The Wyckoff Method

[pavilion103]

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]

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]

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

 

[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?

 

[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.

 

[Joules MM1]

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

 

[motorway]

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

 

[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.

 

[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?

 

[Trembling Hand]

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

 

[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

 

[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

 

[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

 

[Trembling Hand]

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


Repeat 10,000 times.

 

[tech/a]

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


Repeat 10,000 times.

So True.

 

[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

 

[tech/a]

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.

 

[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.

 

[tech/a]

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