Was the great Wyckoff correct?

[ceasar73]

''Money is made in tape reading by anticipating what is coming - not by waiting till it happens and going with the crowd.''

mmm...not sure what Livermore,Darvas and other great trend followers would say about this.

Any thoughts??

thanks

 

[motorway]

''Money is made in tape reading by anticipating what is coming - not by waiting till it happens and going with the crowd.''

mmm...not sure what Livermore,Darvas and other great trend followers would say about this.

Any thoughts??

thanks

Wyckoff's Aim was to identify turning points and stay in harmony with the trend.

He did not need to predict anything.

He referred to this as forecasting ( very different from prediction )

It is about identification of what is and adapting/ making oneself available to fortunate outcomes.

He was not a blind trend chaser ( called following today ) and signal follower.

He was about the use of judgement, identifying turning points
and with the use of a tight stop

having much to gain and little to lose.

Motorway

 

[motorway]

"At this point, I should like to differentiate more clearly between what I have been referring to as 'chart playing' – that is, crude speculation responding uncritically to so-called chart signals – and what can more properly be described as 'chart reading.' … In my view, chart reading begins when automated response to signals is rejected as the only or predominant feature of the 'method.' From this rejection it necessarily moves toward recognition of earlier indicators and, in the process, is constrained to become more discriminating, if only because the leading indicators are inevitably more equivocal than the lagging indicators.

The search for leading indicators and the need to interpret them involves a measure of critical and analytical reasoning. In its most fully developed form, chart reading searches for the earliest possible indications of trend changes; it can then be appropriately described as chart analysis. If the process is extended to include critical examination of other technical evidence, it can qualify for the broader classification of 'technical analysis.' With every step toward greater critical refinement, the process moves further away from being a method virtually devoid of reasoning and closer to the ideal of pure analytical reasoning, internally consistent and taking account of every available item of technical evidence, and designed to produce a fully integrated view of the price movement in all trend perspectives."

"t is necessary to realize that pattern recognition lends itself very well to popularization because it calls for visual comparisons rather than for the mental effort of careful analytical reasoning. (Bar charts are frequently offered under the motto 'a picture is worth a thousand words'; under many conditions, in my opinion, it can be worth less than silence.) Pattern recognition is also an especially tempting technique because its emphasis on numerous historical models leads the chart reader to assume, if but subconsciously, that there is something of the inevitable about the relationship between chart pattern and subsequent price performance."



Bar charts are frequently offered under the motto 'a picture is worth a thousand words'; under many conditions, in my opinion, it can be worth less than silence.

This was written by a guy very much in Wyckoff's lineage.

It is a quote from maybe the last great text on technical analysis. Wyckoff would have been very much in agreement.

Motorway

 

[CanOz]

not sure what Livermore,Darvas and other great trend followers would say about this.

Livermore was a tape reader and Darvas was a pattern trader.

CanOz

 

[ceasar73]

Livermore was a tape reader and Darvas was a pattern trader.

CanOz

point is they were both trend followers.They did not predict or forecast as I thought Whyckoff was implying...

 

[joea]

''Money is made in tape reading by anticipating what is coming - not by waiting till it happens and going with the crowd.''

mmm...not sure what Livermore,Darvas and other great trend followers would say about this.

Any thoughts??

thanks

"The stock market is not an exact science."
"Stock prices are made by the minds of men."
"The stock market rarely behaves exactly the same way twice."
These are quotes from Wyckoff.

Just as the alphabet is the foundation of the english language, there are foundations to trade the stock market.
Wyckoff uses price, volume, trend lines, support and resistance and waves. He uses periods of markup, accumulation and distribution to explain and understand the anatomy of the movement of a stock or market.
It is not about if he is correct, its about if you choose to use his methodology to trade the market.

"Charting the Stock Market" The Wyckoff Method by Jack K Hutson, attempts to show this style and method.

In another thread on VSA (volume spread analysis) you will see how this method is a runoff of Wyckoff in attempting to predict what is about to happen.
joea.

 

[tech/a]

The search for leading indicators and the need to interpret them involves a measure of critical and analytical reasoning. In its most fully developed form, chart reading searches for the earliest possible indications of trend changes; it can then be appropriately described as chart analysis. If the process is extended to include critical examination of other technical evidence, it can qualify for the broader classification of 'technical analysis.'

A terrific and very important topic.
Taking the passage above.
Ive highlighted the most important and often miss interpreted sentence.
Most think that the anticipated change of trend will be a "V" top or bottom and as such trade it that way.
Prediction of a change of trend in this fashion will result more often than not in a poor return for the trader.

Changes in trend more so tend to build --- and it is important for chartists to be able to read what is happening in a chart during the phase of trend change---Consolidation.

Wyckoff wrong?
I dont think so.
The application of all types of analysis is often---lets say---incorrectly interpreted and applied.

 

[nomore4s]

Big difference between anticipating and predicting.

Whenever we take a position in the market we are anticipating, no matter what style or method we use.

When a trend follower takes a position they are anticipating that the trend is going to continue - whether it actually does or not is up to the market.

Motorway and Tech have touched on the important points.

Wyckoff's Aim was to identify turning points and stay in harmony with the trend

chart reading searches for the earliest possible indications of trend changes

The aim of trading off charts is to identify turning points as early as possible and then exploiting it to extract the largest part of a move as you possibly can. Does this mean picking exact tops and bottoms? No! Just being able to reduce risk and magnify reward by understanding how trends begin and end and being able to identify those signs and find satisfactory entry and exit points.