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DbPhoenix
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Everything posted by DbPhoenix
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Admitting Our Incompetence In order to become a top-notch trader, you must have accurate insight into your own limitations. But most novice traders do not. For example, behavioral economist Dr. Terrance Odean has shown that online investors tend to trade beyond their skills. They don't have an accurate picture of what they can and cannot do. These biased exaggerations of abilities are not restricted to traders. It's a widespread phenomenon. Research studies suggest that when it comes to estimating how well you are doing as a novice trader, it is best not to trust your intuition. Dr. David Dunning and colleagues (2003), in a recent article in "Current Directions in Psychological Science," argue that most people are "blissfully unaware of their incompetence." This tendency to overestimate one's abilities has been documented in several studies. When people are asked to take a test measuring abilities, such as thinking logically, writing grammatically, and spotting funny jokes, they tend to overestimate their performance: they think they are performing well above average (60% and above), yet they are actually performing in the bottom 25%. This research finding isn't restricted to taking tests. People in a variety of settings and skill areas overestimate how well they are doing. Debate teams in college tournaments wrongly think they are superb debaters. Hunters think they know more about firearms than they really do, and medical residents think they know how to diagnose patients more accurately than they really can. Studies have even shown that when people are offered money to estimate their performance accurately, they still can't do it. Dr. Dunning and colleagues suggest that poor performers are "double-cursed." Not only do they perform poorly, but they also lack the psychological ability to perceive that they are doing poorly. So what do poor performers do compared to top performers? Poor performers start with the belief that they are "good performers" and don't take the time to develop a method to assess their actual performance. Top performers, in contrast, try to gauge their performance accurately, and tend to avoid worrying about whether they are "good performers" or not. Indeed, studies show that they actually underestimate their performance. When they see how others have performed on a similar skill, they are surprised how well they do compared to others. Fortunately, poor performers are not doomed to remain at the bottom of the heap. In their experiments, Dr. Dunning and colleagues have shown that when poor performers are shown how poorly they do, and are given instruction on how to improve their skills, they perform better and are more accurate with regard to their performance estimates. These studies offer ways that novice traders can improve their trading performance. First, one should be aware that novice traders' intuitive performance estimates are grossly exaggerated and take active steps to ignore them. Second, create an objective log of your trading results, such as a trader diary, so that you know exactly how well you are performing. Third, get some trading instruction to improve your skills (trading coach, mentor, workshops, etc.). As your skills improve, you will perform better and your estimates of your performance will be more accurate. So keep these guidelines in mind. An objective and accurate estimate of your abilities is vital for trading success. Make sure you have one. --Innerworth
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Yes, and the importance of 1200 is confirmed yet again. Given that it's here, that changes the framework to the old 1170ish level back to 1250. I'm sure much of this has to do with BofA, but there's no way to tell ahead of time where buyers will dig in their heels. 1180 will be worth keeping an eye on today. A more micro view, for anyone who's interested:
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Moved from another thread.
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Moved from another thread.
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Moved from another thread.
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Fullett teaches the SMI version of Wyckoff rather than the original course, so it depends on what you want. If you want simple, I suggest you stick with the original. If you can visit the chat room here during the day, you're welcome to ask whatever questions you want, and if they relate to what's happening real-time, that's more likely to be of benefit than more hindsight analysis (of which there is plenty in this forum and my blog, at least). [Note: I should also mention that reading those ltg chats in that form could very well lead to blindness and a short temper ]
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Moved from another thread. See also this post.
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Introduce Yourself Here - Don't Be Shy!!
DbPhoenix replied to trading4life's topic in Beginners Forum
Before you spend a great deal of money, or any, I suggest you explore the site itself. There are several threads with a specific focus on price action, one of which is "price action only". See also the introductory "stickies" at the Wyckoff Forum. The first of these includes attachments of two books in pdf form, free, as already mentioned above. As for hard-copy books, get what you can from the library, for nothing. You may be surprised at what is available. Look also at the used books available at Amazon. Unfortunately, the prices for the used versions of the best books will not be much different than they are new, but money is money, and whatever you save can be added to your trading account. One which I particularly like in the area of price action is Techniques of Tape Reading. Also consider stopping by the on-site chat room. We're there every day, trading price, and your questions are welcome. Eventually you may decide to buy the CDs and the DVDs and the courses and the so forth, but give free a shot first. Free is good. -
Yes, this has been a particularly good period for the boxes, particularly re 1200, 1170, and 1150.
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This is an update of the chart I posted a week ago. I had to go back that far to find something that caught my eye. Today we penetrated that big congestion zone in December by about 15 points. If 90 turns out to be impassable, that gives us a nice 50pt range from 40 to 90. But even 40 to 80 would be okay by me.
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Fine, though you needn't include the buyer and seller part. Following the bid and ask is also fine, but not necessary. You can just follow price's progress up or down. Actually, there is participation on both sides regardless of how high or low volume is. The degree to which it's "high" reflects how much participation. Also all fine, though you can leave off the "possiblys". However, if you focus on the bar, you may miss the whole point of this approach, which is to focus on the flow, not the bar. This isn't about snapshots. It's about a movie. If you find yourself perseverating over what a particular bar "means", change to line charts and follow the price flow. Price rises, more buying pressure. Price falls, more selling pressure. Volume reflects the extent of participation. And that's about it. If that doesn't click with you, you will more likely be happy with an approach that stresses the bar. Attached is an example of what I mean by a "line" chart.
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A completely unnecessary post and an apology is in order. Head sought just the sort of clarification that was necessary since your question was unclear as to the meaning of "agreement". Second, you may not be a novice, but you ask the same questions that a novice would ask. If you don't like the answers, you're welcome to continue searching for someone who will tell you what you want to hear. That's how gurus stay in business. But if you "understood Wyckoff", you'd know that he isn't going to tell you how to predict price movement (as for VSA, I can't say since I don't know what VSA is doing these days). If you're trying to reconcile VSA and Wyckoff, I can understand whatever frustration you may feel since the two are essentially incompatible. But don't take out that frustration on those who are trying to help you.
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I agree with Head. The "agreement" in a hinge has to do with value, not with direction. The hinge is created because traders are looking for value, or "equilibrium". Whether price will then rise or fall is generally unknowable, though beginners devote a great deal of time trying to figure out how to predict direction. They have an extraordinarily low tolerance for uncertainty, and the idea of being prepared for all contingencies is for some reason unacceptable. If the hinge takes place at a support level, it can signify a reversal, but it can also signify a continuation. And though you won't have any trouble finding people who will provide all sorts of hindsight examples of how obvious it all is, or was, recognizing this in real time -- much less acting on it -- is a different kettle of fish. If someone is willing to point these things out in real time, and they're also successful at it, fine. Otherwise, it's all just more guruspeak. So how do you know what to do? You don't. You never do. But you can learn to assess the probabilities and prepare a set of decisions based on whatever contingencies you can conjure up. Then, no matter what happens, you'll be on the right side of the trade. As for three, the wider the bar, the more disagreement there is. But if price is rising, there's more buying pressure than selling pressure. If by "with volume" you mean that volume is also high, that's not particularly relevant. High volume simply means that there's a lot of trading activity. But it's the change in price that yields profits, not the level of volume. You'll read that "big volume" is a benefit on price moves, but this is not the case. Price can move to a considerable extent on very little volume. Big volume -- that is, an expansion of trading activity -- is more likely to be a factor when price gets into trouble, such as at support or resistance (that is, genuine support or resistance, where prior levels of trading have been heavy).
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Combining VSA with Other Modalities
DbPhoenix replied to jjthetrader's topic in Volume Spread Analysis
It would appear that Wyckoff is going to be the chocolate sprinkles of the New Wave in Trading. A little of him here and there will improve just about anything, even pickled beets. -
A little visit to the macroworld:
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I wouldn't go that far. It just doesn't have anything to do with my trading. Whatever works.
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Here's what I'm looking at today:
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Since this thread didn't get off to a very good start, and since daytrading with Wyckoff is addressed throughout the forum, I've moved your question here, along with my reply, and closed the thread. Feel free to ask any follow-on questions at the new location. Those who believe that Wycoff has no value are welcome to begin a thread entitled "Wyckoff: Crock or Not?", but their comments are not especially pertinent, much less helpful, particularly when someone posts a sincere request for information, advice, or guidance.
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To begin with, W doesn't use indicators, nor does he try to predict, so none of this may be helpful at all. Second, though many daytraders who use W's principles apply the same principles intraday as they would interday, W used P&F in his daytrading, largely because he was geared toward scalping in that situation (and he was geared toward scalping because there was little other choice at the time, no WiFi streaming data into a sophisticated charting program). However, since your question has primarily to do with how to trade this via Wyckoff but does not ask about P&F per se, I'll take the shortest and I hope simplest route. First, your resistance line is in the wrong place. Whether or not one drew a hinge at the beginning of the day, he would have seen by lunch that he had a clear trading range in place, along with its midpoint. This midpoint acts as your resistance, though you have to see this in real time as the lower or upper band could also have acted as resistance. That the midpoint is true resistance is suggested by the volume it takes to try to penetrate it. You can short that bar, or you can short the test five bars later. If neither works out for you for whatever reason, you can take the final test five bars after that (ten bars after the buying climax). Once you've done that, you can scalp a few ticks if you like, but there's no particular reason to exit until you reach your "2" (which tests your 1427 low). I could go on, but it likely would not be pertinent to what you want. If you're interested in Wyckoff per se, I suggest you study the stickies at the beginning of the forum and Trading the Wyckoff Way. If you're interested in the P&F aspect, there is a thread here for that, which may also be helpful with regard to scalping (though no one is particularly interested in it at the moment and the thread is inactive). There is also W's book on daytrading, which is attached to the first stickie. If you want to scalp intraday using Wyckoff but don't want to use P&F, I suggest you spend some time in the chat room here and ask your questions real time. Edit: Wj's chart seems to have evaporated. This is more or less what it looked like, only without the stochastic window. The original post and my reply may make a little more sense with this chart.
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Fullett teaches the SMI version of Wyckoff rather than the original course, so it depends on what you want. If you want simple, I suggest you stick with the original. If you can visit the chat room here during the day, you're welcome to ask whatever questions you want, and if they relate to what's happening real-time, that's more likely to be of benefit than more hindsight analysis (of which there is plenty in this forum and my blog, at least). [Note: I should also mention that reading those ltg chats in that form could very well lead to blindness and a short temper ]
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If you're referring to the last dot, not really, but that's the difference in watching it real time rather than review static charts. A pop up, sideways for 20s, a buystop just above. Given the prep for the move, there's no reason to think it won't work toward the top of the range. The entry at the second dot is of course better since the longer you wait, the more likely price will return to your entry before the continuation.
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Our charts are dissimilar, but this is what I look at. A pop up, then a sideways movement. Buystop placed above. Price drifts back instead. Then another pop. Entry could be here or above the next sideways movement at the last dot.
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Somebody actually does that? We're ready to go by 0730 your time, so unless you have a long commute, why not come in for a half hour or so? It's often pretty much over within the first ninety minutes anyway.
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Todd Krueger, Formerly of TradeGuider
DbPhoenix replied to MRW's topic in Trading Products and Services
As I pointed out here, you don't need indicators or software in order to detect these turning points, and though the example is oil, the principles are universal. But those who insist that this is all impossibly difficult will always appeal to those who are, shall we say, trusting. -
As I posted elsewhere, There's a great deal of Wyckoff wrote this and Wyckoff wrote that floating around the internet, much (most?) of which is not true. Wyckoff, for example, never used the term "smart money" in his course, much less equate it with the Composite Man or Composite Operator. In fact, he pointed out thatthere is no Composite Operator, but the effect of the combined operations of bankers, pools, large operators, floor traders and the public [bold mine] is, when boiled down on the tape, of the same effect as if it were produced by one man’s operations. It is important that you observe the market from this standpoint, and that your trading operations are based, not on what you formerly regarded as the market’s characteristics but on the fundamental law of supply and demand, which is at the bottom of every move that is made in every stock in the market at all time. This law is working and will continue to work always and forever. There can be no getting away from it. It does not matter whether the buying and the selling, or both, are genuine or artificial, that is, manipulative, designed for a purpose. Nor did he care much about the open, nor about bar-by-bar analysis, much less about pattern. A final note: professional money is often but not necessarily "big" money. And big money is not necessarily "smart" money (evidence would suggest, in fact, that just the opposite is true). Big money is just big, and that, in terms of the footprint, is enough for both the retail trader and the professional trader who is himself looking for footprints. For the trader who is not "big", however else he might be characterized, to equate "big" with "smart" can lead to many trading errors, often expensive. "Big" is simply "big", and nothing more. One can either trade with that flow or trade against it. But he should never assume that "big" constitutes "smart". Gurus breed where novices rely on what somebody says or writes about something rather than read -- much less study -- the original material, which is why I posted the original material, or as close to it as I could get, in the Beginners thread. The term "smart money" appears nowhere in Williams' original work. Nor does the term "composite operator". But when a dozen gurus preach their individual versions of what is "true", confusion reigns. He who bypasses all of that and seeks out the source material is far more likely than the usual groupie to understand just what is being said. If he doesn't want to take the time and make the effort to do so, he has no one to blame but himself.