DbPhoenix

I've added Wyckoff's 18-month analysis of Anaconda to his analysis of the market here. The analysis is in the same vein and provides further insight into his process, though, obviously, this time with a stock rather than with the entire market. I've also uploaded Sect. 9M, How a Campaign is Conducted. Take great care in making any assumptions while or after reading this section, much less coming to any conclusions. There are no shadowy figures lurking in the mist, waiting patiently to grab your wallet and throw you to the ground. Nor is there "smart" money nor "dumb" money, only traders trying to make a buck. The process described herein does, however, demonstrate just how people who know what they're doing do what they do.

This section (9M) follows the section on groups (8M). Reading that first, therefore (it's not long), may grease the skids for what is contained here. And there's a lot contained here. Chew thoroughly and well before swallowing. Please note that the pdf below focuses on stocks. This is not to say that the principles apply only to stocks. But take great care when applying them to anything other than stocks, particularly those which do not have a finite "supply". Also take great care in making any assumptions while or after reading this section, much less coming to any conclusions. There are no shadowy figures lurking in the mist, waiting patiently to grab your wallet and throw you to the ground. Nor is there "smart" money nor "dumb" money, only traders trying to make a buck. The process described herein does, however, demonstrate just how people who know what they're doing do what they do. W HOW A CAMPAIGN IS CONDUCTED (9M).pdf

There's no need to retype if you can get a good copy and run through a scanner equipped with OCR. Then it's just a matter of making minor corrections that the OCR misses. That takes no time at all, no more than proof-reading. And you can't be too picky about things like footnote placement since the font can't be matched, or at least can't be matched by me (the thing was typed and mimeographed, not printed, so the font size is just ever so slightly different, which throws off the footnote placement). The charts, OTOH, still have to be redrawn.

Well, if that's true, and she ought to know, I'll go ahead and post what I've already restored for myself. Some of these charts are in terrible shape -- copies of copies of copies of copies over decades -- and redrawing them is a giant PITA.

If you mean what I think you mean, that wasn't a hinge. A hinge should be "filled with price", lower highs and higher lows gradually drawing toward a point, concurrent with declining volume. OTOH, you may be looking at something entirely different. Chart? Edit: Is this the hinge (1m) you're talking about?

Premkt update: Though 85 continues to be an important area due to that trading range at the beginning of the month, that was three weeks ago, and one has to adjust according to current conditions. The market is telling us "by its own action" that 86 may be the more important level (it's only a point difference, but a point means a lot to some groups). This also illustrates the idea that support and resistance can be strengthened by having been broken if the break fails to hold (here, the break above 86 at 0600). Note also that this is a range bar chart, and that, again, what is important is price movement, not how one chooses to display it.

We begin with the macro, here using a 100,000 Constant Volume Bar (CVB) chart. The reasons for using this are two-fold: (1) volume bars don't matter until you get to some level of support or resistance where price is most likely to do something useful, like reverse, and (2) the CVB enables the trader to incorporate overnight and weekend action without having a long seventeen-hour+ trail of nothing going on that takes up unnecessary chart real estate. I hope it's unnecessary for me to draw the various trendlines that accompany price up to the end-run swing high in May. They aren't particularly relevant right now. The swing high is, as is the month-long process of getting a running start toward making a new high. That swing high provided resistance, which we have since broken. After having broken resistance, we then began working our way higher, forming a channel. This channel, however, was especially sluggish, each retracement nearly coming all the way back to the point where it started. Therefore, you have an awful lot of trades taking place in this channel, even though it does not provide the rectangular shape of a trading range. Therefore, displaying as it does some of the characteristics of both a channel and a trading range, we'll look at it both ways, the black rectangle being the trading range, with a midpoint of 85. Resistance then becomes support as price drops back toward 40. This creates a tight, inner trading range (the gray rectangle) surrounded by a looser trading range which incorporates the extremes (the black rectangle). The midpoints of each are about the same, or at least not different enough to matter. Price then drops below support, but bulls aren't done, so they shove it back up again (this is called a "shakeout") in an apparent effort toward a new high. So far, then, we have 85 as one focus -- the midpoint of that first, large trading range -- and 77 as another, the top of the next, most recent trading range. Now the relevant lines and rectangles are brought forward to a 10,000 CVB. Here price found R premarket at 85 today, the midpoint of that first, large trading range. This reinforces its importance, particularly since the effort to make a new high failed, and that becomes a resistance level to watch overnight and tomorrow, as does today's high. Thereafter, price showed the support provided by Thursday's swing high to be important (67), and that has to be watched tomorrow in case the current levels do not hold. If price drops below the level of the top of the last trading range, at 77 (it found support there at the end of today), then the next destination becomes the midpoint of the range from 67 to 77 (those who follow MP will likely find a POC here). After that, 67 again. If that doesn't hold either, then the midpoint of the last trading range, at 57, which is also Wednesday's swing high (and probably another MP POC). After that, 40 to 35. So there are the levels to watch. Once price arrives at one or more of them, the trader must then see how traders behave. If price bounces off support, a long might be appropriate, depending on one's own strategy. If it rejects resistance, a short. If it just sits, then so does the trader.

Based on recent comments and questions in the chat room, it's become clear that the two threads in the Wyckoff Forum which are most focused on support and resistance have succumbed to the Dreaded Thread Bloat, having become too long to read. This does not imply, however, that we will begin again. Rather I will ask those who are interested in this subject to read the following threads: LESSON: Trading By Price LESSON: Auction Markets Supplementary Reading: Support & Resistance and Trading Trend Those who are really interested can read the posts in the discussion threads accompanying the abovelinked "lesson" threads. And if even these are insufficient, there is the original course in its entirety. Those who have questions that are answered in the above material will be referred to the above material. Those who have questions that are answered in the above material but who do not wish to read the above material will be given a copy of our home game and our best wishes. Questions that are not answered in the above material will be answered to the best of our ability (by "our" I mean any or all of those who are doing this and are as capable of answering the questions as I am). The purpose of all this activity is to show how one can apply Wyckoff's notions of trend, trading ranges, support, resistance, and the importance of midpoints to actual trading, and not only trading, but trading in foresight, not just hindsight (where everything is clean and perfect and smells as fresh as an alpine forest). I've done this before, but the posts are buried in too-long threads, and perhaps this time I can make it even simpler. The point of all this, of course, is to plan one's trades in advance, thus avoiding the headaches resulting from the head-banging associated with CouldaWouldaShoulda. The next post, therefore, will address the plan for tomorrow. The first step for a trader is to determine the current trend of the market. The second step is to determine one's place in the current trend. The third step is to determine the proper timing of one's entry into whatever it is he's trading. -- Richard Wyckoff Note: When I closed this thread, the post count had risen to beyond 900. That's really sort of ridiculous. You ought to be able to get the gist of this in 50 posts, if that. If it grabs you, then by all means read as much and as far as you wish to go. But by no means do you have to read the whole thread to "get it". What matters most is the practice of plotting your trades in advance, not reviewing what you should have done at the end of the day and beating yourself up over the lost opportunities, and not paying a great deal of attention, if any, to those who post only hindsight charts. Db

Thanks for your work. Ms. Kieckhefer may discover a new-found popularity. Since it's only 400p, I assume the tape-reading course is not included? If not, this is not a tragedy. The Studies_in Tape Reading (or DayTrader's Bible) is fine.

Correct. But then it should also be pointed out that volume is continuous, like price, and doesn't move in bars. Perhaps that's why so many people don't understand it and, consequently, say that it's "unimportant" (since, without volume, there is no price, it is hardly unimportant).

Yes, price has to have a transaction, and, no, price cannot move with volume, which is a transaction (see post #8). If you've ever bought or sold a house, or placed a classified ad for anything, this should all be clear. If you haven't, visit an auction house sometime. Or sell something on eBay. Many things will become clear to you.

I found this post on "Re: Open and Free Discussion on Volume" interesting and have nominated it accordingly for "Topic Of The Month June, 2009"

I don't NEED one, but a 23" Samsung HD for $180 plus free shipping? Duh! Thanks for the heads up. Should be here by mid-week. Now I can keep my chat window open all the time.........

Mapping the Territory 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)

In 1936, British economist John Maynard Keynes gave the best description of the stock market I've ever heard. He said stock market investors are like judges in a beauty contest. But the idea of this beauty contest is not to pick the prettiest girl, but rather to pick the girl that all other judges will think is the prettiest. This simple metaphor is profound because it reveals the truth: For all of our study of the economy and companies, it is subjective perception -- not objective reality -- that sets stock prices. And it's perplexing because, as Keynes pointed out, all of the judges are fully aware of the true nature of the contest and act accordingly. Each judge knows that he's a player in an fabulously complex game of psych and double-psych, an infinite regress of figuring out what the other guy is thinking you're thinking he's thinking you're thinking he's thinking, and so on and so on ... -- Don Luskin

If by "volume in thousand" you're referring to vertical volume bars in histogram form, those represent quantity in time, that is, how many shares (or whatever) changed hands in whatever interval you're using: 1m, 5m, 1hr, 1 day, etc. Volume By Price tells you how many shares etc changed hands at a particular price, without particular regard to time (except of course for the time period you select to plot the VBP). The histogram will tell you how many shares were exchanged during a given time interval, but they won't tell you at what price those shares were exchanged. The VBP will. As to how to read the movements, there are several threads here on volume, though I'd suggest starting here. As for reading VBP, there's also a lot of information in the forum, but a quick and dirty option is here and here.

Terminology can be a challenge, particularly if those who are discussing something are using the same words to describe different things. Perhaps the following will help get you started: The Nature of Support and Resistance Support & Resistance and Trading Trend The Basic Law of Supply and Demand Auction Markets As a start..... Put simply, support is the price 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. Resistance is the price at which those who have enough money to make a difference attempt to retard, halt, and reverse a rise by selling. Whether one calls this money professional or big or smart or institutional or crooked or manipulative or (fill in the blank) is irrelevant. If repeated attempts to sell below this support level are met by buying which is sufficient to turn price back, these little reversals will eventually form a line, or zone. Ditto with resistance. 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. The first two posts to this thread address these matters, as do others here and there. However, finding S&R in real charts in real time takes more than just a couple of posts. But one must understand the nature of support -- and resistance -- itself before he begins to look for it. Otherwise, he will find what he thinks are S&R in some very peculiar places. Before coming to any conclusions about what “works” or “doesn’t work”, and thus does or does not provide an edge, one ought to keep in mind that a given event -- such as price seemingly finding support or resistance at a trendline (or moving average, candlestick, Pivot Point, Fib level or whatever) -- may be only incidental to what is truly providing that support or resistance. A fundamental misunderstanding of how "indicators" are calculated and what they're supposed to do can lead to all sorts of off-task behavior. We think we see the indicators indicating something, or not, and believe we have made an important discovery. We then devote our efforts to improving the hit rate and the probability of whatever it is we think the indicator is indicating when our efforts ought to be focused on determining whether or not the indicator is actually indicating what we think it's indicating. In most if not all cases, it isn't. Consider the virgin being tossed into the volcano: sometimes it results in a great crop, sometimes it doesn't. Maybe tossing her in earlier or later will change the probability of a healthy crop. Maybe two virgins are better than one. Maybe six. Maybe tall virgins are more effective than short ones. And surely age is important. But does the robustness of the crop really have anything to do with tossing the virgin into the volcano in the first place? The money under the pillow is not evidence of the existence of the tooth fairy, and spring will arrive regardless of whether the virgin is tossed into the volcano or not.

Except for mat and a couple of others, however, none of it has anything to do with Wyckoff. Your forum, on the other hand, is just perfect. Enjoy.

I found this post on "Re: Volume Splitter" interesting and have nominated it accordingly for "Topic Of The Month June, 2009"

I found this post on "Re: How Do You Start Trading?" interesting and have nominated it accordingly for "Topic Of The Month June, 2009"

If you're still around, klainey, I hope you study this post carefully and translate it into a series of specific actions. It's not about platforms or systems or books or courses or seminars or CDs or DVDs or workshops or even being mentored, unless it's exactly the right person, which will be unlikely. It's about understanding how markets work, particularly auction markets. Why price moves at all, much less in a way from which you might profit. What traders are doing to move price, and how aggressively -- or not -- they're doing it. And where they're doing it. Which brings us to support and resistance. Most traders wouldn't know support and resistance if they fell over it and broke both their legs. They don't understand what it is, so they find it in peculiar places that too often lead them either to the conclusion that their method of finding support and resistance works, even though it's entirely irrelevant to actual support and resistance, or to the conclusion that support and resistance "doesn't work" and is a lot of hooey. The unfortunate fact is that most beginners have no idea what they're looking at. Many of them never will, either because they're not intelligent enough, or they don't work hard enough, or, oddly, they don't care. They don't much care, for example, why price is reversing. They only want an indicator or pattern that will tell them that price is reversing. They may even have marginal success in finding one that will work. For a while. In a marginal way. But not in a way that they have complete confidence in. Not in a way that will enable them to make a living trading. So if you're in it for consistent profits, much less to earn a living, forego the short cuts. Learn what it's all about. Take your time. Study the charts. Watch price. Don't do anything about it or even wonder what you would do about it if you were to do anything about it. Just watch it. Study it. Learn to understand it. Eventually you'll learn how to play it for profit.

Since this is a thread on volume, the question is not what you'd call "on topic". But I will point out that Wyckoff regularly used P&F in his intraday trading, and P&F doesn't use volume. Therefore, I see no reason why Wyckoff cannot in some way be applied to forex. You need to talk to Flojomojo (use the Contact Info tab to send him a PM). He tried to get a thread started in the Wyckoff Forum on just this subject but could not drum up any interest. Perhaps it's time for a new assault.

I've said in other threads in other forums over the years that unless the participants in a discussion agree on the meanings of terms, most recently, "fractal", the discussion may generate lots of heat but little to no light. Clearly there is no general agreement here on what is meant by "volume". That's why some of the statements seem so, shall we say, untenable. I've seen threads like this go on for literally hundreds of posts without anyone ever agreeing on just what it is they are talking about. Given the collective intelligence and experience of those who are involved, it seems like such a waste.

I don't know that you need to do massive reading. Most of it is examples. The dynamic here is rejection. The trick is to figure out how important is whatever it is that's being rejected. Therefore, you have to carefully define -- as you know -- whatever it is you're testing for rejection. DTs, DBs, and Fibs should be fairly easy, or at least fairly straightforward. Swing points and trendlines might be another matter entirely.

No, they're not. Scan Undeclared Secrets using Ctrl+F to find definitions and explanations.