DbPhoenix

Thank you. Hope you're making piles of money:) Db Incidentally, those of you with the time, patience, and focus to play yesterday's rebound could have played it this way:

Trading in 90 Minutes:

These are just ordinary 1m OHLC bars, available for free off the net. Volume is not a consideration as I'm trying to make this as simple as I can. Therefore, no CVB. Watching the price move is preferred. The context and S/R levels are obtained by using a longer bar interval. 10m should be sufficient. Just look at a continuous (incl overnite) chart of several days and you ought to be able to see where the levels and trading ranges come from (I believe you know by now that the dark blue lines represent the ranges and the dark blue arrow the midpoint; in the last chart, there are three different ranges represented by three different line styles). Db Edit: All of this began with these charts, posted two weeks ago.

Trading in 90 Minutes:

Trading in 90 Minutes:

One, I don't find it odd that no one made any money, particularly if they were doing no more than they were told (see below). Two, I question their alleged "huge motivation to succeed". If anything, they appear to have had a huge motivation to pay somebody to tell them what to do which, it is assumed (on their part), would then in turn result in success. But this is no different from the thousands (millions?) of others who link up with others in some way or other to learn to trade like somebody else using somebody else's method or system or whatever rather than work to understand the basics of just what it is they claim to want to be able to do. The gullible are always looking for the easy way, the shortcut, and there's no shortage of those who are more than happy to sell it to them. Db

Fairly crude, maybe, but not artificial. The demand line tracks those points at which demand won out over supply. The trader has no control over that. As to the break of the 1m bar, that's just a matter of having the market come to you. The entry could be anywhere. But the closer it is to the swing point, the lower the price risk. As to the exits, those are the trader's choice, in this case, a change in the trend, but the change itself is the market's doing. Understand as well that the 1m chart serves to illuminate a concept. Better would be a 1 tick chart, but there's no way to cram 90m-worth of tics into a single readable chart (I've also posted plenty of tick charts, but they are not as large a segment). The underlying point, of course, is that none of this need be complex. Determine the trend and trade it according to simple demand/supply, support/resistance guidelines. Db

To reiterate what I wrote in the opening Trading By Price post, follow a tick chart, set at one tick (or, if you have no access to tick charts, a 1m chart, but no larger interval than that). 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 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. If instead you try to jump ahead to the trading phase and shortcut your way through the understanding price movement phase, you will only be prolonging the process. Whether one indulges in the "Oh, Christ, I screwed up again" routine or the "Yay Me!" only distracts from the central focus: understanding what's going on in front of you in real time. Again, the entries, exits, stops and so on in these charts are merely suggestions. In any given chart, there can be many different entry, exit, and stop placements according to the trader's plan (which will of course accommodate his risk tolerance), as shown below in an ES chart: Do not make the error, then, of thinking that a suggested entry indicates "YO! Here's the Entry!" Attached Thumbnails Attached Images

Trading in 90 Minutes The first 90-120m block is generally the most active of the day. Here one finds maximum confusion, maximum emotionalism, maximum jockeying for position. The profits are quicker, and, if one knows what he's doing, easier. Once the patterns resolve and the day settles into its rhythm, the astute trader is already in position. His task is not entering, but managing. There is also the matter of focus. Few beginners can maintain their focus for more than two hours. Quite a few can't maintain their focus for a half hour. Therefore, the "guerrilla" approach becomes the preferred option: in and out, quick and dirty, then bank the gains or suffer the losses and head for the beach. Or work. Or school. Though I have no statistics, the number of sessions in which price just trails off at 1100-1130EST is very high. It is not often that anything of consequence is missed after that point, at least in comparison to what transpired before. Certainly the beginner who enters after that point is going to find fewer trades, if any, push harder to find something, find mostly bad trades, take them anyway, and retard or halt his progress in learning how to trade, if he does not end up actually sliding backward. Put another way, at 0930, the buffet is fresh and hot. By 1100 or 1130, what one must poke through is, for the most part, leftovers. The 8 charts following-- drawn from the first 25 posts -- are intended to illustrate at least some of Wyckoff's more important principles. Those who have studied the Forum and Wyckoff's course will, I hope, understand what I am doing and why. These trades, however, do not illustrate a "plan". A plan must be created by the trader using criteria which he has tested and found to be reliable. If he hasn't determined the criteria and tested them, he won't be able to create a plan on which they are based, much less follow it. And if he doesn't or can't follow it, there's no point in doing it. If he forces himself to follow it anyway, or at least pretend to be doing so, then the emotions which would otherwise be immaterial will dominate his trading. Nor do these trades illustrate a template, to be followed mechanically. While there are laws, principles, and guidelines, there is no "mechanically", just as there is no "mechanically" in sailing a boat. Yes, there are also laws and principles and guidelines, but one must also take into account winds and currents and the condition of the boat (and the sailor). The point, then, is to understand the principles and guidelines and to develop a trading plan based on them. If my and others' illustrations help, great. But there's no way that anyone is going to be able to copy what atto or head or cows or wj or I or any other contributor has done or is doing and become a successful trader as a result. This Forum will help most beginners leapfrog over most other beginners, but the grunt work must still be done. These charts, therefore, were created for readers who have at least some grounding in the material, who have studied -- or at least read -- the theory, who have at least played with the application, who have moved past the obsession with trading and learned at least a little something about the dynamics of price movement. But this is not a course. There cannot be a requirement to start at Point A, then proceed to Point B, and so on. People can start and stop wherever they like. So anyone starting here might justifiably think that here is yet someone else offering to lead beginners around by the nose, with blinders, selling yet another quick fix. But it ain't so. As stated above, the grunt work must be done. To reiterate what I wrote in the Trading By Price stickie, follow a tick chart, set at one tick (or, if you have no access to tick charts, a 1m chart, but no larger interval than that). 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 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. If instead you try to jump ahead to the trading phase and shortcut your way through the understanding price movement phase, you will only be prolonging the process. Whether one indulges in the "Oh, Christ, I screwed up again" routine or the "Yay Me!" only distracts from the central focus: understanding what's going on in front of you in real time. Again, the entries, exits, stops and so on in these charts are merely suggestions. In any given chart, there can be many different entry, exit, and stop placements according to the trader's plan (which will of course accommodate his risk tolerance), as shown below in an ES chart: Do not make the error, then, of thinking that a suggested entry indicates "YO! Here's the Entry!" Attached Thumbnails Attached Images

Another thread that deserves a bit more visibility. Db

They are supply/demand lines. See the Glossary. Db

No need to be embarrassed. The road less traveled can be unexpectedly interesting. Db

The mention of oil reminds me of this discussion from four years ago. It may provide at least some clarity for those who are genuinely interested in how all of this works. ................................... All of this hindsight chatter about oil serves as an example of the "Wyckoff way" of trading, that is, a different kind of thinking that focuses on price movement as a result of imbalances between buying pressure and selling pressure, particularly against levels or zones of support and resistance, all of which is in turn a manifestation of trader behavior. Understand the behavior and you understand the illustration, whether on a chart or on the tape or on or in some other form. Understand the behavior and its illustration and you are set up to profit from it (one can also profit from this via indicators, chart patterns, "event trading", and so on, but none of this is pertinent to the Wyckoff approach. Participants have demonstrated this kind of thinking in their analyses of the price movement as it wends its way up and down through a continuing series of crests and troughs. These waves are a language, narrating the behavior of buyers and sellers. And whether participants' every opinion has been correct or not, they have worked toward understanding the story that's being told by price movement and its accompanying volume (transactions) and toward gauging and interpreting the continuous changes in buying and selling pressures with the intent of finding the line of least resistance. By doing so, I hope that they have demonstrated that everything one needs to know in order to make a trading decision is in the price movement, again whether illustrated by chart or tape. While there are undoubtedly many traders -- retail and professional -- left holding the bag at tops and bottoms, the Wyckoff trader will not be one of them. He does not allow himself to be distracted by extraneous information of whatever sort. Price behaves a certain way (that is, traders telegraph their intentions by their transactions), and he's out or in, as the case may be. He can wait for moving averages to cross each other or for some other indicator or news or a particular kind of bar or candle or pattern to signal or confirm an action, but he doesn't need to, except for personal reasons. None of this is therefore part of the approach. This has the effect of keeping everything very simple and relatively easy to understand IF one can focus on the approach at its most elemental until he thoroughly understands it. At that point, he can play with it as much as he likes, if he chooses to do so. But while those modifications may alter the approach as he implements it, they do not alter the nature of the original (and 2, 3, 4, 5). In order to save flipping back and forth, the following chart was posted at the beginning in order to provide the macro view. It's a typical and ordinary bar chart. But the waves of buying and selling can be illustrated quite clearly without bars. In fact, for many Wyckoff traders, they are easier to see with a line. The tests are the same, the trend is the same, the signals that the trend is over are the same (see, for example, the inset). A chief difference, however, is that one needn't get entangled in quandaries over what individual bars "mean" (if anything). One can in fact convert trading activity (or volume) into a line, depending on his software. Some Wyckoff traders find it even easier to detect the "pulse" of the market in this way. As for jargon, nothing special: climaxes, technical rallies, reactions, springboards -- that's about it. The goal is clarity and simplicity, not obfuscation and complexity. As I've said elsewhere, price doesn't care about you or about how you care to view it or illustrate it. 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, 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 most people, this requires a perceptual and conceptual shift. Some find this shift relatively easy to make. Others find it impossibly difficult. If you fall into the latter category, keep in mind that there are many ways of making money in the market. This particular approach is only one of them.

Price "indicates" that a transaction has taken place, but that is not what is generally meant by "indicator". Price exists independent of the trader. It has no settings. The trader may summarize it or smooth it or bundle it or chop it up and reassemble it, but he cannot change the transaction itself. That ship has sailed. As for leading traders in the wrong direction, that's pretty much the trader's problem, stemming to a large extent from his lack of comprehension of what he's looking at. A bad map, as it were. As for oil, a Wyckoff trader may have made a few temporary misdirected turns, but there was nothing particularly difficult about the play: a buying climax followed by an entire month of trendlessness, a drop below that trading range, a failure to repenetrate it, then a simple downtrendline leading to today. Whatever emotional baggage the trader may have brought to the market had nothing to do with the demand/supply dynamic and how it manifested itself in the price movement (or, if one prefers, the transactions which were displayed on a "tape" or on a chart). Db

The Wyckoff trader, however, doesn't require a moving average to tell him whether price is trending or trendless, just as he doesn't require an indicator or indicators to tell him when price is gaining or losing momentum. Db

Actually, that's exactly what I suggested, and I disagree that indicators are valuable aids. Rather, they are a distraction. In any case, if you find them helpful, by all means use them. Db

A note about this hinge. I believe it was Schabacker who said that the back-and-forth should resolve itself by the time price has moved two-thirds of the way toward the apex. Otherwise, it is more likely to just dribble its way out and go nowhere. We'll reach that point by the end of the month. Db

Nice job. Thank you. There's more to say (there's always more to say), but I'll leave it to somebody else to say it, at least for now. Those who are trying to break the pricebar mindlock often find it helpful to use line charts, which are far better at illustrating the continuous movement of price. The following may open a window or two. Db

Or you could just say "test", the primary difference being that a test can be seen in real time, whereas a rally (or "spring", if you will) can be seen only in hindsight, which is also one of the chief differences between the Wyckoff approach and its many knockoffs. Nonetheless, I encourage anyone who's interested to participate. There are more than two ways to skin a cat. Or trade gold. Db Incidentally, to those of you who've been lurking here for so long (you know who you are, and so do I), there's no time like the present. Fish or cut bait

Actually, you're using both, though at this point you may not be aware of it (according to your first post, you began studying both nearly two years ago). As to whether or not the glossary you're using is Wyckoffian, that's not particularly important, at least outside this Forum. However, our perceptions are effected if not determined by the words we use to describe them (witness our various descriptions of our President and how they affect/determine our perceptions of him). Therefore, they do in fact "change" the chart. To illustrate, perhaps someone would like to take the other side of this trade. Analyze the chart using Wyckoffian principles, though from a different perspective, arriving instead at a bullish conclusion. While it may seem as though I'm suggesting a preconceived bias, I am instead suggesting that it's possible to analyze this chart in a different way, coming up with a different interpretation as to bullish/bearish outcome. Use these charts if you like. Db

I find your charts very difficult to see. But using my own, your analysis appears to be generally sound. Whatever difficulties there are arise from your efforts to combine Wyckoff and VSA, which are essentially incompatible. There are no "springs" in Wyckoff, nor are there "stopping bars" or "stopping volume", nor do I see any springboards (see the Springboard thread). I have no idea what "stuffing" is. As to the hinge, that depends on the volume. If your volume is correct, that's not a hinge (see the Hinge thread), but I don't know what you're using for your gold chart. Spot gold, on the other hand, shows the appropriate volume. If you like the VSA way of doing things, I suggest you post all this in the VSA Forum (though perhaps with white background charts). They will be much more likely to understand your terms. Db

Charts are a visual record of price movement. If one isn't interested in price movement, one may not find much of value in them. As a map, however, they are about as close to the "territory" of price movement as you're going to get, one degree of separation, if you will. But then we begin to fiddle with it: time bars, volume bars, tic bars, range bars, equivolume bars, candles, lines, histograms, etc, etc. Then we lay on the Fib and the Gann and the Wolfe and the Pivot Points. Plus all the infinite number of indicators with all their variations. Eventually price is nearly lost, and we can't even determine the trend, much less where we are in it. This is analogous to travelling someplace and drawing a map of that place, then moving on to some other place, checking off that particular task, believing that it's "done", relying on the map one has drawn for far too long. Revisiting that place after a number of years, one finds that the territory has changed dramatically, that landmarks and signposts are no longer there, that one's map bears little relation to what is, only to what was. In the market, the transaction and the agreed-upon price is the "territory" and everything begins there. If we massage it, or ignore it entirely, we become disconnected with what the market is doing. In order to know what to do at the time that one needs to do it, one has to be connected with what is happening in front of him, not on a fanciful representation of it. He has to walk the territory, not just trace a route on a map, a route that may not even exist in the present. Call it fantasy, prejudice, opinion, judgment, or what you will, when the high abstraction collides with bare facts, it is the facts that have to give way if your value system places such a high premium on rightness that your tender ego cannot suffer the slightest setback. Many men cannot afford to take monetary losses in the market, not because of the money itself so much as because of their oversensitive, poorly-trained selves. The humiliation would be unbearable. The only way that occurs to such men to prevent such painful situations is to strive to be always or nearly always right. If by study and extreme care they could avoid making mistakes, they would not be exposed to the hard necessity of having to take humiliating losses over and over again. And so? And so, too often, rather than settle for a relatively minor loss, our friend will stand firmly on the deck of his first judgment, and will go down with the ship. The history of Wall Street, and of LaSalle Street, too, is studded with the stories of men who refused to be wrong and who ended up ruined, with only the tattered shreds of their false pride left to them for consolation. How to avoid such unnecessary tragedies? Be always right? You know that isn’t possible. Keep away from the speculative market entirely? That is one answer, but it’s rather like burning down the barn to get rid of the rats. There are other answers, and they are simple. They are standing there, right at hand, like elephants in the front hall, if we can only see them. In the first place, there is no rule that we can’t change our minds. It’s not necessarily wrong or a mistake to believe that Fruehauf stock will go up from $24 to $60. What is wrong is sticking to the opinion after the evidence clearly shows that the conditions have changed. The rational approach is to be ready at all times to consider new evidence, and to revise the map accordingly. In the second place, it need not hurt so much to have to change one’s mind. Unless we are so wedded to absolute standards that we cannot entertain anything that will conflict with what we decided in the first place, we can alter the map to any degree we want, or completely reverse our position. If we have a good method of evaluation, in which we have confidence on the basis of observed and verified results, we will not have to think of these changes of opinion as defeats. They are simply part of the process of keeping our maps up to date. If we plan to travel to Boston over Route 20 and there is construction underway on a five-mile section of the route, we don’t try to blast our way through. We take the detour. We go by the territory as it now is, not by the old map. And if the road is blocked entirely and no detour possible, we don’t shoot ourselves, or run our car over a cliff; we simply turn around and go back home and try again tomorrow. John Magee, General Semantics of Wall Street

If you're going to short a stock as a Wyckoff trader, you have to go through the routine. What's the state of the market? What's the state of the sector? What's the state of the group? If these don't show weakness, then the odds of success are thin. Db

A springboard can be said to exist when preparations have been made for, and the psychological moment has arrived for, a quick and important move . . . Auction markets are in continuous flow from trending states to non-trending states. If a trader is interested in movement and momentum, he will likely be interested in a trending market and try to avoid a non-trending market (what is often called "chop"). Springboards serve to alert him to upcoming changes from one state to another. They alert him to prepare for a transition (whether it turns out to be substantial or trivial) from non-trending to trending or vice-versa, i.e., that point at which price is on a "springboard" to an advance. One can busy himself with questions of who's doing what and why (weak hands, strong hands, professionals, amateurs, intent, prediction, and so on), but none of this is essential or perhaps even important. What is important is being prepared for whatever hand the market deals you. In this way, one can maintain calm and objectivity, not dither with last-minute surprises. What one does with what is in front of him depends largely on whether he is in a trade or he is looking to enter one. If he is in a trade, he's looking for signals that momentum is slowing. If he isn't, he may be looking for the same thing as an opportunity to enter, depending on what else is going on (e.g., is support being tested, is this the end of a parabolic move, has trading activity spiked or evaporated). However, before getting into all the possible tactics that can be employed to play these movements, I suggest that whoever is interested in this subject work toward finding these zones where traders are seeking balance (or equilibrium or fair value or whatever one chooses to call it). Again, these zones occur in all charts in all timeframes. And if one understands why they form, he is less likely to be freaked when his trade stops, much less retraces (he will, of course, have decided in advance what he is going to do when this unavoidable circumstance presents itself). To start, a chart of the DJTA over the past four years (originally posted in March ’07). It could be any instrument over any time period with any bar interval, but I'm being specific -- and using bigcharts, which is available to everyone -- so that anyone who's interested can follow along. I've also deleted the periodic volume bars and used dots rather than price bars in order to turn attention away from what is immaterial and toward the movement of price. Without any annotations whatsoever, one ought to be able to see that price is moving in a generally upward direction with occasional "pauses": If annotations are necessary, the following may be helpful: The exact lower (support) and upper (resistance) levels of these "zones" are not critical. What is more important in each is the general area in which the bulk of trades occur. What may also be important to the trader from a tactical standpoint is the "mean" within each of these zones toward which price will revert when bouncing around between support and resistance. Note that each time price trends upward, it then stops or pauses in order to find equilibrium (or balance or fair value or whatever). It may engage itself in this for minutes or years, depending on time frame and bar interval. Once it has found this equilibrium, it gets comfortable. This is a "safety zone", and the bulk of trades will occur here. These pauses are not as dramatic as the trending moves because it seems as though nothing is going on. But more trades are placed at these prices than at the prices within the trending move simply because these prices are traded again and again over a period of time. This process lays the groundwork for what may become important support and resistance later (as opposed to, for example, a swing point, which, while dramatic, represents relatively few trades). Eventually, there is an imbalance, or disequilibrium, and the springboard makes good its name. Price emerges from this "comfort zone" and either reverses the trend or resumes it. The emergence may be gradual, or it may be dramatic, as with a breakout. Here, in June of '04, it moves up 200pts and immediately forms a new zone. Only later, in October, does it make a more dramatic move. But that, again, reverts into yet another zone in which traders seek balance, this one lasting for 11 months. For those who aren't scalping and who like a deliberate approach to trading, the profit opportunities will most likely be found in the reversals which occur between support and resistance in these zones and in the breakouts which occur when price's state of equilibrium is fouled and it seeks a new one. But whether one trades reversals off of S&R or breakouts through S&R, he is working the edges and avoiding the "chop". If price isn't approaching S or R, much less testing it, he's waiting, and observing, and monitoring. Traders rejected 5000 in May ‘06, then again in July. 4200 was rejected in August and September. This is a wide range, the mean of which was 4600. Price worked the area between 4500 and 4900 for several months, again seeking equilibrium. This equilibrium was broken in February, but traders have now returned to their most recent "comfort zone". This is where they can find trades and reasonable safety. Price may remain here and find balance either side of 4800 (again, this was posted in March ’07). Or it may try again to resume the uptrend. The reversals trader who doesn't mind trading tight ranges might trade here. The breakouts/momentum trader will wait for some determined move out of the range, either up or down. But he will not likely be searching for trades in chop. If locating these zones or pauses in which these efforts toward balance and equilibrium take place is a problem, plotting "volume by price" can help: Note, again, that the bulk of trades are taking place within these zones. It is those areas with the fewest trades, those areas where traders are least secure, where the most potential for price movement -- often sustained price movement -- occurs. If one has no understanding of support and resistance whatsoever, much less where to locate them, this is as good a place as any to begin, and better than most. As for hinges, these are an additional aid to spotting those areas in which traders are seeking equilibrium. They are created by successive lower highs and higher lows and represent a tightening and compression. If interest is sufficient, this compression will eventually lead to a worthwhile move (if it isn't, price may simply dribble off into nothing worth bothering with). As Schabacker later said, these hinges or coils should be "filled with price", that is, there is no aimless drift but a struggle between those who want to move price ahead and those who don't. Therefore, price should bounce in an ever-tightening range which culminates in a release of pent-up energy and a tradeable move.

When doing this sort of analysis, it's best not to rely on the usual volume bar. In this case, there's too much subjectivity involved. Better to at least include VAP. When doing so, however, stop at the peak of the move so that the volume thereafter doesn't contaminate what you're looking at (see an up-to-date VAP chart to compare the difference). Here you see that volume after 425 is practically non-existent. This doesn't mean that holders/buyers won't support the price on the way down. There just won't be very many of them, comparatively. Also look at volume on the recent test, not shown on this chart. While the volume on the climax low was decent, it was pretty pitiful on the way back up. Still is. Db