Head2k

Convert it to compressed format, such as jpg or png. If you paint program can't do it, download some freeware which can.

I am a beginner and I've been studying Wyckoff for quite a short time, but I belive your observations are basically correct.First one needs to choose a way. A way of thinking about market, understanding, interpreting and analyzing the market's action. After some rambling from one thing to another I found Wyckoff and fell in love with him. This way is beautiful in its simplicity and it gives you a chance to get in harmony with the flow of the market (Not saying I got to this phase, but I have some bright moments). Being in harmony with the market's flow provides a kind of inner peace, and implies confidence. As for the process of learning, first one needs to understand the theory. This forum and Db's blog are great for that. Texts and static charts should serve the purpose. Once you think you understand the theory to some meaningful degree and you can interpret historical charts, you should move to live charts. Not trading, but analyzing and interpreting. Without hindsight it gets much harder. Then, if you think you gained enough experience to actually exploit your understanding, you should start with strategy development and paper trading. And once your plan is developed and you gain consistency on paper, you can start live.

Yes, James. Still the same issue. First the chat started lagging and after a few minutes it crashed. I can't remember exact time when it happened, but it was later in the day than usually, I'd guess 2 or 3 hours after US open.

Jon, I wouldn't talk about a mental block. It is just a different approach or philosophy, and it doesn't mean it is worse (or better). Anyway, maybe MadKnight's remark was more general than just related to your last particular decision. Or maybe he wanted to suggest that one losing week doesn't mean much statistically with your method. However, being a beginner myself, I would advocate for frequent changes in trading plan even if the plan didn't get enough time to prove itself wrong. It would be in cases in which the change would be implied by logic rather than statistics.

It is also form of safety protection. If broker, your computer, internet connection or electricity goes down, then the stop in your head won't help you much.

Db posted line charts on more occasions, I believe this is the last one. You might want to check also some preceding and subsequent posts in that thread for some context. Use midpont or closing price of each bar to construct the line. The bar interval doesn't matter, but it should be small enough so there are not only 10 or 20 bars on the chart. Remember that this is merely an exercise which should help you change the way you think, so don't bother with questions such as whether 5 or 30 or whatever. The interval should be just somewhat proportional to the period you watch. And by the way. This is not Gringo's thread so I believe there is no need for apologies for hijacking, but on the other hand, it is a specific EOD thread, and general questions should be more likely placed here. Assuming you have already read at least the stickies in the Wyckoff forum.

Well, the chat room is up again and seems working.

Thank you, James, for all the effort you put into this. But (speaking for myself only) I don't need any Whiteboard, GameZone or Push-to-talk. I wouldn't like to discourage you or to suggest that I am not grateful for the environment you provide us, but I mean what is the purpose of the chat room? The chat IMHO cannot compensate for forum. The chat rather supplements the forum, it brings the static theories into life. And all that is needed to fulfil this task is the ability to chat in real time and to post and view charts in real time. If one wishes to elaborate or to present theories behind his actions he can do it in forums, rather than drawing sketches on a whiteboard. If one wishes to play games he can run his own ones. I just want to say that I would prefer something simple and stable. No need for all these fancy features. Everything only IMHO, of course.

Stuck at Initialization screen both with FF and IE.

I only said that it wasn't clear to me to which action numbers 3 and 4 are related. And why I was sometimes reading bar by bar in my comments? Because if you make annotations every third bar then the shifts in behavior that you are looking for occur often within one or two bars. Simply density of your annotations and chosen data sampling requires to go almost bar by bar in this case. What is important is to observe behavior, confidence and intents of bears and bulls. And changes of them. So even if you need to go bar by bar in some cases, you must never consider the action represented by any particular bar in isolation, but you must judge what it means in context of what happened before. So in fact you are not focused on single bars, but still on the flow. The bars are the smalles pieces of information you have, so if the data sampling is not detailed enough and changes are quick, then what else you can do? But as I said, I am a beginner and this is only my opinion.

I am a beginner just like you, so please accept my humble attempt to help you. Perhaps somebody more experienced will correct me later. I will only quote the points that I disagree with or that I have something to add to. There is selling interest indeed. But there is also increasing buying interest, otherwise volume wouldn't be increasing. What matters is that although lower prices attract buying, selling pressure is greater than buying pressure. Or in other words, selling interest is so strong that it can push price down even through increased demand at lower prices. I don't see such a swing low. Or did you want to say that the support is found at the top of the 2-bar congestion which formed at the previous swing low?Or maybe numbers 3 and 4 are missplaced on the chart? I suggest you to place numbers above or below the described bar, and if they describe a leg then mark the leg with { or something. There IS increasing selling pressure. See point 2. It depends what one decides to call a test. I suggest that price should bounce meaningfully from the preliminary support before the test. So IMHO there was some form of test on a smaller scale (intraday), but on a daily chart I would view the two bars as one action (V bottom) forming preliminary support. Indeed it was exhaustion, but one has to remember that he doesn't know at that time whether the exhaustion is final or just temporary. Correct. So called Technical Rally. Now one can expect a test of the preliminary support. If you look closely then volume is in fact slightly decreasing during the rally, and the day before the day with 9 above price turns down on insufficient demand. The next day it tests the last swing low (the green line again) and this is the day when demand comes in and drives price up. Nice description of what is visible on the chart, but you should rather try to see and describe behavior instead of "price and volume". So buyers drove price up with some effort, but then they withdrew. But sellers weren't so confident to take over (much) either. So the next day was a moment of hesitation. Note the low volume, either side didn't have strong conviction. In fact price was declining prior to this volume spike and as volume came in price slowed the downward progress. To me it looks like that after that hesitation at the last swing high sellers gained confidence and started pushing. First slightly (the day before), now strongly. But they met demand and price got virtually nowhere on that volume spike day. The next day price indeed declines, but then easily gets up again. This look more like exhaustion of sellers, however it might be only temporary. But also note that price failed to bounce from that low meaningfully. This doesn't indicate strenght much IMHO, rather indecision. After such a wild struggle on the volume spike day, both sides are exhausted and since the result was virtually none, they are lost now, they don't know what to do. And after some time there is almost no more traders willing to trade at these prices, so something must probably happen to attract more activity. But what will happen that is highly uncertain at this point IMHO. The clue comes on the last day before the upside breakout from that little congestion at the low. On that day price reaches lower to test for supply and finds none, as you noticed. The volume looks so drastically light that it looks like holidays. Note the period when all this stuff is happening. The extremely low volume is caused more by Christmas and the New Year than by anything else. The direction from here is not that sure. Note that price is not falling, but it is not rising either. So there is not only support against decline here, but also ressistance preventing a rally. The forces are even, though both quite strong.

I found this post on "Re: All You Need... is a Chart" interesting and have nominated it accordingly for "Topic Of The Month January, 2009"

Cows, I wonder if you have visited the "Trading The Wyckoff Way" thread, since oil and its present (or recent past) position was discussed there by atto, Db and others.

Market would most likely react diffenently, at least on micro-scale, but the most significant fact is that there were 500 lots traded. How the trades were splitted is IMHO not that important. But maybe if somebody wants to pick the very bottom or top it actually may be important, because picking the extreme is in fact a micro-scale work.And last but not least, I am a beginner so what do I know?

I would dare to say that the concept or idea is old at least hundred years. It is simply a high volume reversal, or a climax. A lot of volume in small amount of time in a small price range. I would also say that how chopped or not chopped are the orders of big guys are is not that relevant. No indicator is needed for detection of such an event. But if somebody wishes to react fast enough to participate at this very top or bottom, then some sort of computation and automization can be useful. Yet since the thread starter states that the way he does it is secret, this thread serves only as an example that something like that is maybe possible, at least with super-hyper-datafeed and processing capacity

My 2 cents: First you need to define what do you mean by agreement. If you mean same bias then then yes, the greatest agreement is on the rise, but with low volume. If almost everybody has bullish bias there will be only little supply, so price will rise easily on low volume. But I think that it is more usefull to define agreement as agreement on value rather than bias. This way the agreement represents balance. Hinges or ranges may start with a tug-of-war, but eventually they come to a point where there is no more traders willing to make a trade in that particular price zone, for the time being. This is basically what auction theory says.

I would say the real reason why you get pissed is that you are too proud. That goes hand in hand with wanting to be right. Anyway, I wonder why you attend the chat room then, apart from posting cute animals. Just a rhetorical question, I don't need an answer, since after all it is not my business. But perhaps you could answer that question for yourself.

This chart might interest you. 1240 was VWAP associated with the upmove from 1156. I know it is a manufactured level, but I believe it has some importance. Like boxes mark activity encapsulated in time, dynamic value areas describe activity since some point in past until present. Then this VWAP is the average price of all trades made since the origin of the upmove and thus it is a breakeven for the composite operator who entered during that move and is still in position. Something like a dynamic midpoint.

Here is a couple of boxes. And altough I had the white boxes drawn yesterday before open I failed to recognize what was happening. First price bounced off 1245 in premarket. Could be a nice long if one actually trades premarket. But then we failed to get through 56, the midpoint of a smaller box. Then we broke below 45, recovered, but again failed to breach that midpoint. Db posted excelent analysis and I am posting this just to show some context of the 55 level.

I am a beginner and during my learning I was also thinking of market "fractality". I had no problems with recognising the existence of different price positions on diferent time frames, but my problem was to make order in it, that means to decide what the hell I want to trade then, and how to trade it. Anyway, as a remark to the first pages of this thread, I think definitions are very important. Definitions show the way of your perception. Therefore I think a lot about definitions and terms I adopt in my trading, or learning process. Now I don't think of different time frames, I think of different scales. When I think of "scale" instead of "time frame" it is obvious that time per se is not that relevant. It is also obvious that interval of a particular chart doesn't matter. What matters more is the scale of the action. As for reversal being breakout, it is also a matter of preception. One can use a breakout of some sort to time entry into a reversal, but he must keep in mind that it is the reversal that he is trading, not the breakout. He must keep in mind the scale that he trades. For me the result of thinking of diferent time frames was that I would think of scales instead and that I will restrict my trading significantly. I put a down limit on scale I am willing to trade and I decided to plan all my potential trades before open. Not general rules but concrete trades. Not sure if it fits in this thread but that's my (beginner's) take on this topic. EDIT: Also when thinking of diferent time frames, I think the action is self similar only to certain degree. Larger time frames smooth the action (or traders decisions), and to see some sorts of behavior one has to watch the action in sufficient detail.

Actually, I believe this is exactly what atto is trying to tell you. The volume here is a sign of significant buying interest. Sure, selling interest is there, too. But the fact that buyers became interested on such scale and are absorbing on such scale is worth noticing and one should watch closely what happens next.Regarding to catching the falling knife, nobody here wrote that one should buy right now and nobody wrote that one should try to pick the exact bottom.

I'd like to thank Soultrader for creating such a meeting place like this, and I'd like to thank the Wyckoff squad for showing me the way. TL is an invaluable source for me and I wish it all the best in the next year.

Darth, there is no assumption about the distribution. It is not assumed that it is normal, it is not assumed that it is skewed. No assumptions are needed. Actually there is one point where you need to assume some distribution, so maybe that is what you are talking about. When you calculate volume distribution say for a day, you calculate it from bars. Since you dont see inside the bars you have to assume distribution of volume inside them. Usually the assumption is that volume is spread equally along every bar. That is of course a simplification and it introduces some error into calculation. To eleminate this error one would need to run the calculation on a 1 tick chart, where every bar (or point, in this case) means one transaction. But if you play with it for a while you will find that these errors are insignificat (say under 1 tick) when certain detail in data sampling is reached. So as I said, this is the only point when you assume something. The rest is simply mathematics.

This is VWAP with SDs and (last value of) PVP for AmiBroker which I programed some time ago. It doesn't plot volume distribution, because AmiBroker can plot it on itself since version 5.20. I don't know how fast PC do you have, but the PVP calculation is quite demanding. So if you can settle for VWAP and SDs only and use AmiBroker's daily Volume at Price Overlay to judge PVP by eye, you can erase the part of code starting with ///// PVP /////. The code will be much faster then. Also please note that I use black background, so change colors in code if needed. ND = Day() != Ref(Day(), -1); ///// VWAP and SDs ///// P = (H + L) / 2; VWP = P * V; BI = BarIndex(); BeginBI = ValueWhen(ND, BI); BeginBI = BeginBI[barCount -1]; if(BeginBI < BarCount - 1) { InRange = BI >= BeginBI; CumV = Cum(V * InRange); CumVWP = Cum(VWP * InRange); VWAP = CumVWP / CumV; S = Cum(Ref(CumV, -1) * V * (P - Ref(VWAP, -1))^2 / CumV); Variance = S / CumV; SD = sqrt(Variance); VWAP = IIf(InRange, VWAP, Null); Plot(VWAP, "VWAP", colorYellow, styleNoTitle + styleNoRescale); Plot(VWAP + SD, "+1SD", colorGreen, styleDashed + styleNoTitle + styleNoRescale); Plot(VWAP - SD, "-1SD", colorRed, styleDashed + styleNoTitle + styleNoRescale); Plot(VWAP + 2*SD, "+2SD", colorSeaGreen, styleDashed + styleNoTitle + styleNoRescale); Plot(VWAP - 2*SD, "-2SD", colorOrange, styleDashed + styleNoTitle + styleNoRescale); Plot(VWAP + 3*SD, "+3SD", colorPaleGreen, styleDashed + styleNoTitle + styleNoRescale); Plot(VWAP - 3*SD, "-3SD", colorLightOrange, styleDashed + styleNoTitle + styleNoRescale); } ///// PVP ///// BarSinceND = BarsSince(ND); iStart = Max(BarCount - 1 - BarSinceND[barCount - 1], 0); Top = HighestSince(ND, High); Bot = LowestSince(ND, Low); Range = Top - Bot; BoxesInRange = Range / TickSize + 1; VolUnit = Volume / ((High - Low) / TickSize + 1); VUcount = 0; MaxVUcount = 0; PVP = Null; if(iStart > 0) { for(i = iStart; i < BarCount; i++) { jShift = round((Bot[i - 1] - Low[i]) / TickSize); if((BoxesInRange[i] < BarCount)) { if(jShift > 0) { LastVUcount = VUcount; VUcount = 0; for(j = jShift; j < BoxesInRange[i]; j++) { VUCount[j] = LastVUCount[j - jShift]; } } jStart = round((Low[i] - Bot[i]) / TickSize); jEnd = round((High[i] - Bot[i]) / TickSize); for(j = jStart; j <= jEnd; j++) { VUcount[j] = VUcount[j] + VolUnit[i]; MaxVUcount = Max(MaxVUcount, VUcount[j]); } } } for(j = 0; j < BoxesInRange[barCount - 1]; j++) { if(MaxVUcount == VUcount[j]) PVP = Bot[barCount - 1] + j * TickSize; } Plot(PVP, "PVP", colorTurquoise, styleDots + styleNoTitle + styleNoRescale); }

Since nobody else continues I will finish my comentrary on BB's DAX chart. First I want to appologize for wrong annotations of potential selling climaxes in the chart attached to my last post. Please read Pot'l SC instead of Pot'l BC in downtrend. I used copy & paste too much. So what happened since the test with the nice short entry? It is pretty much a stair step downtrend. At each of the potential selling climaxes one can look for reversal. But if he waits for a test to confirm the reversal he doesn't get it. Also the olive green supply line is safe. Price instead increases angle of down fall and the blue supply line can be drawn. When price rises on technical rallies after the potential climaxes it always finds resistance at the last swing low and always bulls don't show much effort to push through. At 9:17 comes a slight warning. Blue supply line is broken which means that price slows down. Then another potential selling climax comes, this time volume is the highest on the chart so far. Also we can notice that the technical rally doesn't find resistance at the last swing low but rather one level higher. Just subtle warning signs, nothing of great importance. But then, the subsequent reaction finds support at midpoint of the last down swing and buyers come in on volume, pushing through the top of the technical rally. That is the first time demand presented itself with such a force and it should tell us to cover the short or even reverse position.