DbPhoenix

At the risk of dominating the thread (too late), I do want point out at least that W is not the only avenue to success. Lots of people make loads of money off mechanical systems, with or without indicators. I'm not one of them and never could be, but that doesn't mean that it can't be done. So if you want something mechanical, don't give it up. But if that's not for you, that's not the end of the game.

It's not so much about "mixing up too many approaches" as it is having a thorough understanding of each of the approaches that one is attempting to reconcile or consolidate. Being "inclusive" sounds great, but if one is trying to combine what may actually be incompatible elements into something tradeable based on what one has read or heard or seen, one can wind up with Spam when what he wanted was pate. I've seen a great many beginners try to paste together price action and indicators and cycles and Gartley and Gann and who knows what all and eventually just say to hell with it all this is too damn difficult and takes too much time. While one could argue quite easily that it does take too much time, I suspect that it would be far less difficult if the beginner were to develop a thorough understanding of just one approach, one strategy, one setup, one quiver of tactics. If nothing else, he might learn just what it is that he is most comfortable with even if it isn't the particular approach he's been studying, or at least learn what it is that he can't stand. If, for example, one has no interest in mathematics or statistics or Excel or anything else of a similar persuasion, that pretty much excludes a substantial chunk of what he might otherwise waste time exploring. But if he knows instead that he needs something mechanical, something codeable, that all this buying pressure selling pressure support resistance new age "Zen" stuff is of no interest to him whatsoever, then he has likewise saved himself a lot of time and can begin working toward a far more specific and probably achieveable goal. You can best determine just what it is that interests you. You can then begin to investigate those approaches which are compatible with those interests. It doesn't take more than a few weeks -- or, in some cases, a few days -- to learn whether something has potential or is a load of crap. But rather than argue about it on message boards, one can go on to something else until he finds that synergy that works for him. If one is lucky, he may stumble on something fairly quickly. More often, it takes a considerable amount of time. As for the "creek thing" (and the "spring"), it's not mentioned anywhere in Wyckoff's course, but OAC et al are having so much fun trashing the Wyckoff Forum, and I hate to spoil their fun . It's a simple thing to test, though. I wonder if anyone will ever do it?

We're getting into channeling the dead and hindsight wisdom here. It's fine to say oh yeah I would have done so and so for this and that reason but it's all a crock. When you get right down to it, you have to make a decision based on what's going on in front of you, and I wasn't even there. If there had been an air pocket above 1200 rather than that clog and if I hadn't seen so much weakness at the effort to hold that higher high, I might have gone long. Or not. Even with replay, I can't tell you. But that's the point of this group, isn't it? People who've been looking at and discussing this in chat then discussing it postgame. In the end, you have to fish or cut bait. Or get out of the boat. If you call a short and it turns out to be wrong, then you get out and reassess the situation without being distracted by what you just did. Same if you go long and the rug is pulled from under you. Or maybe you don't get back in at all, but watch it take off without you. If you're misjudging what you see and you're not thinking clearly, what's proven by staying in and insisting that the market bend to your will? Immediately switching to paper-trading when called for is nothing to be embarrassed about.

Here's the follow-up chart referred to earlier:

Rather than make this thread overlong, let's switch now to the short side, which will appeal to all the counter-trend junkies who are forever seeking to "pick the top". Again playing devil's advocate, since no one would actually make these trades:), what might be the justification for each of these shorts?

Bringing one's expectations in line with the strengths of the support and resistance levels that he's pondering is an important step. There are important levels and zones of S/R as well as trivial ones, and one can't expect as much of a move to result from tests of the trivial as from the important. This does not mean that the trivial lines and zones and moves are "noise". There is no such thing as "noise". It all contributes. It all matters. But contributing is not the same thing as being important. Put simply, if you're playing an S/R level or zone that's seen by everybody on the planet, even those who use only weekly charts, you can expect something more than if you're playing an S/R level or zone that's seen only by those who are trading 1-tick charts. Many who are new to scalping have trouble with this, which is why they scalp for a few ticks those trades that are worth only a few ticks but also scalp for a few ticks those trades that are worth much more. In fact, anyone who consistently cuts his profits short is probably not putting things into context. This has nothing to do with what many call the "fractal" quality that they believe the market has. It's just a matter of context. As such, there is no magical means of illustrating the movements (X number of ticks, Y number of minutes, range bars, CVBs, candles, etc). What matters is the movement itself.

When someone goes on and one about the power of a particular approach then can't provide a single chart example that demonstrates the singularity of that power (as opposed to the "power" of any other approach, such as simple chart reading, that would accomplish the same thing), particularly if that refusal is coupled with remarks regarding the inabilities of those asking the questions (in this case, you and FW, among others) to understand what the claimant is talking about, then bells should begin to go off and flags should be raised (you should probably avoid discussions of "the trading clock"). Therefore, you are perfectly justified in feeling the way you do. On the other hand, you should understand that you are seeking to combine mechanical and discretionary approaches. Therefore, you're going to have to anticipate and accept quite a lot of confusion. Wyckoff is largely discretionary, though there are things that one is always looking for that when detected prompt an almost mechanical response. SMI nudged Wyckoff further into this realm. VSA made it even more mechanical so that it could be transformed into software. Therefore, if you attempt to look at price movement from both a Wyckoff standpoint and from a VSA standpoint, you're going to be using two mutually incompatible approaches simultaneously. This will likely be painful. Add to that "event trading", which is very much non-Wyckoff, and Taylor Trading, which is I-don't-know-what, and you're going to find "straight answers" difficult to come by since you have not yet reconciled all the competing strategies and tactics that are swirling around in your head, and whatever answers you receive are going to be filtered through all of that. As for drawing the creek, that's an SMI thing, and OAC was wise not to ask about it in the Wyckoff Forum since his post, as he expected, would have been moved someplace else. Whoever wants to know about it can ask the question in the VSA thread. They're into that. Or study the SMI material themselves. Studying creeks and ice and polar bears and palm trees and springs and so forth may be helpful to some, but it's superfluous to Wyckoff. Once one learns the basics and understands them, he can tack on all the bows and ribbons and hats and sparklers he likes, but that doesn't mean that what he adds were part of what he studied to begin with.

With the possible exception of (4), however, none of your justifications, have anything to do with what price is doing in front of you in real time in this situation. They have more to do with what you expect to happen that with what is happening. Regarding (4) and (5), using both trendlines and demand/supply lines is important. I recognize that most people don't understand the difference, but among the advantages of using d/s lines is that they help the trader to detect changes in strength and weakness in the overall trend. That may not be enough for you here, but note that you do in fact have a lower high before the last attempt at a higher high, and rather than make a higher low, price instead breaks your trend line. Yes, it does make a more or less rapid recovery, but look at the upper tails on those candles. Each of those candles represents and is part of a series of waves of price movement. Even if one doesn't drop down to a shorter interval, it should be clear that price is reaching up, then collapsing, reaching up, then collapsing. This is not bullish, particularly since price is at the same time trying to clear important R. It is an additional confirmation element. I don't trade it on its own. But then I don't detail everything I see in the chart. That would be quite lengthy (but then that's why I began switching all this over to chat ). If your blue line is a supply line, then no, since it would have to be adjusted after the lower low. As for the second dot, I suspect he'd exit his position at the breach of the lsh, particularly given the strength of the bounce off what had become S. Though we haven't had coffee lately. I'll ask him next time I see him. I'll put something together later.

Nice job. While it may seem as though I'm encouraging wrongthink here, it's an exercise, not a prescription for strategy and tactics. Everyone should keep in mind, though, that it is always a good idea, when preparing to enter a trade, to think about what he'd do and how he'd do it in order to take the opposite side of the trade. If nothing else, he may prevent himself from taking a trade that he had not thought through thoroughly.

Partly because of that thick clog above 1200. Given the lackadaisical behavior of everybody concerned, I saw no evidence of any overwhelming desire to initiate and sustain a giant push through all that. And partly because of the rapid deterioration in the tickq. But even if one were to buy that pullback to 1200, he'd have to take into consideration that price broke the demand line in the meantime. This is not encouraging. If he were also following the tickq, he'd also notice that there was no divergence. Rather the tickq was confirming the weakness, particularly at the low at 1315. The TD instead shows up at what had become an S/R level at 1190, and even if I weren't tempted to go long, I'd certainly exit most or all of my short position. If you don't have this data, I'll be happy to provide a chart of the TD at 1190.

No one but a floor trader should always be in the market. Those who trade from the tape in an office should assume a neutral position frequently. They should not delude themselves that they can anticipate everything that happens in their favorite stocks. They should take vacations from the tape varying from a walk around the block to a trip into the country for a week or two. A neutral position clarifies the mind. Trading should never become a habit (like smoking cigarettes) so that you've simply got to satisfy that craving to jump in and out. Such a practice warps the judgment; eagerness to trade supplants deliberation. RDW

Yes, that's what I said. Price flows regardless of how -- or whether -- one chooses to detect or illustrate that flow. There can be an imbalance between supply and demand leading to a failure to complete a transaction regardless of what's posted where. And I'm sure there's lots of noise in your book. But there is no such thing as noise amongst completed transactions. Every transaction means something to somebody and contributes to price flow.

His implication that anyone who doesn't join the admiring throng is too dumb to understand what he's talking about -- particularly his last response to Hakuna -- suggests guruitis. In any case, I've put together a chart that I hope better illustrates what I was trying to get across yesterday. Here, R was at 1200. Strong R. And I said early on that my "box" was 1100 to 1200. Price hit 1200 around 11:08, but there was no tickq divergence. It then floated back to what had become unexpected S/R about 1190, where it remained until 12:35. It then took another shot at 1200 at 12:39, and there was a minor TD which could have been taken or not but which was negated five minutes later. Price then took off for 1208 at 12:58, and here appeared what I would have been looking for had I been trading at the time. Note that there's a pretty severe deterioration in the tickq beginning at 12:56, and one could take that. But the clearest sign of weakness is the level of the tickq when price is pushed into an attempt at a new high at 13:01:30. That's the entry (with a tight stop, as always), at least for me.

I've been pumping the chat room, particularly to those interested in trading by "price action". How many of them become regulars remains to be seen. Incidentally, the questions you're asking in the "Ideas for Struggling Traders" thread are excellent. The idea that thousands of market movers all over the world are going to act in concert, event or no event, prompts skepticism at best. At the very least, anyone advancing such a notion would not only have to provide a great many concrete examples but to do so in real time in advance of whatever move they're predicting. Without that, it's just more of the usual hindsight wizardry. All of which is why Wyckoff warns against "event trading" and why he insists that it's all in the chart, a fact which Head2k and atto have demonstrated nicely.

bump................

You must always be on the lookout for a change in the immediate trend. It is likely to change its direction from one to three times in a single session. This is how you detect the change: In an up trend, when the selling waves begin to increase in time and distances or the buying waves shorten. Either or both will be an indication of a change in the immediate trend. Apply the same reasoning to a down trend. Watch closely for these changes for they tell you when to buy and sell; when to get long or short; when to close your present trade and reverse your position. RDW

Price flow is independent of the means chosen to illustrate it. Unless one is following a one-tick chart, everything he's looking at is to some degree a summary of the flow, not the flow itself. It can, but price does not move until there's been a transaction. If a buyer and seller cannot come to an agreement, then there's no transaction, regardless of how much of an imbalance there may be.

The indicator phase is something that probably everybody probably has to go through, whether it's MAs, stochastics, MACD, %R, VWAP, MP (if you're looking only at the form), Pivot Points, Fibonacci, Bollinger Bands, chart patterns of one sort or another, candles, or even the price bars themselves (range bars, CVBs, tick bars, VSA, etc). And if one can make that endeavor successful by going through the necessary testing and developing the necessary plan, then there's absolutely nothing wrong with settling into that phase for the rest of one's successful trading life. Since all of this depends on its existence on the movement of price, however, it is all "price action", hence the confusion over what is meant by "price action". But trading by price means simply that one is following price flow (not order flow, but the movement of price) and the imbalances between buying pressure and selling pressure that prompt that flow. It has nothing to do with any kind of indicator or any sort of bar or even any kind of chart. Is it superior? Yes, if it makes more money than an indicator-based approach. If it doesn't, then no. Does it get one into moves earlier than an indicator-based approach (including those which focus on bars)? Yes, if one understands the buying-selling dynamics mentioned above. But getting in early is only part of what is required to make a profit. Otherwise, all counter-trend traders would be rich. Though there are undoubtedly price action people who look down their noses at indicator people, the PA people have no reason to feel superior. And contrary to the beliefs of some indicator people, the PA people do not fail to understand indicators; they just don't see the point (other than perhaps scanning a database for price movements). In most cases, the latter have in fact gone through all this, as mentioned earlier, and had insufficient success with it, just as they've been dissatisfied with the chat room phase and the newsletter phase and the advisory service phase and the red-green arrow software phase and the seminar-course-workshop-DVD phase and the trade-the-news phase and the chart pattern phase and have instead found a more comfortable fit with a focus on price flow. It's all about the money and how one chooses to go about getting it. There is no inherently better way, particularly if the trader doesn't care to do the work. A good fundamentalist, after all, will beat a bad technician any day. Therefore, if one is using indicators but has no idea how they're calculated, much less done the testing necessary to make the most of them, he is unlikely to reap the full -- or any -- benefit. If one is trading price flow but embraces irrational views of what constitutes support and resistance, he is similarly unlikely to reap the full benefits of that approach. Either way, it's all about study and testing and screen time. Without that, it makes absolutely no difference how one goes about the process of entering and exiting a position. Those who are interested in how price action is traded would do well to visit the TL chat room as there are several people there who do just that. And it's free.

The experience of the past few years has emphasized the value of disregarding all considerations except those which relate to price movement, volume and time. If one is endeavoring to realize profits from the principal swings in prices of stocks, it is my opinion that he should disregard fundamental as well as corporate statistics relating to the stocks in which he is trading, stick closely to a study of the action of the market and become deaf and blind to everything else. RDW

Regarding the comment above, the post was moved to Ideas for Struggling Traders per the request of several participants who thought the discussion of its contents would best take place elsewhere. I didn't know moving it would affect the nominations it received, but that seems to be the case. Anyone who cares to do so may nominate it again where it currently resides. As for the private group, I did not know that it was visible. But it's limited to people with a demonstrated interest in the subject matter and is by invitation only. I'm sorry if this offends anyone, but private groups exist all over the internet, and I assume that the option is provided here to keep people onsite. If that's not the case, I'll be happy to delete it.

For future reference, green is long, red is short.....

Lovely job, but keep in mind that we're talking only about longs for the time being, that is, the "entries" that I've tagged are for the long side. Again, one might wonder why anyone in his right mind would go long at any of these spots, but people do. All the time. Some of you might have done so, but you needn't confess to it. But this is the sort of thing people do in real time when they have no compass to guide them. Stupid things. And if you understand Wyckoff thoroughly, none of you will be doing these stupid things anymore. So, let's each of us play devil's advocate. Let's assume that we are beginners with their heads up their asses and we want in on this multi-generational rise. Wouldn't each of these green dots represent an opportunity to get into, or back into, this never-ending escalation? Explain.

Figuratively speaking, the small trader should imagine himself as a hitch-hiker in the market. For the ordinary hitch-hiker, someone else supplies the car, chauffeur, oil and gas. When he thinks the car is about to go in his direction, he jumps aboard and rides as far as he thinks the car will go. When he notices the machine has been stopped by a red light, or is about to turn a corner and go in some other direction, or that the car is running out of gas, or the brakes failing to work properly, he steps off and figures he has secured about as long a ride as he may expect. All he has supplied in this transaction is a modest commission and whatever brains were necessary to observe and recognize the opportunity when to get on and off. RDW

The Trading the Wyckoff Way thread was closed yesterday for reasons which needn't concern us here. However, those who are interested in continuing the discussion are welcome and encouraged to do so here.

You're correct that it's not about instincts but about reasoning, and Wyckoff is a particularly good mentor for this type of reasoning. Granted it's "hindsight" reasoning, but that's how one learns what to look for. The principles are simple and they are few. That makes recognizing these behaviors in real time much easier, as you may have noticed in the chat room this morning. Again, one might wonder why anyone in his right mind would go long at any of these spots, but people do. All the time. Some of you might have done so, but you needn't confess to it. But this is the sort of thing people do in real time when they have no compass to guide them. Stupid things. And if you understand Wyckoff thoroughly, none of you will be doing these stupid things anymore. So, let's each of us play devil's advocate. Let's assume that we are beginners with their heads up their bums and we want in on this multi-generational rise. Wouldn't each of these green dots represent an opportunity to get into, or back into, this never-ending escalation? Explain.