Trading styles of Livermore/Wyckoff

[blig]

Hi

I've studied Wyckoff for years.

I can only improve on "motorways" excellent posts in a few areas. Motorways description of the Wyckoff method cannot be improved upon.

Wyckoff and Livermore had very similar characters. Both lived for the ladies and drinking. Both made and lost fortunes. Livermores losses are well documented. Wyckoff lost his by signing away his "Magazine of Wall Street" business to his nubile young secretary (I used to have the web link to the story in Time Life archives circa 1930's sorry lost them). The "Magazine of Wall Street" was on sold to Dow Jones and was morphed into Barrons. At this point Wyckoff started "Wyckoff and Associates" which marketed the wyckoff course. This course now forms the core of the 2nd Unit of the SMI course, in particular, chapter 7 formed the core of the original method. Both Livermore and Wyckoff used a judgemental approach to the market bound within a core philosophy as opposed to the mechanical methods promulgated at the time by Richard Schabacker (who is incedentally John Magee's grandfather). Both Wyckoff and Livermore understood and described how securities were marketed to the public in the secondary market (absolutely nothing has changed today...nothing). Both Wyckoff and Livermore marketed how to speculate courses, with differing success.

It is necessary to read both Sarnoff's book and Smittens book on Livermore to get a flavour for the man, both come from different points of view.

Thanks to a prodigous memory Livermore used to work off raw numbers only (in the same way Gary Smith does), whereas Wyckoff worked off charts hand drawn by his office staff. Livermore placed greater emphasis on macro economic factors, Wycoff worked purely off his interpretation of market action. Livermore thought in terms of price levels and price reactions at certain price levels, Wyckoff thought in terms of the character of price action. Livermore bought breakouts and sold breakdowns, Wyckoff bought dips and sold into price rises (in effect Livermore demanded service, Wycoff provided service, a very important point of difference). Livermore was attracted by action/momentum in a security, Wyckoff was attracted to movement in a sleepy security. Livermore was a bottom up analyst as long as macro conditions held, Wyckoff was purely a top down analyst.

Some thoughts...
Its interesting to note the sudden interest in the Wyckoff method in this market wave, it was not evident during the tech boom. Its even more interesting to note that most people who talk about Wyckoff on forums only talk about price/volume as if that is the Wyckoff method. PV considerations form only about 15-20% of the analysis/work. The Wyckoff course has been substantially improved by subsequent owners of "Wyckoff and Associates/SMI" through constant refinement. Only 2-5% of people who start the Wyckoff course will ever be successful. Why? Because it takes a lot of work and analysis on a daily basis even with automation. It does work, but its hard work and expensive in both time and money. Thousand dollar software systems claiming to work on Wyckoff principles are novel but ultimately a waste of time. Wyckoff devotees on the web are no different from Gann, Mechanical systems gurus or Elliott fans, in so much that some are blinded by thier fanatical beliefs. Seek out those who know, but can see the big picture.
For those interested in investigating further:
www.ltg-trading.com/
There are other resources out there, but part of the reason people are attracted to Wyckoff is because of its do it yourself application, so if you find them, good luck on your journey...

Cheers
Bagwan

 

[motorway]

Hi blig... Welcome ..

Wyckoff lost his by signing away his "Magazine of Wall Street" business to his nubile young secretary

The "nubile young secretary" Became /Was His Wife ..

1926 was already a year where Wyckoff was winding down His activities.
He had felt His Health deteriorating...In May He transferred control Of The Magazine..But retained a significant Bond holding.. This was Also No doubt involving His Divorce as a factor.... He also planned His retirement from the advisory and broking activities... In June 1926 he suffered a near fatal bursting of the artery of the heart.. Another breakdown in health in 1927 and a stroke in 1928.


He did regain His health and it is at that time He founded Wyckoff & Associates.. Which became SMI... The first full edition of His course was made available in 1931 ... Also at that time He founded the magazine, Stock market technique ...

Immediately He was at work revising His course... Which was completed after His death in 1934... And made available in 1937 By Robert Evans . Who ran SMI for a significant period of time producing numerous lectures on the method himself.

Maybe Without His breakdown there would have been No Course No SMI..

Wyckoff worked off charts

He started with the tape... Saw charts as an aid to memory
He then transferred the method of tape reading to one of being chart based and centred..

The number of active stocks exploded through the 1900s-1930s
Whole sectors of activity that did not exist came into being..

Wyckoff was purely a top down analyst.

He wanted the best stock in the best group in the best sector in the best market.. Best being what would move the "soonest and the furthest"

So a lot of the analysis is top down...

The Position sheet produces a top down view but from the bottom up.
Analysis of individual stocks is combined to give a particular market view in contrast to an index ..

Its even more interesting to note that most people who talk about Wyckoff on forums only talk about price/volume as if that is the Wyckoff method. PV considerations form only about 15-20% of the analysis/work.

Yes... Shows how effective that part is even on it's own.

Wyckoff bought dips and sold into price rises

Breakout was a valid entry .. But only under certain conditions and the least favoured.. Wyckoff expected to already have defined the trend before the breakout occurred.. He wanted low risk, high return positions by buying near the exhaustion points of the preceding waves .. When the stock was on the "springboard".

Its interesting to note the sudden interest in the Wyckoff method in this market wave, it was not evident during the tech boom.

I probably might never have heard of Wyckoff or His method except for the Internet... And only because I was always looking for knowledge..

SMI does not even have a website.. You almost have to stumble across it.
The course has not been Hyped or marketed very much

Tom Williams and tradeguider has changed this... Internet forums have changed this... People are interested because they see something familiar ( A lot of What makes up the TA they Know ) But from a fresh and compelling completeness.. And With much promise...

Wyckoff method seems to me to have almost been a secret method

It does work, but its hard work and expensive in both time and money.

To be in the 10% who can and do.. I would expect takes time and effort and understanding... People pay 1000's for moving average black boxes systems. Or even more for certain courses ..

There is a lot of spin and hype and marketing..

I have found finding out about Wyckoff.. Hard Work.
Big difference.. The old Saw- why would you tell if it worked. My experience not many tell...

But the Internet is changing that..

I don't really think it is expensive... Anyone can do the course But it is what We bring to it ... What We are ourselves that maybe makes it work..

But to even be introduced to a little Wyckoff Will have the serious student of markets with much to ponder and be stimulated By imo..

A student of markets
motorway

 

[motorway]

User:Jccoppola
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James Philip Coppola III ("J.C.") (born June 8, 1968) student of the markets, and well read in the classics of Wall Street. Little has changed, ever, in the speculative nature of “campaigns” that take place on Wall Street. The simple truth is human nature and its influence on price, run fairly constant through a boom and bust cycle when financial market history is rigorously studied. Mr. Coppola has done such significant research, and early in his career, Mr. Coppola was influenced by the writings and teachings of Richard D. Wyckoff -- trader extraordinaire and investor educator in the early to mid 1900's. Mr. Wyckoff's teachings are well summarized in The Anatomy of a Trading Range, by Jim Forte [1].

Identifying with the Wyckoff characteristics to market campaigns and concepts like the “Composite Operator”, while professionally trading, Mr. Coppola extensively modeled, tested, and mastered the Wyckoff technique, real-time, in his professional hedge fund operations. Mr. Coppola conducted many formal studies of market winning campaigns, some of which the data was furnished by William O'Neil + Co. Inc for the white paper Improving Returns While Controlling Risk: Integrating Wyckoff's Tools with CANSLIM Stocks by Mr. Coppola [2].

As Mr. Coppola evolved as a trader, he continually paralleled Wyckoff's work with many modern day market operators discussions and writings, such as George Soros, Bruce Kovner, Paul Tudor Jones, William O'Neil, and Ed Seykota. Leading him to become passionate about money management mathematics and attain a deep respect for risk management and psychological factors that influence hedge fund management.

He recognized the necessity of taking responsibility for risk before, during, and after risk is engaged and saw no single technology that packaged and contained all the tools needed. The patent pending MoneyMaximizer® - Seatbelt for Investors (USPTO #09/587,619 Portfolio Accounting and Risk Management System) technology was created.

Mr. Coppola is currently the Managing Member and Chief Investment Officer of Choice Alternative Investments [3]. Barron's Magazine has twice ranked Mr. Coppola the leading Global macro Fund Manager in terms of annualized performance.

1 http://www.choicealternative.com/product_information/white_papers/mta_journal_issue_43_forte.pdf

2
http://www.choicealternative.com/product_information/white_papers/mta_journal_issue_44_coppola.pdf

"The simple truth is human nature and its influence on price, run fairly constant through a boom and bust cycle when financial market history is rigorously studied."

Boom bust cycle operates on all time frames

Boom bust cycle produces even the individual bars on a bar chart..

There are useful trends (that is ones that can be identified and profited from) because ..

markets are not random ... They are not random because they are
" manipulated "
They are manipulated By Demand and Supply which spring from information of some kind (even if its only the fact of a certain price movement having occurred). The existence of Information , it's ownership, dispersal, contingency and timing.

Both information and Manipulation are broad concepts.
The choice of limit or market orders is a form of manipulation.
Waiting to buy or sell when something happens is manipulation.
Price movement itself is manipulation... Manipulation is another way of saying
Non random..
By choosing to buy sell or hold. Everyone Big or small, informed or uninformed
is manipulating price in some way.

Above are the links to the two mentioned papers..

Both of these I think were students of Hank Pruden ..

Here is a third paper By Pruden Himself

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

The line of least resistance is the immediate trend
They arise from a certain technical position
And at their ends produce a certain technical position.

A certain information ( oversold ) builds them
A certain information ( overbought ) exhausts them
price and esp volume activity disperses the information.

Wyckoff judges a stock from it's own action.
Not the artifacts produced by a stocks action.

Those who know more than You
can not help reveal that knowledge
by their own buying or selling
and the subsequent action of the stock

NO moving averages etc

Only the four qualities

Price, volume, range/spread, close and position.... also activity

motorway

 

[motorway]

Proof that these rules and methods are correct is also found in their adaptation to other forms of trading, chief among which is the detection of accumulation and distribution at certain important turning points in the market. I have used this method successfully in forecasting the market for these principal swings and find it to be a much more comfortable way of following the market, because it is not so confining.

Preparation for a long advance or decline, as well as for the intermediate movements are numerous, is clearly apparent to those who understand the art of Tape Reading. In judging the market by its own action, it is unimportant whether you are endeavouring to forecast the next small half hourly swing or the trend for the next two or three weeks. The same indications as to price, volume, activity, support and pressure, are exhibited in the preparation for both. The same elements will be found in a drop of water as in the ocean, and vice versa. A study of the stock market means a study in the forces above and below the present level of prices. Each movement has its period of preparation, execution and termination, and the most substantial of movements are those that make long preparation. Without this preparation and gathering of force, a movement is not likely to be sustained.
On the other hand, the greater the preparation, the greater the probable extent of the swing. Preparation for the principal movements in the market will very often occupy several months. This may be preceded by a decline, in which large operators accumulate their stocks. They may even precipitate this decline in order to pave the way for such accumulation.

Large operators differ from small ones in their ability to foresee important changes in stock market values from six months to a year in advance, and to prepare themselves for it. A study of these preparatory periods discloses to those who understand the anatomy of market movements the direction and possible extent of the next big move. Thus, a study of these important turning points, principal among which are booms and panics, is the most essential. Small operators should take a leaf from the book of those who buy and sell enormous quantities of securities. It is their foresight which enables them to profit. To cultivate foresight means to study the markets condition. In a lecture at the Finance Forum, New York, I showed how all influences of every sort affecting the stock market are shown on the tape, and in the changes in prices. While I would not for a moment discourage the student from acquiring any knowledge, and giving some consideration to Fundamental Statistics such as crops, money, politics, corporate earnings, etc.- the advantages of studying the action of the market, as a guide to future prices, are productive of too great results to warrant their dilution with factors which are really of secondary importance. I make this claim because of my conviction that the position of large operators is more important than the so-called basic factors.
For several years past I have applied the principles in this book to the forecasting of the swings of from 5 to 20 points. Results have been highly outstanding. For this reason I can recommend that the subject be studied with a view to the formation of a method of trading, especially adapted to the individual requirements of those who wish to follow this intensely interesting and highly profitable business.

RICHARD D. WYCKOFF
New York, 1916

Markets are in a constant process of building Trading Ranges, and then leaving them. Markets do this continually . Richard D. Wyckoff was called the master of the trading range.

Trading ranges are occurring on all time frames...
building a "cause" having "effect"..

The same elements will be found in a drop of water as in the ocean, and vice versa.

Today The term fractal is applied to this observation.

Wyckoff uses the words prediction and forecast

in the sense of anticpation..

When a Man is on tip toes We anticipate That He will descend..
We can not predict exactly when .. But We know that it is a given . A forced move..

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.
Richard Wyckoff ,1909

The line of least resistance is a forced move...

motorway

 

[Chorlton]

The Hutson Book



Hank Pruden has a new book out

He is a professor who teaches Wyckoff at Golden Gate University..

Getting Good reviews

"At long last, someone has taken the time and effort to bring the work and insight of Wyckoff to wider public attention -- and Hank Pruden has done so masterfully, with great clarity and eloquence. Hank has taken the best of Wyckoff's work, combining it with the essential aspects of trader discipline and psychology, to provide a highly readable and particularly useful guide to trading. MUST READING!"

Jacob Bernstein

The Three Skills of Top Trading: Behavioral Systems Building, Pattern Recognition, and Mental State Management HANK PRUDEN

PART ONE Systems Building and Behavioral Finance.

CHAPTER 1 Systems Building for the Three Skills of Top Trading.

CHAPTER 2 Behavioral Finance.

CHAPTER 3 The Life Cycle Model of Crowd Behavior.

PART TWO Pattern Recognition and Discretionary Trading.

CHAPTER 4 Wyckoff: The Man, the Method, the Mystique.

CHAPTER 5 The Basic Elements of Charting for the Wyckoff Method.

CHAPTER 6 The Wyckoff Method of Technical Analysis and Speculation.

CHAPTER 7 Anatomy of a Trade.

PART THREE Mental State Management.

CHAPTER 8 Trader Psychology and Mental Discipline.

CHAPTER 9 The Composite Man.

CHAPTER 10 Putting It All Together: Ten Principles for a Trader to Live.


motorway

Hello Motorway,

Have you read the above book by Hank Pruden??

Just interested in getting it but would welcome any comments about it beforehand.....

Kind Regards,

Chorlton

 

[Garpal Gumnut]

Hello Motorway,

Have you read the above book by Hank Pruden??

Just interested in getting it but would welcome any comments about it beforehand.....

Kind Regards,

Chorlton

Wyckoff was an interesting but complex bloke who had a simple system that served him well.

See above for picking the bottom, creek, spring etc., its not rocket science, any TA course would cover this using different nomenclature.

He believed in wave theory. Google wave theory and thats covered.

He also used sector averages e,g banks added their prices and charted them and then compared his picks vs the average.

He lived well and flew high and crashed. He would probably have a DSS Case Manager if he lived in Australia today. Or he may have worked for Macquarie as they live live by different rules.

His ideas make intuitive sense, but they are not complicated.

If you want to run a course on anything, incl Wyckoff, make it complicated to give the punters value for money.

Garpal

 

[motorway]

My understanding is that Hank Pruden did the SMI-Wyckoff course
in the 1970's... He also new Robert Evans ..

From comments from around the web I have seen ... Those reading the book consider it a good resource... I have seen it compared favourably to Unit 1 of the course itself regarding the content.

I have also seen comments stating that it draws on the material he has previously published before ..

I don't think it hits our shores till June... It is available on Amazon
for just under $50 USD... It is Hardcover. At this stage I have seen No where where We can "look inside" .

Hank Pruden has been teaching Wyckoff for a significant period of time and set up the faculty at Golden gate University..

Seeing it is is a proper book .. With His background.. I would expect it to be good both in content and layout..

However I have not read any part of it Myself.

I would expect it to be a better more rounded introduction then the

Hutson book.. which was a series of magazine articles from three authors assembled into a book...

With Prudens book I have also seen some pleasantly surprised at the amount of material The book does contain.

I can not really verify anything for sure

For comparison with the SMI course

Unit 1 is a general overview
basic principles basic tools
buying selling tests
types of charts and their uses in Wyckoff method
accumulation distribution ,trends etc

unit 2

Is The three volume text of Richard Wyckoff himself a
massive amount of material

unit 3

Are the basic Lectures
That are a condensed review
of much of the material from units 1&2

unit 4

Is about putting theory into practice
Judging technical positions
selecting the best stocks for any phase of mkt activity etc

unit 5

Is a final review

motorway

 

[Garpal Gumnut]

unit 5

Is a final review

motorway

Dear Motorway,

With respect to you and Pruden,

The situation is similar to that of James Joyce when he wrote Finnegans Wake, he said he would keep the "Professors" going for 150 years.

Livermore and Wyckoff were larrikin investors/tapereaders, not academics.

Pruden has heaps of theory and is useful, but, if you want to be the biggest Lothario on the block you have to put the book down and ask the first girl on the floor for a dance.

Practice makes perfect.

Garpal

 

[wayneL]

If you want to run a course on anything, incl Wyckoff, make it complicated to give the punters value for money.

Garpal

Most punters don't want complicated IMO. They want the one SECRET that will make them a millionaire by next week.

That's where the sales are. IMO

 

[motorway]

Wyckoff was an interesting but complex bloke who had a simple system that served him well.

See above for picking the bottom, creek, spring etc. , its not rocket science , any TA course would cover this using different nomenclature.

He believed in wave theory. google wave theory and that's covered.

He also used sector averages e,g banks added their prices and charted them and then compared his picks vs the average.

He lived well and flew high and crashed. He would probably have a DSS Case Manager if he lived in Australia today. or he may have worked for Macquarie as they live live by different rules.

His ideas make intuitive sense, but they are not complicated.

If you want to run a course on anything, incl Wyckoff, make it complicated to give the punters value for money.

Garpal

Hi Garpal..

His ideas are simple.. And much echoes His Methodology today
Of the publicly available material most of it seems to be only some basic principles from unit 1

There are a zillion indicators that attempt
to judge the character of action
but mainly deal with instead appearances

Wyckoff is about judging the character and not just appearance.

All men who wear suits are not businessmen
All those who wear tracksuits are not great athletes
All those holding a microphone are not great singers.

for example all breakouts are not equal

It is the character that determines these things

If We can not judge character then We have to jump on just appearance .

Tom Williams did the course in the 1960s...
has taken the principle of effort and result and
Tradeguider has resulted

It is interesting to hear who has done that course..
Or developed methods from it..

Wyckoff developed simple methods that
echo many methods of today but were used to judge character not appearance.


What did he devolpe
trend lines
relative strength
wave theory
four market phases ( some today say stages ) etc etc

But used to judge character not appearance

for example

From a Reuters seminar on TA

"Trendlines are one of the simplest and most useful
indicators in Technical Analysis. They also happen to be
one of the most misused.
"One of the biggest mistakes made by beginners and
professionals alike, is inconsistently defining and
drawing the trendline. To be useful, the trendline must
accurately reflect the definition of the trend."
(The Classic Trendline
THE WYCKOFF TRENDLINE
The principles and conditions that make up the
"classical trendline" are in many respects a variation of
Wyckoffs original findings on this subject. Wyckoff
included the following conditions:
Firstly, he argued that a trendline requires you to join only
two price extremes as opposed to three. He qualified this
by specifying that the two price extremes had to be
consecutive and of similar magnitude.
This condition of similar magnitude to validate a trendline
is now disregarded by most traders . It is however, an important measure
of the change in trend. For instance, if a Wyckoff trendline
is breached, the concept of similar magnitude indicates the
degree of the change in trend of that particular time frame.
A second concept included by Wyckoff in his analysis of
trendlines, was the idea of a trendline that is "recovered".
In other words, the concept that a breach of a trendline
does not always automatically render that trendline invalid."

A third also was the reverse use of trend lines
which require only one point to define

Also much oringinal methodology concerning bar and point and figure charts
and their combination

de villiers and Wyckoff split over this point,

Wyckoff used both in a coordinated manner.

And as blig said still being refined up to today

And many others like John Bollinger and Richard Arms
heavily influenced

100 years and counting..

So anyone using a "simple trendline" is using in a way Wyckoff

But as any carpenter will tell you a straight edge is a powerful tool
IF you know when and where to place it.

A zillion indicators I don't think would do as well

motorway

 

[motorway]

http://www.traders.com/Reprints/PDF_reprints/HP_PRUDEN.PDF

 

[RichKid]

http://www.traders.com/Reprints/PDF_reprints/HP_PRUDEN.PDF

thx for that motorway!

 

[tech/a]

Hmm point and figure is in Tradeguider I wondered why?

 

[motorway]

Just Lost a detailed reply




The short story

P&F is a chart that charts units of return (trend continuation) Vs units of risk (trend reversal)
allows an objective technical position be given to every stock..

out of technical positions..........trends arise........

P&F is a graphic of this "work"

congestion zones are important

page61 and 69 Nick Radge on why He uses EW

seek opportunities
define trends and positions in trends
prove disprove..

He could have been talking about Wyckoff P&F

charts are just tools
principles are what matter..

P&F charts

have trend constants
bullish bearish definitions

objective trend lines - best known 45degree (1 unit return for 1 unit of risk)

relative strength

every chart can be placed in a technical position by its position on a P&F chart

which being a square grid allows any mathematical relationship to be compared across all charts......

A P&F chart could just be a vertical column
reversals are significant

A number of reversals together produce "zones of congestion"

mathematical relationships.....




Not squaring of price and time (Gann)
But the squaring of return and risk...continuation and reversal.. volatility cycles


P&F (cause and effect) + Bar chart (effort and result)

Two specialized tools
coordinated together

motorway

 

[motorway]

First Draft came back (magic )

So I post it as well


Here is a hint

Point and figure

chart a trend continuation Vs a trend reversal

What do these represent?

trend continuation = reward
trend reversal = risk

How many units of reward for each unit of risk
such a chart is another tool to help reveal
The behaviour of those active in the stock..

(suddenly the hurdle of the 45 degree trend line might have a special relevance)

It is very easy to give an objective technical position to every stock in the universe......

Bullish bearish definitions
above below trend line
trending or ranging (but not through time)


Why are the most important part of the chart the "horizontal zones congestion"

support resistance etc

because clock time (and time is a tool of manipulation) is absent
all that you are left with are the swings of smart money...

A P&F chart could just be one vertical column
Every time it reverses column is for a reason.

The ratio of trend continuation to trend reversal
is the trend constant

So We are dealing with volatility (again risk)


Because it is a square grid chart
all charts are directly comparable

on any criteria all charts can be classified as to a technical position

This can also incorporate relative strength


Now ALL charts are just tools
It is the principles that matter

But Wyckoff made special use of P&F as a special tool

In Nick Radges Book page 61 & 69 His reasons for using EW are similar Why a Wyckoff practitioner uses P&F .....defining opportunity, technical positions
and Prove or disprove (1 unit of return for 1 unit of risk etc)


motorway

 

[tech/a]

Motorway.
Thanks.
I think this is best seen graphically.
Here is the P&F and Bar chart comparisons for MGX over the same timeframe.
The congestion and the release into a trend and the risk reward can be seen clearly or clearer in the P&F.

Is there a prefered reversal amount or is it as I suspect more about the pattern?

 

[motorway]

Box Size

A study done on USA stock prices came to the conclusion that over time
the average USA stock price was between $40 and $60...

This was because of the use of splits and reverse splits to keep the share price looking "right"......

A stock much dearer was to seen to be too highly priced and a stock much lower was seen as having something wrong with it...

hence the historic use of a box size of $1...

approx 2% of the price and a natural filter that would keep one out of low priced stocks that if they were any good would be priced higher even if only through capital management .........

It would still pick up low priced stocks of extraordinary potential ..

Also short term traders used margin and sought points gain not %...So looked to higher priced stocks....

Stock prices were quoted in eights and there were half ,quarter and eighth point chats used as well...

So a box size of 2% of either the last price or mid point of anticipated move is a good starting point...

looking at the bar chart and the size of the swings between support and Resistance ( The swings of smart money ) can be useful when looking at particulars........

You don't want to fit the chart to the instrument and make it look good
You want the chart to be a hurdle a "test" to judge the better opportunities.

Bolinger ( his Bands are very P&F ) suggests the box size should incorporate the square root of price in a formula for box size ( he quotes an old rule the square root rule.. The square roots of prices move proportionately in rallies across stocks making up an index )

The ultimate box size is a work in progress...................

I think the P&F charting in tradeguider is poor

I use log box size 2% to screen for opportunities , define trends and technical positions..scalable and meaningful comparisons stock to stock index group etc ) zoom in or out to different magnitudes ( related to time frames )
with multiples of 2% ( eg down to .25% to even 32% with stocks below .10 )

You then can determine a box size from support and resistance ( filter out everyone but the smart money ) with a certain fraction of those swings...

At the cutting edge the "public" thinks in terms of points
and bid and offer have certain fixed point values....

log charts have a different look and You must be careful with half way points
( They are not at the half way point )


relative strength charting should be log

log should be used for screening

eg how many stocks above below 45 degree trend,
how many are below trend but with a bullish definition,
how many are above/below trend and in zones of congestion of 5 columns width etc..

I can screen for those "technical positions" and pick candidates ahead or behind the trend and technical positions of the market..

As Wyckoff did ... picking the best candidates for every market phase..


The P&F chart Wyckoff called a cause and effect chart and a manipulation detector..It is also a trend performance measure

cause = potential ( This potential I see as having three factors behind it )

Now potential is only potential

the bar chart is Wyckoff Effort ( Volume ) and result ( the price movement)

This is an actual fact It is a potential in the process of being or that has been realized...

Cause = potential ....leads to effort that produces a result = relative out performance ... is the final effect

relative strength is a reality... ( an end and beginning)


All of this is a cycle that leads back to a state of new potential..

Charts are tools to observe the

"three laws"
and apply the "five steps"


possibilities are great eg
mkt is breaking trend line on bullish definition from 5 columns of congestion

stocks in that market are in or out of harmony .. ahead or behind
in the same or different technical positions.......

and where is the VOLUME coming in and how ?

Coordinating from the Bar chart and back again.....Always looking for Changes of behavior.....identifying the phases of the market cycles.

Underlying this are principles

The charts are just tools
to help recognize and apply

the student must first learn and understand the motives, behavior patterns and the emotions of the people who go to make up the market.

The recent "correction" was an very good example of why understanding

these motives, behaviour patterns and emotions........
Of the value in determining these technical positions ( That is what they really are ) and then looking for the change of behaviour and where the "Volume comes in"

It is difficult to over-emphasize the importance of studying the technical position, particularly when making a speculative commitment. Many people may say, What is a weak or a strong technical position? My reply is, in brief, that a stock is in a weak technical position on the bull side when it has been purchased and is held by a large number of outside speculators; when most of these are looking for a profit; when the price of the stock has advanced to a point where no further buying can be stimulated for the time being. It stands to reason that when buying power is exhausted a stock must decline, no matter how strong its finances, management or earning power.

On the other hand, a stock is in a weak technical position on the short side when the bears have exhausted their ammunition by selling all they can afford and when the buying power of investment and speculative purchasers is such that it resists the pressure of the bears; in other words, when demand overcomes supply. The weakness in such a position is found in the fact that all those who are short are potential bulls; they must, sooner or later, cover their commitments in order to close their trades.

They do not wish to remain short indefinitely. Bears, after they have sold short are an element of strength, not of weakness.

Richard D. Wyckoff, How I Trade and Invest in Stocks & Bonds 1922

motorway

 

[motorway]

The Point and Figure Highlighter is used for searching for latest Point and Figure signal – either bullish or bearish.

The basic bullish signal is a double top breakout, when a column of Xs rises above the previous column of Xs, for example:



The basic bearish signal is a double bottom breakout, when a column of Os falls below the previous column of Os:



You may choose to define a bullish breakout as one that has broken above (or below) more than one previous column of Xs or Os.

The Point and Figure Highlighter allows you so search for these and multiple top and bottom patterns.

For more precise Point and Figure patterns, it is better to use the Point and Figure Pattern Highlighter 0 on page

The Point and Figure Pattern Highlighter is used for searching for any Point and Figure patterns. These are the same patterns which you can search for on charts using the Identify Patterns tool – see page .

There is no restriction to which patterns you can search for provided you can write the simple formulas yourself. Some have already been coded for you to show how easy it is.
You may qualify your pattern search in three ways. You may tick any or all of these Conditions:

· And Current Risk-Reward Ratio (CRR) is between

o This allows you to filter the results to ensure only those with a Current risk-reward ratio in the range you specify is highlighted

o For more details on Current Risk Reward ratio please see 0 on page

· And Current 45 ° trend is

o This allows you to specify whether the main 45 ° trend is Up or Down at the time.

o For more details on 45 ° trends please see 0 on page

· And the % to Target is within

o This allows you to filter the results to ensure only those with a % to the target is in the range you specified

If these qualifying conditions are ticked, the resultant charts from the Highlighter will show the automatic 45 ° trends and Current Risk-reward

It is possible to search for Point and Figure breakouts on Price as well as Relative Strength charts.



· Tick P&F Of Normalised RS against to change from a price Point and Figure to a Relative Strength Point and Figure, and

o Click Search to select a Relative Strength file code

Or

· Leave Unticked to leave as a price Point and Figure



Soon maybe have an esignal feed with this

P&F should not have time distortion in it
So No use making box size too small if using eod data

Here is a 1 box chart and a 3 box chart
with a 4% log box......

Wyckoff always starts with a 1 box chart ( Here drawn in Wyckoff Style )

red is not stop
green is not go
strength is seen in weakness
weakness appears within strength
what needs to be emphasized is the flow trend and congestion...

motorway

 

[Garpal Gumnut]

I have started reading again after a lapse of many years

"How To Trade In Stocks"
The Livermore Formula for Combining Time Element and Price.

by JESSE L. LIVERMORE

It is a refreshing read and though my edition was printed in 1940 , it is as timely now as when Livermore traded.

I would recommend it to new and existing ASF members.

gg

 

[ThingyMajiggy]

I am just reading through Reminiscences of a Stock Operator about Livermore, how he used to trade in the "Bucket Shops" reading the tape, what would the equivalent be of this today? The DOM? Market depth? P&F chart on lowest tick increment?