DbPhoenix

What charts are you referring to? There are no candles in these examples. As to the "failure", the hinge did exactly what it was supposed to do.

Depends on what you mean by "volume" and how your edge depends on it. Volume is just trading activity. Without it, there would be no price movement. If your edge depends on pace, that might influence your edge. Or if you are using volume patterns as indicators, that might influence your edge. But since both contracts are tied to the same source, they can be traded more or less the same way in terms of PA.

Which is not necessarily intentional, which is why beginners so often go astray with this sort of testing. If one is testing something, he has to do more than just "look". He has to do more than just "find what is". One has to do more than "just test it". Testing requires inputting data, which requires making choices. If the results are unsatisfactory, different choices are made and the testing begins again. And again. And again. Until one either quits or finds something that appears to be profitable. Which is why backtesting can do no more than provide clues for further research. The sort of backtesting results posted earlier that demonstrate profit are meaningless, much less demonstrate that a moving average crossover system "works".

Now that I will likely agree with, the key word being "system". Beginners attracted to this thread should understand that practically any idea -- whether rocket science, not rocket science, or downright harebrained -- can be made to appear profitable, whether by accident or by design, in a backtest. A more meaningful test is a properly-conducted forward test. And the most meaningful of all is a real-time test, preferably with real money. Belief or the absence thereof is not pertinent. The account balance is the final arbiter.

If it were easy, everybody would be doing it. Oh wait......

If you're defining trend as an MAXO (or any other indicator cross or hook or whatever), then of course you're correct; it won't work. But an MAXO is not the traditional definition of "trend", i.e., higher highs and higher lows or vice-versa. Yesterday, for example, there was a very nice trend in the NQ from the market open to 14:00, then another in the opposite direction until the close.

While trading is simple, it is not easy, and beginners often make it more difficult than it already is by virtue of the choices they make. Inattentiveness is a common cause of CWS. The most obvious solution to this is to determine just what one's attention span is, i.e., for how long a period one can maintain maximum attention and efficiency, then trade for only that length of time. However, it's not all about the trader. The market has something to say about all of this as well. And that's where Wyckoff comes in: find the market or instrument that's most likely to (a) move, (b) move the farthest, © move the fastest. In the chart wj provided (though this is not about wj per se but about all those who suffer from the dreaded CWS), note that price moves from R to S first in only 45m. It then rallies back to R in 30m. It then takes three times as long, 90m, to revisit S. then three hours to get back to R. So if one has attentiveness issues, when ought he to be trading? When is the market most ready to move? When does it move the fartherest the fastest? One can, of course, elect to trade during that period of the day which is most inappropriate for his "style" , but doing so will involve unnecessary struggle, which will often lead to "fear", at which point the trader will focus on dealing with his fear, when a more pertinent concern is the choice of the interval in which he's trading. The fear, in other words, is most often an irrelevance, the result not of deep-seated neuroses which fatten the pockets of psychologists and counselors but of poor choices. If the trader were to alter his trading environment, he would very likely find that his fear evaporates.

I agree. The core of this approach is being sensitive to the imbalances between supply and demand and how those imbalances result in price movement. This is not compatible with "farting around" until a chime is sounded. The chime option may, as you pointed out, work with a mechanical system, but this is not a mechanical system. If one can't focus on the work, he shouldn't be doing it. If trading all day is too much, he should trade only as long as he can do what is required (which is why I try to finish by 11:00). Or switch to a mechanical, or even an automated, system.

It's important to distinguish between a chat room and a trading room. Ours is a chat room and has never pretended to be anything else. One can therefore "hang out" while waiting for a setup, but he must be on guard that he not get so wrapped up in the bonhomie that his setup wings right by him. Therefore, I suggest that one determine exactly what it is that he's looking for (which does not seem to be a problem so far), wait until he gets it, then join the chat while he manages it. Or, as suggested, wait until one is done for the day. But to try to trade, even sim, with all of that going on requires a multi-tasking ability which is very likely unreasonable for someone who is grappling with trading challenges. The following exchange that I had several years ago may be of benefit here. Or not. Why do you say "fears that they will not succeed"? Can you elaborate? You've pretty much wrapped it all up in this post. We want to be intuitive. But unless one is exceptional, there are no shortcuts to this level (and if one is not exceptional, he will find out rather quickly). So we take or don't take a trade based on what we think or feel or intuit when in fact we are acting or not acting based on some subliminal fear. In other words, we don't take a trade because we "intuit" that it won't succeed, but we in fact don't take it because we are afraid that at bottom we have no idea what we're doing, we don't want to fail, we can't afford to lose, etc. The doubt and anxiety freeze us, and whatever intuitive sense we may have has been buried in the muck. Which is why the testing is so important, and the experience, which is both a companion to and a consequence of the testing. That is, it's not just the testing that bolsters confidence but the experience that one has gained by having gone through the testing in the first place, regardless of the outcome of the testing. As for the willingness to accept the loss, that's a biggie, and not just the willingness to accept it but to embrace it. If loss disturbs the trader in any way, then he hasn't accepted the fact of it. This alone prompts a number of self-sabotaging behaviors: getting revenge on the market, over-trading to compensate for loss, failing to take every trade that the strategy calls for, reluctance to pull the trigger, chasing price after having been reluctant to pull the trigger, etc. If one believes that he must win, that loss is unacceptable, that he must have made an error if he took a loss, losses will become debilitating. And if one is unfortunate enough to begin trading for real at the beginning of what Yoder calls the "payout cycle" (see Stage Two, Stages of a Trader, post #1), he can suffer a significant setback to his self-confidence. There are those who believe that if one is not trading intuitively, he isn't trading. This is unrealistic. Perhaps at some point one will "get it". Or perhaps he never will. Does that preclude him from trading? Not necessarily. If he can develop a system that he trusts, he will put himself in the position of trusting his system rather than his intuition. Of course, since he developed the system, he will in a sense be trusting himself in either case (this does not apply if one uses somebody else's system). However, trusting the system (or strategy or whatever one wants to call it) is not quite so fuzzy as trusting one's intuitive sense. The system is also more easily fixed. When you reach those "inflection points" where you must decide whether to pull the trigger or not, based either on your system or your intuition, put your thoughts into words. Employ Steenbarger's tactic of being your own coach and explain to yourself, out loud, just what it is that's going through your head -- and what you're feeling -- at the moment you have to make that decision (this is difficult to do in "chat"). Get a digital voice recorder (you can pick up an Olympus VN-240 on eBay for $20 or so) rather than try to write all this down, then review your explanation/analysis/rationalization at the end of the day when you aren't on the spot and can be more objective. Use your charting program's replay function at the same time you play your recording. At the very least, this exercise may help you clarify and separate what's going on with you intuitively and what's going on with regard to your perception of your system.

This is an excerpt from something I posted yesterday. It's made the rounds, and old-timers will already have read it. 38 Steps To Becoming A Successful Trader We accumulate trading information - buying books, going to seminars and researching. We begin to trade with our 'new' knowledge. We consistently 'donate' and then realize we may need more knowledge or information. We accumulate more information. We switch the commodities [or stocks, or futures, or...] we are currently following. We go back into the market and trade with our 'updated' knowledge. We get 'beat up' again and begin to lose some of our confidence. Fear starts setting in. We start to listen to 'outside news' & other traders. We go back into the market and continue to donate. We switch commodities again. We search for more trading information. We go back into the market and continue to donate. We get 'overconfident' & market humbles us. We start to understand that trading success fully is going to take more time and more knowledge then we anticipated. Most People Will Give Up At This Point As They Realize Work is Involved

It's also about having a trading plan and a well-thought-out strategy, which is a far more rare combination than it should be. Learning to trade via message board posts will only take one so far, like from here to here. If one wants to get from here to ........................................ here, that takes a bit more work.

So was the lunch worth it?

A few things to think about. Even though the larger context may give us the strong S/R represented by the limits of the trading range, price will often find S or R closer in as we work our way towards show time. In this case, it was 1478 to 1482 (the 5m chart). Price had already rejected the larger range topped at 1500+/-, after which it had repeated difficulties getting past 1492. You will hear or read that the more you test something, the more likely you are to break thru it. Forget that. It is just as likely that traders will say the hell with it and explore the other direction. Stay unbiased and flexible. Here they were testing 1485 as well, and eventually decided that the ops there may be juicier. Which brings us again to 1478 to 1482. Now for the chart below. Seven minutes before the open, traders decide to test 85 again, and it fails. This is not necessarily a go for a short, but if you like it, you could always work on making a setup out of it. You can also just sit on your hands and observe. Traders settle on 83. They jerk up a few times, but basically just lie there on 83. The market then opens, and we have another effort to get thru 85, a violent one. That doesn't work. So we get the same sort of effort to the downside. That appears not to work either. Traders appear not to want to go back to that 78 to 82 range. So they settle into 83 to 84. They poke out of it on both sides, each poke becoming progressively longer. Finally they bust out and try for 85 again, which again fails. This pretty much says Short Me, but you don't have to. Not quite yet. Largely because you know you have a downside test coming up. Now you see what happens when you work your way toward 82. You can short that and risk being stopped out. Or you can wait for a retracement that may never come. Or you can do both: short the break below 82 with a tight stop (a very tight stop), then take the retracement as well, since the retracement doesn't even make it to 83. Then just ride the short until you get your exit signal.

There seems to be quite a bit of angst pervading TL lately. I'm Confused. I'm Frustrated. How Long Before I Make Any Money At This? How Long Before I Become Successful? Was This Short OK? What Am I Doing Wrong? There are threads that encourage beginners to post their profits and losses (without necessarily explaining how those profits and losses occurred), to post their losing trades (the Misery Loves Company approach), to post their winning trades (sometimes with the reasoning behind them, sometimes not). But what about the couldawouldashoulda trades? There is as much if not more to learn from the winning trades we didn't take as there is from the winning trades we did, much less the losing trades we shouldn't have taken but took anyway. Post, therefore, the trades you should have taken because..., would have taken if only..., could have taken but.... It is not so much for What Was I Thinking? but Why Did I Miss That? It is not for the closet flagellant who wants to beat himself up but rather for the intellectually curious who is on a self-improvement arc, who wants to figure out and understand what he could have done better, assuming as he does that this exercise will enable him to do better the next time. Posts will, of course, include an annotated chart of the couldawouldashoulda trade along with the poster's assessment of the situation, preferably with some sort of plan of what he intends to do the next time to avoid the CWS. This will theoretically hone the trader's understanding and appreciation of the setup so that the probabilities of his actually taking it next time will be increased. Or maybe not. But it sure beats banging one's head against the wall. Since this is the Wyckoff Forum, setups and charts will of course reflect that. In other words, no pretty pictures of bowties and butterflies and so forth, no indicators, no pivot points, no Fib, no candlespeak, no colored price or volume bars. Just straightforward, plain ol' price bars (or a 1-tick chart, if trading PA has perverted you to that extent, or a line chart, if you're trying to see price movement without the bar structure) and, if you like, volume bars (though these are not strictly necessary).

Visiting the canaries:

I assume manage other people's money.

I no longer have any of my Wyckoff books. I was introduced to Wyckoff in the late 90s and the material made so much sense to me that I knew I'd be wasting my time with anything else. So I bought everything I could find that Wyckoff had written (nearly all of which is available on Amazon), but, even though I got a relatively good idea of Wyckoff's thoughts regarding the markets and market participants and so forth, it wasn't specific enough. I didn't know how to translate all that into a trading strategy. The most valuable book in that regard, until I obtained a copy of W's course, was the Hutson book, Charting the Stock Market. As to what is enough, I guess that depends on how interested you are in the approach. Certainly anything that W wrote would add to your knowledge of and appreciation of how he approached the market and trading. But is it necessary to read all that? No. As to the glossary, there's one here. As to how to interpret the action in a trading range, I can think of a couple of examples offhand -- there's one here and here regarding the trading range that occurred in the NQ in May and a series of posts beginning here that address the behavior of price in a hinge, which is a special kind of trading range/springboard -- but there are more. Perhaps other members might remember an example in one of the threads that stuck with them and helped clarify something for them. I also suggest, again, the Most-Thanked Posts Sticky, which is only 60 or so posts as opposed to a thousand. Once you've real all that, plus the other stickies, plus the threads in the forum, plus my blog, then you'll know whether or not you need to buy books. Note: Wyckoff goes into the process of trend, rest, trend, rest, trend, rest, the rests being trading ranges or springboards or both. But Auction Market Theory goes into the why trading ranges occur in the first place, and understanding that might help you understand what's going on and why in whatever range you're looking at.

Yes, language can be a bitch, but we'll keep at it And, yes, examples mean more than verbal explanations. A picture's worth a thousand words and so on. So, let's move on to your specific concerns rather than go on again about concepts. Absorption is first addressed in Section 7, p 8. Hypodermics are first addressed in Section 7, p 11, and Section 8, pp 5 and 15. Springboards are addressed in thirteen different sections, beginning with 4 (not posted here), 7, and 8. Use Ctrl+F to locate the specific pages. You can also refer to the springboards section of my blog. As for "stopping volume", this is not mentioned in Wyckoff's course, though it's pretty self-explanatory, i.e., volume which is heavy enough to stop price in its tracks. This type of volume can often be found in climaxes, though it often occurs shortly after what appears to be -- at the time -- climactic volume. If there's anything more than doesn't have to do specifically with Wyckoff Resources, feel free to take advantage of the Ask Any Wyckoff-Related Question or Trading the Wyckoff Way, or any other thread which may be more specifically related to your question. Annotated charts are probably going to mean a lot more to you than more verbal explanations.

Perhaps the only way of answering this satisfactorily is for you to obtain the Taylor course, the Pruden material, the SMI course, and the original Wyckoff course in its entirety and make the comparisons yourself. Otherwise you're in the position of relying on somebody else to tell you what you should know rather than relying on your own work to make that determination. Some may say that I myself am setting myself up as someone who is telling you what you should know, and if the Wyckoff material weren't here, then that would be true. However, it is here, and one can study it at his leisure without paying the slightest bit of attention to anything I say about it. Therefore, if you want to spend the money to buy other courses and materials, nobody's going to tell you that you can't. It is, after all, your money and your time. But I'm not in a position to advise you on those purchases. (Note: seems I posted this before you posted your edit. However, what I've posted above still applies to anyone who wants to do more than trade the market superficially.)

Though I've looked at the 1930-31 analysis more times than I can remember and eyeballed the trendlines and support and resistance and so forth, I've never actually annotated the charts. MLB's suggestion yesterday -- and a lot of time on my hands -- and a comment I read about all of this being so "out of date" -- prompted me to go ahead and do it, at least for the first two charts in the triptych: Trading ranges, support, resistance, midpoints, swing points, trend: it's all the same now as it ever was. And it really doesn't even require language.

A suggestion. The trading ranges need not encompass every single bar. The purpose of locating the ranges is to find those zones where the bulk of the trades have taken place. This may seem like a duh, but it's easy sometimes to overlook. Therefore, when you have, for example, a shakeout, as here, you needn't feel compelled to include it. It's an anomaly of sorts, and since no other trades took place there while the range was forming, it can be ignored, at least in terms of the box. Doing so raises your midpoint to a level that is on a par with yesterday's close. This in itself is not particularly meaningful since whether we have moved past the midpoint or only reached it is only one component to be considered. Other components, as you mention, include the behavior of the other major market averages. There is also the behavior of the trannies, the volume of advancers (which has been, for the most part, crap), the behavior of the sectors and so on. On other other hand, you must also in this particular case consider the reshuffling in the Dow. Replacing AIG and GM with CSCO and TRV will likely provide at least a temporary boost to the Dow if for no other reason than that the replacements have been doing so much better than what they're replacing. Given how close we are to 9000, that alone may be enough to put us there, and one should be wary of attaching any particular significance to a bump up to that level.

The differences among all the variations to Wyckoff's original work range from few to many, whether they be Evans, Pruden, Ross, Darvas, Dunnigan, Steidlmayer, Williams, or any of a number of other people. To explore them all would be exhaustive and might even be interesting. But the task would be irrelevant to the Wyckoff Forum. When one begins an investigation of something, whether he's a researcher, a student, a reporter or whatever, it is important to begin with the source material. If one is beginning an investigation of Wyckoff's approach, then the source material becomes whatever Wyckoff himself wrote, not on what somebody else wrote based on Wyckoff wrote (including me). One can then, if he so chooses, move on into some variation or adaptation or interpretation of Wyckoff (the same applies to reading Dow before moving on to Hamilton, or Schabacker before moving on to Edwards and Magee). Or he may be more than happy to work with the original material and come up with his own variations on the themes (as I've done with my boxes, though doing no more than drawing a box around a range that's been defined according to Wyckoff isn't that much of a variation). Those are the trader's choices. But to begin with the adaptations or variations or whatever one wants to call them and deny the trader access to the original material is to assume that one knows best what the trader ought to know. That's why -- all the posts and threads and charts aside -- the core of the Wyckoff Forum is Wyckoff's own material. The trader can ignore every single post, every single attachment and instead focus on Wyckoff's work alone, forming his own hypotheses and coming to his own conclusions without prejudice or bias or preconception. The benefits of studying the original material can be seen by comparing recent efforts to sell a newsletter that was allegedly Wyckoff but was actually an adaptation. Only two trades were made in five weeks, both losers. But those who had not read the adaptation and focused on the original material provided more accurate analyses and had, instead, winning trades. Even so, those who want to discuss these adaptations and variations are welcome to do so. I ask only that they not do it here since this is, again, a forum for discussing the original material. While this may seem "heavy-handed" to some, it is primarily a matter of focus. Wyckoff is simple, straightforward, and essentially plain-speaking. Though there are terms that are used in a particular way (like "climax" or "test"), he couldn't care less what term you use to describe something as long as you understand what's happening (see all the synonyms he provides for apex, hinge, wedge, dead center, etc). To say that it's simple, however, is not to imply that it's easy. Even though charting software has been available to the average retail trader for only ten years, a trading culture that is based on bars of various sorts and indicators of a near-infinite variety has entrenched itself so thoroughly that few beginners are able to conceptualize price movement in any way other than by some type of bar, and to be able to conceptualize price movement independently of whatever means one chooses to illustrate it or record it is crucial to implementing the Wyckoff approach. Otherwise, one risks joining the camps of those who believe that, for example, just because they have volume plotted on their charts that they are "doing Wyckoff" or who are forever trying to determine what a particular bar "means". A long-winded answer that very likely tells you far more than you want to know about the subject, but I'd like to lay this to rest. Those who want to discuss Evans, Pruden, etc are welcome to do so elsewhere (though when that opportunity was recently provided, nobody pursued it). It isn't as though I'm going to insist that interested parties be gagged and thrown into a closet. The Wyckoff Forum is about Wyckoff. Therefore, if you truly want to grasp the concepts, I suggest you begin with the Stickies to the forum, then move on to the sections on volume and group strength, as suggested earlier. If you need illustrations, explore the "Most-Thanked Posts" Stickie. If you have further questions (and you very likely will), ask. There are a number of people who are working their way through this along with you and will be happy to be of assistance.

Always good to see credit go where it's due. And I know what you mean by the "lots of time" part. I've restored a number of charts in the original course, and in many cases it's bar by bar by bar. But it's a kind of therapy as well. Like basket-weaving.

Sorry. Stopped Out at Break Even.

If that's a question addressed to nobody in particular, I hold it until I get to the other side of the range, though I scale out at predetermined intervals. But then I've reached that accommodation between what I want and what the market's willing to give me, which is one reason why I try to get it all done in 90m. If a trader wants to work 20hrs/day and make $1m/week, this might not work for him. To amplify the previous chart, the first contract is sold when the "supply line" (a type of trendline) is broken, the second when the last swing high is exceeded. The rest are sold at the target (S), though a bit of room is given in case there's a continuation. In this case, there was a reversal signal, which prompted not only a complete exit but a new trade to the long side, so there was no need to waffle around about it. After the long, the first contract is again sold at the break of the trendline. In this case, there is no subsequent violation of the last swing low. Everything else is sold at the target ® and I go riding.