DbPhoenix

Okay, picking up where we left off, what about these entries? And if you're thinking nobody in his right mind would take these, think again.

MP is to me entirely consistent with Wyckoff, though by "MP" I'm referring to the essential concepts of auction market theory, not the books and software and jargon and so forth. As with any other approach, one can get so distracted by extraneous factors that he fails to see what is in front of him. But if one "gets" MP, I should think that Wyckoff would be much clearer.

If you're trading live, you have the volume information, even though it may not be represented by a bar. On the other hand, if one has mechanical setups, perhaps recognition is all that's required, though one might argue that understanding is required for creating the setup in the first place.

I don't know how many people outside the US are interested in this subject, but I seriously doubt that any "modification" program is going to enjoy much success unless and until it addresses the question of the principle. Regardless of the interest rate, the loan payment, the term, etc., most people who are paying off a loan which represents a value which is twice, for example, what the house is worth are going to feel like chumps. Banks make a multiple of the value of the loan anyway due to the interest payments, so it isn't as though they'd be giving the house away by adjust the principle. After all, they have to adjust the principle anyway if they have to sell the house in foreclosure, so why not adjust it anyway and keep the owners in their homes? But Barack doesn't call, he doesn't write.....

I'm impressed, and at least I now have something to go on when people ask how long this takes. I've thought that this stuff would be far easier to understand for those who know little or nothing about the market, much less charts (your ability to read left to right probably has a lot to do with how quickly you've picked this up). Experienced traders know, for example, how easy it is for children to grasp price movement. Unfortunately, those who have the most to unlearn have the most trouble, and are the most likely to give up in frustration. Indicators are so seductive.... I'm not going to interfere with this because the comments and suggestions and questions of those who are still working things out will be far more meaningful than whatever I might say at this point. However, you have been particularly interested in the issue of entry and exit, so the following exercise may be useful to you. These aren't the only places where one could enter, just as the areas to which I drew attention on the original charts were not all there was to look at. But they're a start. What are your first reactions and thoughts with regard to each of these points? Which seem least and most risky? Where would you place your stop with each? What to you would be the probability of each of your stops being hit? Don't make too much of this. You won't need a calculator. The central point is that you see selling pressure lessening at some level of support and you want to be prepared for a renewal of buying interest. So where do you enter to take advantage of that move if and when it occurs and where do you place your stop in case you are wrong? As for exits that are not related to stops, that can wait. And last, I'm assuming that all of this is pertinent to what BB had in mind when he initiated the thread. If it isn't, I'm sure he'll let me know.

Of course, at least in terms of price movement. One can know, for example, that price rose on low volume because there was little selling pressure, but deciding how to profit from that knowledge and that movement is a separate issue, often centering around risk tolerance. There are also the modifications that must be made to knowledge as a result of experience, but having to make those modifications doesn't mean that one had no understanding to begin with. Understanding is ever-evolving, and is rarely (never?) complete. Observation may not be absolutely prerequisite to generating hypotheses, but if one jumps to the hypothesizing stage without it, he is likely to spend far longer there. On the other hand, if he relaxes back into observation mode, he may find that his hypotheses are better, tighter, fewer, and more productive in general.

No idea. The bumping thing has been a problem throughout the forums and it has not yet been fixed. Perhaps a moderator with forum-wide tools can move it someplace else.

While it not up to me or firewalker et al to begin a new thread that will contain the "parallel" discussion, yours is the third request that this be done, and two simultaneous discussions are less likely to be of benefit than two which are independently "on-topic". Therefore, I'll transfer Steve's posts to his own thread along with those posts which relate to it. I hope that this will be the last time that this will prove necessary.

From the Wyckoff Forum:

For the sake of the folks who are reading this, how long did it take before you could do this sort of analysis?

Thanks for getting the ball rolling.

Speaking of oil and of trading "the Wyckoff Way", anyone care to tell the story of the following price action a la the example given in the opening post? In until the end, then out. No additional information outside the pricevolume movement required.

As I said, if one understands -- practically and not just intellectually -- the dynamics of buying and selling pressure against support and resistance, the entry and exit timing are not nearly as much of an issue. But at some point, that means going to the chat room (or working with somebody in some other way) and doing it. Hindsight posts on message boards are, for the most part, philosophy and theory, even if those posts are tied to charts. Many of those who say they trade intraday do so during coffee breaks and lunch and so forth. I can't imagine anyone being able to understand these principles, much less apply them, by trading so intermittently. In order to understand price action, you have to watch it move. That would seem to be a non sequitur, but otherwise one is just throwing darts. Edit: I should point out here that Wyckoff is by no means all about intraday trading. One can also watch price "move" on EOD charts, and EOD trading is a great, big, wide, wonderful world which most "intraday traders" should probably be focused on anyway.

On the other hand, the OP may have decided that he does not yet sufficiently understand and appreciate how this market moves and would like to become more familiar and comfortable with it and with the traders who trade it before determining how to profit from it. This can take a considerable amount of time, and there's no hurry.

Trading by price -- and "volume" -- requires a perceptual and conceptual readjustment that many people just can't make, and many of those who can make it don't want to. But making that adjustment is somewhat like parting a veil in that doing so enables one to look at the market in a very different way, one might say on a different level. One must first accept the continuous nature of the market, the continuity of price, of transactions, of the trading activity that results in those transactions. The market exists independently of you and of whatever you're using to impose a conceptual structure. It exists independently of your charts and your indicators and your bars. It couldn't care less if you use candles or bars or plot this or that line or select a 5m bar interval or 8 or 23 or weekly or monthly or even use charts at all. Therefore, trading by price and volume, or at least doing it well, requires getting past all that and perceiving price movement and the balance between buying pressure and selling pressure independently of the medium used to manifest or illlustrate or reveal the activity. For example, the volume bar is a record of transactions, nothing more. The volume bar does not "mean" anything. It does not predict. It is not an indicator. Arriving at this particular destination seems to require travelling a tortuous route since so few are able to do it. But it's a large part of the perceptual and conceptual readjustment that I referred to earlier, i.e., one must see differently and one must create a different sense of what he sees, he must perceive differently and create a different structure based on those perceptions. As long as one believes, for example, that "big" volume must or at least should accompany "breakouts" and clings to this belief as ardently as he clings to his rosary beads or rabbit's foot or whatever, he will be unable to make this perceptual and conceptual shift. If you can work your imagination and use it to travel in time, you will have a far easier time of this than most. Imagine, for example, a brokerage office at the turn of the 20th century. All you have to go by is transaction results -- prices paid -- on a tape. No charts. No price bars. No volume bars. You are then in a position wherein you must decide whether to buy or sell based on price action and your judgment of whether buying or selling pressures are dominant. You have to judge this balance by what's happening with price, e.g., how long it stays at a particular level, how often price pokes higher, how long it stays there, the frequency of these pokes, at what point they take hold and signal a climb, the extent of the pokes, whether or not they fail and when and where, etc., all of which is the result of the balance between buying and selling pressures and the continuous changes in dominance and degree of dominance. One way of doing this using modern toys and tricks is to watch a Time and Sales window and nothing else after having turned off the bid and ask and volume. But this wouldn't do you any good unless you spent several hours at it and no one is going to do that. Another would be to plot a single bar for the day and watch it go up and down, but nobody's going to do that, either. Perhaps the least onerous exercise would be to follow a tick chart, set at one tick. Then follow it in real time. Not later, but real time. Granted this means a lot of screen time and only a handful of people are going to do it. But those few people are going to part that veil and understand the machinery at a very different level than most traders. Once this is understood, the idea of wondering -- much less worrying -- about what a particular volume bar "means" is clearly ludicrous, as is the "meaning" of a particular price bar or "candle". If it is not understood, then the trader spends and wastes a great deal of time over "okay so this volume bar is higher than that volume bar but lower than this other volume bar, and price is going up (or down or nowhere), so...".

Since you're posting in the Beginner's Forum, I assume you're a beginner. This thread (http://www.traderslaboratory.com/forums/f34/learner-thread-5033.html) may be of interest to you since he is also a beginner and working on much the same thing. Perhaps the two of you could keep each other motivated.

It may become a hinge eventually, but not yet. The volume's wrong (volume is often erratic during holiday periods). Don't forget why a true hinge forms in the first place and what it's supposed to accomplish. Without those elements, it's just two converging lines which may mean and lead to nothing at all.

How does this relate (a) to Bearbull's opening post and (b) to Wyckoff's work?

I haven't posted to Steve's thread, much less squashed anything there. If you have questions for Steve, why not post them to Steve's thread? Monte Carlo simulations, pivots, and 200 and 80p EMAs and so forth just aren't relevant to this particular forum, but they may be of vital importance to Ideas for Struggling Traders. Those who have something to post regarding Wyckoff's methodology are welcome to do so. Those who'd rather discuss some other methodology have dozens of other forums to choose from.

Head2K did a fine job of answering your question. As for "how I trade" or "what I do", that is largely irrelevant to the thread and forum. I have, however, made many suggestions regarding how one might incorporate Wyckoff's approach into his own trading throughout the forum and in my blog. Anyone who wants to know exactly what it is he is to do in order to develop a trading strategy and trading plan -- both of which are required before he actually places a trade -- is going to have to study the material and go through an extensive period of testing in order to determine what is best for him.

Bigcharts does not plot futures. If you want Volume By Price, select Advanced Charting, then follow Tannis' instructions.

If price rises, demand is overcoming supply. If price falls, supply is overcoming demand. Volume is simply the amount of trading activity.

Did you play any part of this?

Since we're there, here's the trendline referred to above. And since the boxes are at least as important as the trendline (and this is the boxes thread), they are included.

The insights are Wyckoff's, but I agree with them. As for entering on swings, this is explained in the remainder of the post you're referring to. Entry is in the trough of the swing rather than at the new high. One can also enter on the pullback after a breakout, but if one enters on the secondary reaction -- or test -- after a climax, he's already in prior to the breakout, so he needn't concern himself with the subsequent pullback, which may not occur.