DbPhoenix

Given the popularity of this thread and that it has reached a length that discourages all but the most devotedly curious from reading all of it, and due to the variety of topics contained within this one thread, James has graciously allowed us to tranform the thread into a forum. As a forum, the essentials can be made into Stickies and easily found and accessed. And the various aspects of Wyckoff's approach can be discussed separately, making life easier for those with special interests. Gassah and I are the moderators and will be initiating threads that are of interest to us. However, anyone who wants to pursue some particular aspect of Wyckoff's approach is welcome to open a new thread himself. Now that the thread has "opened up", it will now be closed.

. . . Richard Wyckoff was a pioneer of technical analysis. While Dow contributed the theory that price moves in a series of trends and reactions, and Schabacker classified those movements into chart patterns, developed gap theory, and stressed the role of trader behavior in the development of patterns and support/resistance, Wyckoff contributed the study of the relationship between volume and price movement to detect imbalances between supply and demand, which in turn provided clues to direction and potential turning points. By also studying the dynamics of consolidations or horizontal movements, was able to offer a complete market cycle of accumulation, mark-up, distribution, and mark-down, which was in large part the result of shifts in ownership between retail traders and professional money. Wyckoff sought to develop a comprehensive trading system which (a) focused on those markets and stocks that were “on the springboard” for significant moves, (b) initiated entries at those points which offered the highest probability of success, and © exited the positions at the most advantageous time, all with the least possible degree of risk*. His favorite metaphor for the markets and market action was water: waves, currents, eddies, rapids, ebb and flow. He did not view the market as a battlefield nor traders as combatants. He counseled the trader to analyze the waves, determine the current, “go with the flow”, much like a sailor. He thus encouraged the trader to find his entry using smaller “waves”, then, as the current picked him up, ride the current through the larger waves to the natural culmination of the move, even to the extent of pressing one’s advantage, or “pyramiding”, as opposed to cutting profits short, or “scalping”. What distinguishes Wyckoff from all of the various Wyckoff knockoffs in circulation are (1) the emphasis on the continuity of price and (2) the lack of "setups". Continuity of Price: Wyckoff began as a tape reader. By the time he incorporated daily charts into his trading, the continuity of price movement via the tape, tick by tick, had become so ingrained that he could see price no other way. Even though he might be looking at a series of daily bars on an end-of-day chart, he saw price as continuous. Thus the bar itself was irrelevant to him, and he was just as comfortable using line charts as bar charts. The line chart, in fact, more closely conforms to this continuity. "Setups": There are no "setups" in Wyckoff, at least insofar as we commonly use the term. He did not say that if price does this, you buy and if price does that, you short. Rather he stressed that the trader must be sensitive to imbalances in buying pressure and selling pressure, particular at levels where these imbalances might most likely result in profit opportunities, e.g., reversals. Therefore, the "trading signal" is not, for example, a "double bottom" or a "higher low" or a "climax bottom" or even what some call a "spring" (not a Wyckoff term); the trading signal is provided by the imbalances between buying pressure and selling pressure (which is why software won't work), and if one does not view price as a continuous movement and is not sensitive to these continuous shifts in balance/imbalance, he will not understand what it is that he's supposed to do. *Risk is minimized by (1) focusing on liquid markets, (2) monitoring the imbalances between buying pressure and selling pressure at those levels of “support” or “resistance” where price is most likely to reverse its trend, (3) entering on reversals (or, if necessary, retracements) rather than breakouts, and (4) getting out when the market tells you to. WYCKOFF LITE Wyckoff's original course** came in two "divisions": The Richard D. Wyckoff Method of Trading and Investing in Stocks: A Course of Instruction in Stock Market Science and Technique, which amounted to about 400pp, and The Richard D. Wykcoff Method of Trading in Stocks: A Course of Instruction in Tape Reading and Active Trading, which added 97pp, Those who are intimidated by the prospect of working their way through 500p of a century-old course and/or those who are skeptical of the value of the course at the outset may be game for an abbreviated course, not a shortcut, but an "essence". This can be accomplished in two phases. The first is targeted toward those who may be interested but first want to know what this is all about. This amounts to about 45p (that's the best I can do) from Division 1: The Basic Law of Supply and Demand (Section 2), Judging the Market by its Own Action (Section 3), and Buying and Selling Waves (Section 5), the application of all of which are demonstrated by Wyckoff himself in a year-long study (Determining the Trend of the Market, Section 7) of the market from the end of 1930 through 1931 and an 18-month study of a stock, from 1934 through 1935. If after reading this tenth of the entire course, you think there may be something to all this after all, step in to phase two. This amounts to the four sections above plus the Forward (Section 1), Volume Studies (Section 14), Significance of Trend Lines (Section 15), Refinements (Section 21), Stop Orders (Section 23), General Instructions: Cautionary Suggestions (Section 24), and Market Philosophy (Section 25), about 90 additional pages all told. SEARCHES You may search Wyckoff's course (links provided above) just as you would any pdf. Open the pdf, click Ctrl+F, and enter your search term, e.g., trend or trendline or whatever. Once the function has found the first instance of your search term, click Next to go to the next instance. WYCKOFF LITE-R Given that you are in charge of your own learning, you have the option of skipping the Wyckoff course entirely, except perhaps as a resource, and skipping ahead to "Trading By Price" (a 21st -version of Wyckoff's approach). Whether or not this will work for you without ever consulting the original Wyckoff material is a matter of cloudy prognostication. But not all roads are smooth. GLOSSARY Note: Included in this glossary are what I call "abbreviations of convenience", e.g., AOC (abbreviation of convenience). Wyckoff didn't use them; he spelled everything out. But then Wyckoff didn't post to message boards. So please understand and forgive their use. They save a lot of wear and tear on the fingertips. Accumulation: An area where stoc]ks are purchased – or “accumulated” -- with the intention to mark up prices at some later time. Every traded stock is in one of four phases: Accumulation, Mark-up, Distribution, Mark-down. Absorption is a form of "re-accumulation" which occurs toward the end of the Mark-up phase as price approaches old resistance. Buyers "absorb" the offerings of bulls who bought at that old resistance and now want out, as well as the offerings of bears who bought on the way down to that old resistance and now see an opportunity to get out even (see Determining the Trend of the Market by the Daily Vertical Chart, Division 1, p. 8). Breakout: BO (AOC). A breakout is not just a matter of a price exceeding a previous price level. Price must break out of something, most often a trading range. Buying Climax: the opposite of a Selling Climax (see Determining the Trend of the Market by the Daily Vertical Chart, Division 1, pp. 1, 2). Composite Operator: Wyckoff’s name for the total sum of forces, including the public, that move the market. Demand: Buying power, buying pressure. Demand Line: that line which passes through two successive swing lows (the low points of two successive reactions). Also DL (AOC). Distribution: An area where stocks are sold with the intention to mark down prices at some later time. EOD: End of Day (AOC). HH: Higher High (AOC). HL: Higher Low (AOC). LH: Lower High (AOC). LL: Lower Low (AOC). LSH: Last Swing High (AOC). A swing high or low represents a point at which traders are no longer able to find trades. Whether that point represents important support or resistance will be seen the next time traders push price in that direction. But everyone knows this point, even if they aren't following a chart. It exists independently of the trader and his lines and charts and indicators and displays. It is the point beyond which price could not go. Hence its importance, both to those who want to see price move higher and those who don't. LSL: Last Swing Low (AOC). See above. Mark-down: The phase of the cycle where prices decline, from the beginning of a bear campaign to its bottom. Mark-up: The phase of the cycle where prices rise, from the beginning of a bull campaign to its top. Overbought Position Line: that line which is drawn parallel to a demand line and passes through the first point of resistance (rally top) which intervenes between two successive points of demand in an up trend (whew!). In order to cut down on the jargon, the Supply Line is used here to perform the same function. Oversold Position Line: that line which is drawn parallel to a supply line and passes through the first point of support (reaction low) which intervenes between two successive rally tops in a down trend (whew!). In order to cut down on the jargon, the Demand Line is used here to perform the same function. Price movement [price action]: the continuous tick-by-tick (transaction-by-transaction) movement of price as shown on the tape [or on a corresponding chart]. Rally: A phase in the market that experiences rising prices, that is, higher highs and higher lows. Reaction: A phase in the market that experiences declining prices, that is, lower highs and lower lows. Resistance: An area where selling pressure overwhelms buying pressure. More specifically, resistance is the zone or level at which those who have enough money to make a difference attempt to retard, halt, and reverse a rise by selling. Retracement: RET (AOC). The first pullback after a break through support or resistance and the second opportunity (the first being the break itself) to enter the trade. If price does not resume its course, the "retracement" becomes a failed breakout. Reversal: REV (AOC). A bounce off of or rejection of a support or resistance level. RT: Real Time (AOC). S/R or S&R: Support and Resistance (AOC). Secondary Reaction: The reaction following a Technical Rally. Selling Climax: A major panic that occurs at the end of a steep decline in prices (see Determining the Trend of the Market by the Daily Vertical Chart, Division 1, pp. 1, 2). Shakeout: A sudden break below a support level followed by a rapid reversal. Springboard: A stock (or group or the market as a whole) is on the springboard following a period of preparation for an advance or decline. Stop Loss: An order to exit a trade if the market does something that proves your initial decision to enter the trade was wrong. Supply: Selling power, selling pressure. Supply Line: that line which passes through two successive swing highs (tops of rallies). Also SL (AOC). Support: An area where buying pressure overwhelms selling pressure. More specifically, support is the zone or level at which those who have enough money to make a difference are willing to show their support by retarding, halting, and reversing the decline by buying. Tape: a thin strip of paper on which is printed a series of stock symbols, each print representing a transaction in that stock and consisting of the price at which the transaction took place and the volume of shares changing hands. Modern day equivalents are the "time-and-sales window" and the one-tick chart. Tape Reading: the art of determining the immediate course or trend of prices from the action of the market as it appears on the tape of the stock ticker. Technical Rally: The rally that occurs after a Selling Climax. Thrust: A break above a resistance level followed by a rapid reversal. Trading Range: A period of balance between supply and demand forces. Prices move within a range where the bottom represents demand and the top represents supply. Also TR (AOC). Trend: The line of least resistance. Trendlines: Straight lines drawn through the tops or bottoms of the price path established during an upward climb or downward pitch. They “serve to define the stride of the price movement, thereby frequently directing our attention either to possibilities of an approaching change of trend or to an actual reversal.” Also TL (AOC). Volume: Number of units changing hands in each transaction. Wave(s): See Buying and Selling Waves, Division 1, Section 5. **Please note that this forum is focused on Wyckoff's original course. Wyckoff died in 1934, and his course passed into other hands. The provenance of the material and the relative quality of subsequent additions, deletions, alterations and so forth is not the concern of the forum but rather the study of the original material, the belief being that by studying the original material, the individual is in a better position to evaluate any other approaches, methods, systems, etc that are "based on Wyckoff", whether they make that claim or not. Without access to the material, the individual is in the position of having to take somebody's word for the content and intent, and that's not the best basis for beginning a trading strategy. Enjoy.

Section 2 I had been in Wall Street 20 years when I discovered that it was possible to judge the future course of the market by its own action. In my book, Wall Street Ventures and Adventures through Forty Years, I stated my experience and observations in 1909 as follows: I saw more and more that the action of stocks reflected the plans and purposes of those who dominated them. I began to see possibilities of judging from the very tape what these master minds were doing. My editorial work was proving a most valuable means of self-education. In gathering material that would benefit my readers, 1 was actively searching out the stuff that would aid me personally. While my subscribers were given the best of what I collected, there was much in material discarded which helped to build up what I might call a code of enlightened procedure for use in this greatest of all the world’s games. I had a friend who had been a member of the Exchange and who was well up on the technique of the market from the standpoint of the floor trader. We often discussed the difference between reading the tape simply to follow price changes (as most clients did) and reading the tape in order to judge the probable action of stocks in the immediate future. Starting from the simple ground that the logical action of a stock was to decline when offerings exceeded the number of shares bid for, and to advance when the amount bid for was greater than the amount offered, we agreed that the quantity or volume of stock changing hands in each succeeding transaction was of great importance. Anyone who undertook to rend the minds of the momentary buyers and sellers was able to measure, to a certain degree, their eagerness or anxiety to buy or sell; also to measure the force of the buying power or selling power as shown by the number of shares; and to judge of the purpose behind the action, whether it was to buy without advancing the price, or to force the price up, or to mark it down, or to discourage buying or selling by others, as the case might be. Each transaction carried with it certain evidence, although it was not always possible to interpret that evidence. All stocks no matter by whom they were owned, bought or sold, looked alike on the tape. But the purposes behind this buying and this selling were different and these might be fairly clear to those who understood market psychology. Each transaction, although recorded only once, represented a meeting of minds; those of a buyer and a seller. This meeting of minds took place at a certain post on the floor of the Stock Exchange, even though the buyer might be in the far west and the seller in Europe. Not all transactions were significant, but the interpreter must detect those which were. He must see that some indicated a purpose. Some one or some group was carrying, or attempting to carry, something through. He must take advantage of that. Continuing my studies of the tape, I realized that the Basic Law of Supply and Demand governed all price changes; that the best indicator of the future course of the market was the relation of supply to demand. The Law of Supply and Demand operates in all markets in every part of the world. When demand exceeds supply, prices rise, and when supply is greater than demand, prices decline. This is true not only of stocks; it is constantly being demonstrated in markets for wheat, corn, cotton, sugar and every other commodity that is bought and sold; also, it is reflected in other markets such as real estate, labor, etc. I demonstrated this further in a series of articles entitled: “Studies in Tape Reading” which attracted wide attention as the first of their kind ever published anywhere, as far as I knew. My basic idea in this series was that the stock market, by its own action, continually indicates the probable direction of its immediate and future trend, and anyone able to determine this with accuracy should attain success in trading and investing. Coming events, I claimed, were foreshadowed on the tape because large interests there disclosed their anticipation of advances or declines by their purchases or sales. So, too, with the large speculator who was endeavoring to raise or depress prices. If one were to become sufficiently expert, he could judge by the action of stocks what was in the minds of these large interests and follow them. The trend was simply the line of least resistance. When a stock met opposition in its rise, it must either be strong enough to overcome this resistance (selling) or it must inevitably turn downward, and when, in its downward course, sufficient buying was encountered to halt the decline, it would turn upward. The critical moments in all these various phases of the market were these minor and major turning points, or else the points where the price broke through the opposition into a new field. Further development of this method of judging the market from its own action resulted in my using it as a basis for predicting the probable course of the market, and this eventually led to my issuing weekly, “The Trend Letter” (first published in 1911) which had a most successful career for many years. In fact, the forecasts contained in this Letter were so accurate that a large following was developed. As a result of a series of successful campaigns we were not only overwhelmed with business but brokerage houses throughout the country passed along these recommendations to their clients. So many followers were gained that an undue effect was had on the quotations for the stocks in which they traded, and in certain cases the effect on the market was important. My reason for mentioning these facts is to show that this method of judging the market by its own action was highly successful from the standpoint of profits realized for subscribers who followed my advices, as well as for many thousands of people who were not subscribers but who bought and sold when we did. From the above you may judge how vital it is in the stock market, as in every field, to operate with the proper principles. .

There are two kinds of artists: one who paints the plan which has been made in his mind on the canvas, and the other who takes suggestions from the picture itself as he goes on painting. The difference is that the one is merely an artist and the other is a master. The latter is not bound to the plan; the former has designed something and is bound to what he has designed; he is limited. Hazrat Inayat Khan ------------------------------------------------------------------------------------------------ Section 3 The business of Wall Street is to finance corporations and to sell the securities - stocks and bonds - which result from this financing. Some securities are good; others not so good. Those who manufacture and sell them to the public know their value best. The public has comparatively little idea of their real value, except for seasoned securities—those which have been on the market for a long time and which, therefore, have established earning power and intrinsic value. In every case the banker who does the financing and the dealers who help distribute, have paid for their securities either in cash or in services, or have underwritten them. The object is to market these stocks and bonds at as high prices as possible. This marketing is done through distributing houses and syndicates, by private sale, by public offering, and by means of listing on the stock exchanges. In the latter case, the stock is advertised by making it active on the tape. If the price be advanced, and the transactions made large, the activity attracts buyers, and those who are handling the stock are thus able to dispose of their shares. Sponsorship is sometimes continued after the market is thus made for a company’s shares. The bankers operate for themselves, or others operate for them. After a stock is floated, its sponsors try to create a stable market and support the price as well as they can without taking back too much stock. When it is thoroughly distributed and enough people are interested in the stock to make a market which takes care of itself, under ordinary conditions, the original banker, syndicate or sponsor may discontinue operations and turn attention to some other stock which affords a new opportunity for money-making. Other interests may begin operations in that stock. Generally speaking, there are usually one or more sponsors or large operators working in every stock. Sometimes there are many. These interests see opportunities for profit, accumulate a line, mark up the price when conditions are favorable and then sell out. Or they may sell short, depress the price and cover. No one can deny that in Wall Street the big fish eat the little ones. Large operators could not operate successfully without the large number of people making up the public; that is, if there were only ten big interests in the market and no public, these ten could only make a profit by dealing with each other. It would be difficult for one crowd to deceive any of the nine others. But when the public enters the stock market, the large operator’s game becomes easier for him. Tape Reading and Chart Reading enable one to detect and profit by these inside operations or manipulation; to judge the future course of stocks, by weighing the relation of supply and demand. This sometimes can be done from price movement alone, but if you consider also the volume of transactions you gain an additional and vitally important helpful factor. By accurately judging this supply and demand, you are able to determine the trend of the whole market and of certain stocks; also which stocks to buy or sell, and, what is even more important, when to do so. You always aim to select the most promising opportunities; that is, the stocks which are likely to move soonest, fastest and farthest. You make no commitments without sound reasons and you avoid undue risks. Whenever you study the tape or a chart, consider what you see there as an expression of the forces that lift and depress prices. Study your charts not with an eye to comparing the shapes of the formations, but from the viewpoint of the behavior of the stock; the motives of those who are dominant in it; and the successes and failures of the buyers and sellers as they struggle for mastery on every move. The struggle is continuous. The tape shows all this in detail. The charts enable you to pick the market apart and study whatever portion or phase of it you choose. Supply and demand may be studied on the tape of the stock ticker, and to even better advantage from charts. The tape is like a moving picture film. Every minute of the day it is demonstrating whether supply or demand is the greater. Prices are constantly showing strength or weakness: strength when buyers predominate and weakness when the offerings overpower the buyers. All the various phases from dullness to activity; from strength to weakness; from depression to boom, and from the top of the market down to the bottom – all these are faithfully recorded on the tape. All these movements, small or great, demonstrate the workings of the Law of Supply and Demand. By transferring to the charts portions of what appears on the tape, for study and forecasting purposes, one is more readily enabled to make deductions with accuracy. And now that you are undertaking to learn this Method, it is best that you prepare your mind for it by discarding most of the factors that you have heretofore employed in forming your judgment and making your decisions, such as: tips, rumors, news items, newspaper and magazine articles, analyses, reports, dividend rates, politics and fundamental statistics; and especially the half-baked trading theories which are expounded in boardrooms and popular books on the stock market. It is not necessary for you to consider any of these factors because the effect of all of them is boiled down for you on the tape. Thus the tape does for you what you are unable to do for yourself; it concentrates all these elements (that other people use as a basis for their stock market actions) into the combined effect of their buying and selling. You draw from the tape or from your charts the comparatively few facts which you require for your purpose. These facts are: (1) price movement, (2) volume, or the intensity of the trading, (3) the relationships between price movement and volume and (4) the time required for all the movements to run their respective courses. You are thus far better equipped than the man who is supplied all the financial news, statistics, etc., from the whole world. I, therefore, claim that: You need never read anything on the financial page of your newspaper except the table of stock prices and volumes. You need pay no attention to the news, earnings, dividend rates or statements of corporations. You need never study the financial or the business situation. You need not understand railroad or industrial statistics, the money market, the crop situation, the bank statements, foreign trade or the political situation. You can absolutely ignore all the thousands of tips, rumors, reports and especially the so-called inside information that flood Wall Street. You can discard all of these completely and finally. UNLESS YOU DO THIS YOU WILL BE UNABLE TO GET THE BEST RESULTS FROM YOUR MARKET OPERATIONS.

Section 4 Every upward or downward swing in the market, whether it amounts to many points, only a few points, or fractions of a point, consists of numerous buying and selling waves. These have a certain duration; they run just so long as they can attract a following. When this following is exhausted for the time being, that wave comes to an end and a contrary wave sets in. The latter may attract more of a following than the former. By studying the relationships between these upward and downward waves, their duration, speed and extent, and comparing them with each other, we are able to judge the relative strength of the bulls and the bears as the price movement progresses. All stock market movements, however large or small, are made up of buying and selling waves. The market does not rise and fall like the water in a tank which is being filled or emptied. It moves to a higher or lower level by a series of surges - a good deal like an incoming or outgoing tide, with successive waves higher or lower than those preceding. The small buying and selling waves which occur during every stock market session run so many minutes. They are caused largely by the restlessness of active professional traders, much like the ripples produced by the wind upon the ocean. Traders must have activity; they make their livelihood by trading on fluctuations. Therefore, they engage in a ceaseless tug of war, trying to put prices up whenever the condition of the market is favorable, or drive them down when they find that the bulls are weak or have over-extended themselves. The degree of success or failure attending their efforts enables us to determine whether the market is growing stronger or weaker. These small waves are part of the larger waves which run several days, and eventually make up movements of 3 to about 5 points [Note: this was the average daily range of the index at that time; today the average daily range is more than 200 points; adjust accordingly]. The 10 and 20 point moves are made up of 3 to 5 point waves, and the bull and bear markets are composed of many swings of 10 to 20 points or more. You can easily confirm the above by examining any chart. It is important that you do this so as to impress upon your mind these numerous waves of various sizes, inasmuch as this will help you to understand the market. You will thereafter think in waves. When you are looking for an opportunity to buy, watch for the down waves in the market and in your stock. After you have bought, you sit through a number of small, medium and good-sized waves, until finally you observe that it is about flood tide in that stock. Then watch for an especially strong up-wave and give your broker an order to sell your stock at the market. The waves of the market furnish a clear insight into changes in supply and demand. By learning to judge all sizes of market waves, you will gradually learn to spot the time when a rising market or a rally, and the time when a declining market or a reaction, has halted and is about to reverse. These are the turning points. To be able to say when these turning points are occurring - at the bottom of a bear market, or at any important rallying point on the way down to the bottom, or at the top of a bull market, or at any important reactionary point on the way up - is a mark of ability in an investor as well as a trader. Remember: The market itself tells us everything we need to know about its probable future action. Every significant change in supply or demand is registered on the tape. When you have learned to analyze the market by its own action, as recorded on the tape or on your charts, then you will be proficient in the art of operating in stocks. Of all the things that are most desirable to know about the stock market, these two are most important: (1) First, to be able to determine the final top of a bull market, and second, to determine the top of the intermediate swings, and finally the top of the minor moves. (2) To be able to determine the final low in a bear market, the bottom of the intermediate swings, and the end of the minor moves. Master this branch of the subject thoroughly, it is vital. But there is one step more: Your education will not be complete until you can cover all your shorts and go long at the bottom of a panic, a depression or of an intermediate swing, and sell out all long stocks and go short at the top of a boom or an intermediate bull movement. This will be the result of practice, training, and experience. It requires great flexibility of mind and absolute control of your emotions. You can learn to do it if you will study and faithfully practice this Method.

Section 7 DETERMINING THE TREND OF THE MARKET -- A PRACTICUM Determining the Trend of the Market by the Daily Vertical Chart of the New York Times Average of 50 Stocks (see pdf, below; see also Comparing Strength and Weakness: Group Charts [chapter 8] and Volume Studies [chapter 14]) And if you've enjoyed and benefited from going through Wyckoff's analysis of the market, above, you may also enjoy and benefit from his analysis of eighteen months in the life of a stock (Individual Chart Studies, chapter 16, below). Wyckoff Analysis 1930-31.pdf W INDIVIDUAL CHART STUDIES (16M).pdf

Wyckoff, The Law of Supply and Demand, and Auction Markets Much nonsense has been circulated about trading over the past seventy years or so, the bulk of it since the internet made possible discount brokers, affordable charting software, real-time streaming data, chat rooms, trading rooms, trading websites, blogs, and so forth, all of which offered fertile ground to a literally endless assortment of books, DVDs, courses, seminars, "alert" services, mentors, counselors, trading software, indicators and so on, all designed to separate the beginner or struggling trader or otherwise low-hanging fruit from his money. There is, however, only one essential, one lynchpin, one fundament when it comes to understanding the auction market: supply and demand and the Law thereof. Everything else – support, resistance, trend, price movement, volume – stems from the balances and imbalances between supply and demand, selling pressure and buying pressure, sellers and buyers, yet struggling traders are generally incapable of accurately assessing the state of these imbalances, i.e., determining who's in charge at any given moment or interval (some are capable but can't implement what they know, but that's another subject). Trading price hinges on the ability to assess the state of these imbalances not only in the abstract but in every moment of the trading session. If one does not thoroughly understand just what it is that he's looking at, he will be lost. When trading price, the trader knows at all times who's in charge, who's dominant, who's holding the good cards. If he doesn't know this, he's just guessing, and that's not the route to consistent profits, no matter what you read on message boards. Why bother? Because once you learn how to trade price, your edge* will never fail. You will understand trend and how to play it under all circumstances, including its endings and reversals. You will also learn how to distinguish between trending and ranging, the latter including "chop" which is a collection of micro-trends which generate tons of commissions and very little if any profit. *the knowledge you gain through your research and testing that a particular market behavior offers a level of predictability that provides a consistently profitable outcome over time (from Douglas)

By "none of this", I meant the discussion of Wyckoff resources. The concepts developed by Dow, Wyckoff, and Schabacker are the basis for virtually all non-indicator-based approaches to the market: supply/demand, support/resistance, trend/non-trend.

Which is as it should be. A lot of sites have gone wrong, e.g., EliteTrader. But the fact that James and most of the moderators actually trade, and use the site themselves, makes an enormous difference.

Going to the source is always the preferred route, which is why I use the original course. As to whether the differences are fundamental or not, this is easily determined by putting the original course in one window and the SMI interpretation in another, then comparing the two. Whether one prefers the original or the SMI interpretation is a personal choice, but one that should be fully-informed. The original course is also considerably less expensive. In any case, none of this has anything to do with VSA. I suggest that a moderator open up a thread entitled "Wycoff Resources" and move all of it, beginning with winnie's original question, to that thread.

God, no, please. "Top-heavy" (to put it delicately) administration is one of the reasons why we left. But thanks for the welcome.

The original course may be available through SMI, but Wyckoff's original course is not the same as the SMI course which, as you point out, "adds its own interpretations, ideas, adds things, deletes things, etc". The original course is also considerably cheaper, assuming that Schroeder (who is the Institute) is still willing to sell it separately (the SMI course is currently AFAIK around $900; gassah is in regular contact with Schroeder, so he would likely have the most up-to-date information). Excerpts from the original course can be reviewed on the Wyckoff thread.

I don't want to get into t2w bashing, but there are reasons why we left there and moved here. I should point out, however, that the emigres, on the whole, are a rambunctious lot, and while they are generally well-behaved, I assume no responsibility for them whatsoever. If they are fed every other day and if their cages are kept clean, they should present no problem. It is my understanding that they have all had their shots. You personally have been very welcoming, and it's very much appreciated by everyone.

It's really up to you, GJ. If you want discussion and to see others' charts but you don't care about being able to moderate, opt for a thread. If you want the opposite of the above, start a blog.

If you have no particular focus, such as Market Profile or candlesticks, consider the Market Analysis Forum, either an existing thread or a new one.

Try a smaller bar interval.

Knowing how much people love my cajas famosas, here is what I'm looking at now. Those who've followed from the beginning will recognize this as an amalgam of several POVs previously posted.

I beg your pardon?

Addendum: about this, see post 207.

While days appear to be discrete, they are in fact the result of everything that's gone before, even though the details may not be immediately apparent. Therefore, an intraday setup can and usually is the result of something that's happened the previous day, or even the previous week. The "30m" display is for consolidation only. A 1m chart would show the same thing, only with 30 times more bars. And it would of course be much wider. As to the overnite, sometimes it matters and sometimes it doesn't. If in doubt, plot a CVB chart. In this case, the CVB chart and the time bar chart are the same (if you have a potential hinge, plot both; it's important to know whether or not volume is declining during the formation of the hinge). As for being late, the test occurred pre-market, and not everybody wants to enter trades then, even if they can. In any case, the immediate hinge may stop out the trader who's trading tight. And even if he has a wide stop, he may not be comfortable sitting there and waiting throughout the hinge (the perfect scenario works out only in hindsight). He may elect instead to exit and stand aside until the market decides what it wants to do. As for entering at the apex of the hinge, that is an option ("no supply" is VSA, and I'd rather not get into anything having to do with VSA), but since there has already been one attempt to take price down and another attempt to take price up, both of which were faded, the trader may want to wait until the market has shown its hand. In this case, waiting for the volume -- i.e., the professional interest -- makes it a much higher-probability trade. I should also point out that your green dot is placed at a point which is shortly before the close, and not everyone has the cojones to enter such a trade at such a time.

There is also a section on Wyckoff in my Blog (click below). This consolidates the Wyckoff material into one place, without the discussion that's included in the Wyckoff thread. I suggest, however, that you post any questions you may have to the Wyckoff thread so that others who are interested may benefit.

. . Trading By Price Trading by price -- and "volume" (or trading activity) -- 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 – or taking the red pill -- 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. And while you may attach great importance to where and how a particular bar -- or candle -- closes, there is in fact no "close" during the market day, not until everybody turns out the lights and goes home. Therefore, trading 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 illustrate 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 (and maybe # of shares) -- 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, their pace, 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 are 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. 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. Watch how price rises and falls due to imbalances between buying pressure and selling pressure. Watch how and where these waves of buying pressure and selling pressure find support for and resistance to their movements. And when I say "watch", I mean just that. Don't worry about what you're going to do about whatever it is you're looking at. Don't worry about where you'd enter or where you'd exit or how much money you'd make or whether you'd have been right or wrong to do whatever. Just watch. Like fish in an aquarium. If that seems only slightly less exciting than watching concrete harden, or it's just not possible for you to watch this movement in real time, then collect the data and replay it later at five or ten times normal speed. You can do an entire day in little more than half an hour (though you won't get any sense of real-time pace). Granted this means a lot of screen time, even in replay, 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 the continuous nature of these movements 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" (including where it "opens" and "closes" and what it's high is and so forth), and eventually the trader may come to the realization that all those people who've been insisting that these bars have some cosmic meaning have been trying to sell him something, i.e., DVDs and courses and software and seminars (box lunch included) and so forth that explain what these meanings allegedly are. If the continuous nature of these movements 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...". And if you're really into this, you may be interested in my eBook, Trading By Price, which is a much-revised, expanded, updated, integrated and generally improved version of the old, unimproved Trading By Price. The new version has three parts: the SLAB (the SLA/AMT Book), a resurrection and dusting-off of the pertinent sections of Db's Burrow (for those with long memories), and Notes (which is a combination journal and diary, regularly updated until I run out of thoughts), altogether something just over 400p. The Table of Contents is as follows: Part I: The SLAB Section I The Mind Game Section II Developing a Trading Plan The Trading Journal The Trading Log Section III Straight Line Approach, The Wyckoff and Auction Market Theory Glossary Appendix A: The Hinge Appendix B: The Dog That Didn't Bark Appendix C: The Law of Supply and Demand (1931) Appendix D: A Wyckoff Practicum Appendix E: Characterizing a Market Appendix F: On Fear Appendix G: Trading the SLA Intraday Afterword Part II: The Burrow How to Read A Chart Bases Rectangles Demand/Supply Stalking the Wild Equity Valuation Trendlines Post Cards Appendix: Bottom Fishing Part III: Notes Climaxes and Climactic Volume Volume and the Tick The Law of Supply and Demand Judging the Market by its Own Action Buying and Selling Waves The Springboard Trading Opportunities Back-Testing Emotionless Trading Exits Trend Coaching, Mentoring, Trading Rooms, etc. The Danger Point The Price of Admission (risk) Art Class Q&A Trade the Behavior, Not the Pattern Please Sir, May I Have A Trade Equilibrium What Am I Bid Easy Street Messages How Long Does It Take Where to Start The "SLAprvTOC" pdf attached below is a condensed version of the SLA/AMT and acts as an introduction to it all, largely to enable the individual to decide whether or not this is something in which he might be interested. Those who are may contact me at dbsburrow@gmail.com. The pdf also includes the Table of Contents above (TOC) SLAprvTOC.pdf

Unfortunately, the thread may already be too long. It's unreasonable to expect newcomers to plow through hundreds of posts, many of which may not even be especially pertinent. Splitting all of this into multiple threads is a possibility, particularly if its popularity continues (it's become the most-viewed thread in the TA forum, after VSA). Given the several varieties of VSA, I really can't say. However, VSA and Wyckoff have little to do with other. VSA is about bars; Wyckoff is not. VSA also takes an entirely different view of the market environment than Wyckoff does. This is not unlike the difference between those who obsess over candlestick patterns and candlestick names and candlestick shapes and those who see candlesticks as illustrations of market dynamics and price flow. Wyckoff would have you "ride the wave". As long as you got in at the correct point, you'd ride the trend until it was broken, or at least changed its character. If you didn't get in at the correct point, you'd still have to be aware of it and determine any subsequent entry based on where that correct entry was, then trade as though you were pyramiding. The market doesn't know whether or not a trader missed the correct entry and couldn't care less. Thus the landscape doesn't alter itself for him just because he wasn't around when the low-hanging fruit was ripe for the picking. Entering later also carries implications for the width of the stop, and though one may feel like a Grade A putz for having missed the correct entry on a trend day, standing aside may be the best option for the account balance.

See post 387.

I didn't post this on the Wyckoff thread because only one person there trades the NQ intraday. And at this point it's hardly live. But no one else mentioned it anywhere. And it's a picture-perfect Wyckoff setup, and I hate to see it drift by unnoticed. So..... 1950 is support, and even though the volume on the test is only slightly lighter than on the "climax", it's not heavier, either. Then afterward, a hinge. The entry, in order to avoid whipsaws and feints, is on volume just above 1970, five bars past the point of the hinge. Too bad these don't come along more often.