave ?
> *What would volume signify ?
> 
> SUPPLY*... You have no defined uptrend. Many would say it is in a down trend.
> many would expect selling to occur and resume.
> 
> But we see small volume on that bar marked "5"  after the two previous bars that "5" defines as Absorption and then what of the next down bar closing on the high ? "6" it is unmarked ... Would you say lack of supply here ?
> 
> He is reading the action as like a film. he makes definitions that the subsequent action confirms . If this is buying and absorbing of SUPPLY. Then that first rally will be low volume, There is no following by buyers and you are looking for signs the selling is finished. So low volume.
> 
> *Now at the point where you expect lagging indications to be followed ?
> When it does breakthrough the overhead resistance ?
> 
> Then you see volume. huge relative volume.*
> But the price action just keeps powering through.
> 
> Motorway




Thanks Motorway, I knew you'd be a huge help.

Those highlighted points stand out to me. 

I hadn't considered the fact that the stock won't get a public following until there is already somewhat of an established up trend. 

I wrote your notes on that page of my Wyckoff book. Will help me nail this home as I continue to review. Thanks mate.


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## pavilion103

Does anyone here use/construct a Wave Chart as illustrated in Section 22M of the Wyckoff course. 

I'm interested to know the depth that people use them. 

Or is this just a very common sense thing which becomes second nature over time?


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## joea

I was having a look around the other day for direction changes in relation to patterns, and come across this
 article by Tim Ord.

Basically he shows some rules he developed from Wyckoff.
I thought somebody maybe interested! Part 1.

http://www.tradingmarkets.com/.site/stocks/how_to/articles/-76494.cfm

While I am at it, I purchased a YTE (May/June)  magazine because of the articles in it. Thought some beginners may browse it next time they are in the newsagent!
Louise Bedford "The 8 habits of highly effective traders".
Traders Story from Alan Liao who suggests  4 books to read, and his comments on seminars and courses.
Larry Williams
An elderly lady Dawn Bolten-Smith (Don't Fight the Tape) She selects stocks to watch in the future. 
Interesting point of it all is the same points keep getting repeated time and time again.
###This is not a promotion of YTE magazine as I buy about one every two years***

joea


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## Greynomad99

Not a lot going on with this thread but it looks like a good place to put my post.

I occasionally mention Wyckoff chart patterns in my analysis and as not many are conversant with Wyckoff I thought a short video (a basic overview) might be of interest to some. However, as it is a complex subject and there doesn't seem to have been a post on this thread since Adam played fullback for Jerusalem, I'm not expecting many to view it.



			Video - A brief explanation of Wyckoff patterns - Robert Norman Share Charting


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