The Wyckoff Method

[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

? 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]

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]

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

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]

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]

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