Sandbox

[markl67 10]

But in the example chart, it does appear that an initial large trade (buying volume) moved the price up which then caused the stock to pop up on radar screens creating interest, etc. So I guess in this case someone could have been screening for nothing but volume increase/spikes and found this stock.

[DbPhoenix 42]

But in the example chart, it does appear that an initial large trade (buying volume) moved the price up which then caused the stock to pop up on radar screens creating interest, etc. So I guess in this case someone could have been screening for nothing but volume increase/spikes and found this stock.

 

If you follow charts in real time, or if you break them down to a very small bar interval, such as 1m, you'll find that price moves up on very little volume. This is because of what those who are accumulating the stock are doing in order to attract attention (if they were already attracting attention, volume -- trading activity -- would be higher before price ever moves up). Price pokes its head up and traders notice, either because they've been following it or because of a scan they've run. Those who notice may be interested in riding this particular train. That increases trading activity, i.e., raises the volume level, which in turn attracts more attention and more trading activity for the reasons stated above.

 

And while ordinarily I'd love to go into all this again, it's already been done. I ask those who are interested in discussing it further to read the linked thread above and the Volume Studies pdf also linked above.

 

Since I haven't heard from facc, I'll assume until I'm told otherwise that he intended to post his question someplace where he could get help with LII sorts of considerations. If that's the case, those who are interested in pursuing this discussion can do so in the thread linked earlier, "Volume Observation".

Edited June 19, 2009 by DbPhoenix

[DbPhoenix 42]

Richard Wyckoff was a pioneer of technical analysis. While Dow contributed the theory that price moves in a series of trends and reactions, and Schabacker classified those movements into chart patterns, developed gap theory, and stressed the role of trader behavior in the development of patterns and support/resistance, Wyckoff contributed the study of the relationship between volume and price movement to detect imbalances between supply and demand, which in turn provided clues to direction and potential turning points. By also studying the dynamics of consolidations or horizontal movements, was able to offer a complete market cycle of accumulation, mark-up, distribution, and mark-down, which was in large part the result of shifts in ownership between retail traders and professional money.

 

Wyckoff sought to develop a comprehensive trading system which (a) focused on those markets and stocks that were “on the springboard” for significant moves, (b) initiated entries at those points which offered the highest probability of success, and © exited the positions at the most advantageous time, all with the least possible degree of risk*. His favorite metaphor for the markets and market action was water: waves, currents, eddies, rapids, ebb and flow. He did not view the market as a battlefield nor traders as combatants. He counseled the trader to analyze the waves, determine the current, “go with the flow”, much like a sailor. He thus encouraged the trader to find his entry using smaller “waves”, then, as the current picked him up, ride the current through the larger waves to the natural culmination of the move, even to the extent of pressing one’s advantage, or “pyramiding”, as opposed to cutting profits short, or “scalping”.

 

What distinguishes Wyckoff from all of the various Wyckoff knockoffs in circulation are (1) the emphasis on the continuity of price and (2) the lack of "setups".

 

Continuity of Price: Wyckoff began as a tape reader. By the time he incorporated daily charts into his trading, the continuity of price movement via the tape, tick by tick, had become so ingrained that he could see price no other way. Even though he might be looking at a series of daily bars on an end-of-day chart, he saw price as continuous. Thus the bar itself was irrelevant to him, and he was just as comfortable using line charts as bar charts. The line chart, in fact, more closely conforms to this continuity.

 

"Setups": There are no "setups" in Wyckoff, at least insofar as we commonly use the term. He did not say that if price does this, you buy and if price does that, you short. Rather he stressed that the trader must be sensitive to imbalances in buying pressure and selling pressure, particular at levels where these imbalances might most likely result in profit opportunities, e.g., reversals. Therefore, the "trading signal" is not, for example, a "double bottom" or a "higher low" or a "climax bottom" or even what some call a "spring" (not a Wyckoff term); the trading signal is provided by the imbalances between buying pressure and selling pressure (which is why software won't work), and if one does not view price as a continuous movement and is not sensitive to these continuous shifts in balance/imbalance, he will not understand what it is that he's supposed to do.

*Risk is minimized by (1) focusing on liquid markets, (2) monitoring the imbalances between buying pressure and selling pressure at those levels of “support” or “resistance” where price is most likely to reverse its trend, (3) entering on reversals (or, if necessary, retracements) rather than breakouts, and (4) getting out when the market tells you to.

 

 

WYCKOFF LITE

 

Wyckoff's original course** came in two "divisions": The Richard D. Wyckoff Method of Trading and Investing in Stocks: A Course of Instruction in Stock Market Science and Technique, which amounted to about 400pp, and The Richard D. Wykcoff Method of Trading in Stocks: A Course of Instruction in Tape Reading and Active Trading, which added 97pp,

 

Those who are intimidated by the prospect of working their way through 500p of a century-old course and/or those who are skeptical of the value of the course at the outset may be game for an abbreviated course, not a shortcut, but an "essence".

 

This can be accomplished in two phases. The first is targeted toward those who may be interested but first want to know what this is all about. This amounts to about 45p (that's the best I can do) from Division 1: The Basic Law of Supply and Demand (Section 2), Judging the Market by its Own Action (Section 3), and Buying and Selling Waves (Section 5), the application of all of which are demonstrated by Wyckoff himself in a year-long study (Determining the Trend of the Market, Section 7) of the market from the end of 1930 through 1931 and an 18-month study of a stock, from 1934 through 1935.

 

If after reading this tenth of the entire course, you think there may be something to all this after all, step in to phase two. This amounts to the four sections above plus the Forward (Section 1), Volume Studies (Section 14), Significance of Trend Lines (Section 15), Refinements (Section 21), Stop Orders (Section 23), General Instructions: Cautionary Suggestions (Section 24), and Market Philosophy (Section 25), about 90 additional pages all told.

 

SEARCHES

 

You may search Wyckoff's course (links provided above) just as you would any pdf. Open the pdf, click Ctrl+F, and enter your search term, e.g., trend or trendline or whatever. Once the function has found the first instance of your search term, click Next to go to the next instance.

 

 

WYCKOFF LITE-R

Given that you are in charge of your own learning, you have the option of skipping the Wyckoff course entirely, except perhaps as a resource, and skipping ahead to the Wyckoff and Auction Markets thread. Whether or not this will work for you without ever consulting the original Wyckoff material is a matter of cloudy prognostication. But not all roads are smooth.

 

 

GLOSSARY

 

Note: Included in this glossary are what I call "abbreviations of convenience", e.g., AOC (abbreviation of convenience). Wyckoff didn't use them; he spelled everything out. But then Wyckoff didn't post to message boards. So please understand and forgive their use. They save a lot of wear and tear on the fingertips.

 

Accumulation: An area where stoc]ks are purchased – or “accumulated” -- with the intention to mark up prices at some later time. Every traded stock is in one of four phases: Accumulation, Mark-up, Distribution, Mark-down. Absorption is a form of "re-accumulation" which occurs toward the end of the Mark-up phase as price approaches old resistance. Buyers "absorb" the offerings of bulls who bought at that old resistance and now want out, as well as the offerings of bears who bought on the way down to that old resistance and now see an opportunity to get out even (see Determining the Trend of the Market by the Daily Vertical Chart, Division 1, p. 8).

 

Breakout: BO (AOC). A breakout is not just a matter of a price exceeding a previous price level. Price must break out of something, most often a trading range.

 

Buying Climax: the opposite of a Selling Climax (see Determining the Trend of the Market by the Daily Vertical Chart, Division 1, pp. 1, 2).

 

Composite Operator: Wyckoff’s name for the total sum of forces, including the public, that move the market.

 

Demand: Buying power, buying pressure.

 

Demand Line: that line which passes through two successive swing lows (the low points of two successive reactions). Also DL (AOC).

 

Distribution: An area where stocks are sold with the intention to mark down prices at some later time.

 

EOD: End of Day (AOC).

 

HH: Higher High (AOC).

 

HL: Higher Low (AOC).

 

LH: Lower High (AOC).

 

LL: Lower Low (AOC).

 

LSH: Last Swing High (AOC). A swing high or low represents a point at which traders are no longer able to find trades. Whether that point represents important support or resistance will be seen the next time traders push price in that direction. But everyone knows this point, even if they aren't following a chart. It exists independently of the trader and his lines and charts and indicators and displays. It is the point beyond which price could not go. Hence its importance, both to those who want to see price move higher and those who don't.

 

LSL: Last Swing Low (AOC). See above.

 

Mark-down: The phase of the cycle where prices decline, from the beginning of a bear campaign to its bottom.

 

Mark-up: The phase of the cycle where prices rise, from the beginning of a bull campaign to its top.

 

Overbought Position Line: that line which is drawn parallel to a demand line and passes through the first point of resistance (rally top) which intervenes between two successive points of demand in an up trend (whew!). In order to cut down on the jargon, the Supply Line is used here to perform the same function.

 

Oversold Position Line: that line which is drawn parallel to a supply line and passes through the first point of support (reaction low) which intervenes between two successive rally tops in a down trend (whew!). In order to cut down on the jargon, the Demand Line is used here to perform the same function.

 

Price movement [price action]: the continuous tick-by-tick (transaction-by-transaction) movement of price as shown on the tape [or on a corresponding chart].

 

Rally: A phase in the market that experiences rising prices, that is, higher highs and higher lows.

 

Reaction: A phase in the market that experiences declining prices, that is, lower highs and lower lows.

 

Resistance: An area where selling pressure overwhelms buying pressure. More specifically, resistance is the zone or level at which those who have enough money to make a difference attempt to retard, halt, and reverse a rise by selling.

 

Retracement: RET (AOC). The first pullback after a break through support or resistance and the second opportunity (the first being the break itself) to enter the trade. If price does not resume its course, the "retracement" becomes a failed breakout.

 

Reversal: REV (AOC). A bounce off of or rejection of a support or resistance level.

 

RT: Real Time (AOC).

 

S/R or S&R: Support and Resistance (AOC).

 

Secondary Reaction: The reaction following a Technical Rally.

 

Selling Climax: A major panic that occurs at the end of a steep decline in prices (see Determining the Trend of the Market by the Daily Vertical Chart, Division 1, pp. 1, 2).

 

Shakeout: A sudden break below a support level followed by a rapid reversal.

 

Springboard: A stock (or group or the market as a whole) is on the springboard following a period of preparation for an advance or decline.

 

Stop Loss: An order to exit a trade if the market does something that proves your initial decision to enter the trade was wrong.

 

Supply: Selling power, selling pressure.

 

Supply Line: that line which passes through two successive swing highs (tops of rallies). Also SL (AOC).

 

Support: An area where buying pressure overwhelms selling pressure. More specifically, support is the zone or level at which those who have enough money to make a difference are willing to show their support by retarding, halting, and reversing the decline by buying.

 

Tape: a thin strip of paper on which is printed a series of stock symbols, each print representing a transaction in that stock and consisting of the price at which the transaction took place and the volume of shares changing hands. Modern day equivalents are the "time-and-sales window" and the one-tick chart.

 

Tape Reading: the art of determining the immediate course or trend of prices from the action of the market as it appears on the tape of the stock ticker.

 

Technical Rally: The rally that occurs after a Selling Climax.

 

Thrust: A break above a resistance level followed by a rapid reversal.

 

Trading Range: A period of balance between supply and demand forces. Prices move within a range where the bottom represents demand and the top represents supply. Also TR (AOC).

 

Trend: The line of least resistance.

 

Trendlines: Straight lines drawn through the tops or bottoms of the price path established during an upward climb or downward pitch. They “serve to define the stride of the price movement, thereby frequently directing our attention either to possibilities of an approaching change of trend or to an actual reversal.” Also TL (AOC).

 

Volume: Number of units changing hands in each transaction.

 

Wave(s): See Buying and Selling Waves, Division 1, Section 5.

 

**Please note that this forum is focused on Wyckoff's original course. Wyckoff died in 1934, and his course passed into other hands. The provenance of the material and the relative quality of subsequent additions, deletions, alterations and so forth is not the concern of the forum but rather the study of the original material, the belief being that by studying the original material, the individual is in a better position to evaluate any other approaches, methods, systems, etc that are "based on Wyckoff", whether they make that claim or not. Without access to the material, the individual is in the position of having to take somebody's word for the content and intent, and that's not the best basis for beginning a trading strategy.

 

 

Enjoy.

Edited July 21, 2015 by DbPhoenix
Re-organize

[DbPhoenix 42]

Given that the last few posts (now moved) have taken a detour toward P&F, I'm moving them to the P&F thread so that the P&F posts are all in one place.

[DbPhoenix 42]

Posted on 12 July.

 

The lack of interest in these canaries has been disappointing because an understanding of what the market is doing and an understanding of what the groups are doing are so vital to implementing the Wyckoff approach, even if one is daytrading. Therefore, I'm going to tie everything together here in case someone reads this at some point in the future and wonders how the puzzle pieces fit.

 

To start, there is the "groups" thread, particularly post 6. There are then the updates on the weekly charts posted in the "dailies" thread as well as posts 95 and 96. Those who read this linked materal as well as the posts to this particular thread (there are only a few) will be more likely to understand what is to follow.

 

The point of following the canaries can be seen below. Using the canary for the sectors, one can see here that while every sector but XLF and XLY was making new highs in early June (ignore if you can the colors and the MAs and the volume; removing all of that takes a lot of time) .........

 

 

 

 

the sector canary was not.

 

 

 

 

The trader/investor following this would at least entertain the possibility that the failure of the canary to confirm these higher highs -- coinciding as they did with the major averages bumping up against heavy resistance (see the linked posts above) -- might signal trouble for the long side, and he would at the very least work out a contingency plan for the short side, keeping in mind all the while that there might be a sudden and inexplicable rally.

 

He would note that XLF and XLY were the first to break their trendlines and begin there. But he would also follow the weakest stocks in the other sectors. And when every sector but XLV and XLU followed the weakness in the sector canary (XLV dropped below its trendline but quickly recovered; XLU eventually broke its trendline a month later), he'd already know what he wanted to short and when and why.

 

That, then, is the purpose of these canaries, or Wycoff Waves: to provide advance notice of moves by revealing the activity that's taking place "underneath" and which is not obvious or even visible to the casual observer (much like the means by which one can anticipate moves in various trading instruments through analyzing the support and resistance provided by trading ranges).

 

Edited July 13, 2009 by DbPhoenix

[Flojomojo 10]

Hey everyone,

 

as I believe ppl here are interested in obtaining the original course without paying for the full SMI course I want to tell you how to get your sample:

 

The Librarary of Congress has the 1931 as well as the 1937 typewritten, nonpublished The Richard D. Wyckoff Method of Trading and Investing in Stocks on microfilm and can pull it on paper for you.

 

Pricing for one of them with shipping to Europe is:

$ 14.00 set-up fee

$100.00 $.25 x 400 pages = $100.00

$ 45.00 shipping

________________________________

$159.00

 

I am getting my copy via:

 

Ms. Margaret Kieckhefer

Mail: mkie@loc.gov

Office of Business Enterprises

Library of Congress

+1 (202) 707-2590 (office phone)

+1 (202) 707-1771 (office fax)

 

Hope this is useful information for some of you.

 

Best regards,

Flojo

[DbPhoenix 42]

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.

Edited June 29, 2009 by DbPhoenix
Add link

[atto 20]

I've forwarded this information to Fraser Publishing, which has done an excellent job keeping older works in print (by Mamis, Wyckoff, Neill, Schabacker, etc). I'd absolutely love to see this in book form.

 

Thanks for the tip!

[Flojomojo 10]

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.

 

Good that you mention it. I will post an index of whats in the course when I recieve my copy so we can see whats missing. Even if a couple of pages are missing this seems like great value for the money.

[Guest OrlandoB]

I am in possession of the following items in digital form:

 

The 12 “ Wyckoff Basic Lectures Programe” are now available on 1 MP3 format cd. The disk will have the following information on it:

Basic Lectures 1 thru 12 in MP3 format

Basic Lectures 1 thru 12 in Microsoft Word format – Lawrence Berg

Practice Trading 1 thru 6 in Microsoft Word format – Lawrence Berg

Definitions – Alvin Nelson

Trading Point – Michael Ellis

Glossary – Bruce Hands

 

The Richard D. Wyckoff Method of Trading and Investing in Stocks Vol1 199 pages

The Richard D. Wyckoff Method of Trading and Investing in Stocks Vol2 203 pages

The Richard D. Wyckoff Method of Trading and Investing in Stocks Vol3 133 pages

The Richard D. Wyckoff in Stock Course Market Science and Technique 122 pages

Introduction to the Wyckoff Method of Stock Market Analysis 194 pages

The Richard D. Wyckoff in Stock Course Market Science and Technique Basic Lectures 190 pages

Introduction to the Wyckoff Method of Stock Market Analysis 71 pages

chart and reviews 44 pages

 

total

24 mp3 files

21 MS doc files

17 pdf files

 

---

 

I will sell the whole thing for $200. Contact me through PM. Thanks.

[firewalker 10]

I've forwarded this information to Fraser Publishing, which has done an excellent job keeping older works in print (by Mamis, Wyckoff, Neill, Schabacker, etc). I'd absolutely love to see this in book form.

 

Thanks for the tip!

 

Yeah, Fraser Publishing has been an excellent resource. And if you buy 'distressed copies' (which actually just look as brand-new to me as any other book), you're doing a real bargain.

[BlowFish 10]

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.

 

Perhaps som enterprising person should negotiate a bulk discount! I wonder what other gems might be buried there. I am surprised they haven't converted the majority of their micro fiche stuff to digital by now actually.

[Flojomojo 10]

In the future you will be able to get a copy from me...and its even legal! Here's what Mararet wrote:

 

"The Wyckoff item is in the public domain. If you know of other people

who would like to have it, you or they are free to run it through a

photocopy machine, which will surely be cheaper than getting it from

me."

 

If someone is interested, drop me a msg....have not thought about the price, but it will be somewhere close to the almost nothing range.

 

[Ed: the pdf has now been uploaded to the thread here]

Edited January 29, 2010 by DbPhoenix
Add pdf link

[atto 20]

Interesting, that's great news. What kind of interest do you think there is for this? I'd be willing to pay someone $10/hr to retype this (along with restoring the charts) if enough people wanted it. I'd love to see this thing in book form.

 

edit: Tentatively found someone willing. This might be a longer term thing, though, so if you want it soon/now, Flojomojo's your best bet.

Edited June 30, 2009 by atto

[DbPhoenix 42]

Well...I think this enterprising person will be me. In the future you will be able to get a copy from me...and its even legal! Here's what Mararet wrote:

 

"The Wyckoff item is in the public domain. If you know of other people

who would like to have it, you or they are free to run it through a

photocopy machine, which will surely be cheaper than getting it from

me."

 

If someone is interested, drop me a msg....have not thought about the price, but it will be somewhere close to the almost nothing range.

 

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.

[DbPhoenix 42]

Interesting, that's great news. What kind of interest do you think there is for this? I'd be willing to pay someone $10/hr to retype this (along with restoring the charts) if enough people wanted it. I'd love to see this thing in book form.

 

edit: Tentatively found someone willing. This might be a longer term thing, though, so if you want it soon/now, Flojomojo's your best bet.

 

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.

[atto 20]

I have a half decent OCR, and it gets most of the text. A few spots need to be corrected, and if the job's worth doing, I'd also want to redo the layout, fitting the text on a normal size page (and moving the footnotes around accordingly). That might take a little time, in addition to the charts (which will take a while).

[Tams 20]

...Some of these charts are in terrible shape -- copies of copies of copies of copies over decades -- and redrawing them is a giant PITA.

 

 

You can make it a community project.

[DbPhoenix 42]

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

Edited July 1, 2009 by DbPhoenix

[Head2k 10]

I thought you guys (at least Db and atto) already have the course. So why to obtain a copy from a library? Also, if I remember correctly, OrlandoB was selling the course in pdf format (along with another Wyckoff stuff) a few days ago here.

So I don't get the point of getting a copy from library and restoring it, when a pdf is already available. Is there something I am missing? Some copyright issues of your copies, or is the library version special in some way... ?

[DbPhoenix 42]

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.

[atto 20]

So why to obtain a copy from a library?

That was for people who don't have it. For myself, I'd just like to see it in book form for those who want it. It's condition is pretty bad (especially the charts), so before that happens, it would need to be restored.

[DbPhoenix 42]

I should also point out that what I've posted here is what I consider to be absolute minimum to engage the curiosity. Those who want to go on, have. Most find way too much here as it is, even if they explore only the stickies. This is not intended to be an extension course but a discussion forum. Screen time is at least as important, if not more so, than how much of the course one reads.

[motorway 10]

Wyckoff material being discussed here was all produced after 1923

 

And I would be surprised if copyright was not renewed

 

Here is a long list for example

 

 

Copyright Renewal Database: Search Results

 

Original renewals seem to have been made by Richard's widow

But I am sure I have seen even later renewals..

 

 

motorway

 

eg

Registration Date 23Sep33

Renewal Date 14Feb61

Registration Number AA128792

Renewal Id R270982

Renewing Entity Alma W. Wyckoff (W)

 

 

 

I would guess all copyright is today owned by SMI

 

Such copyright I think lasts 95 years from Author's death

But I am no expert,,

[atto 20]

According to the Library of Congress, it's all public domain. If someone has additional evidence contradicting that, let us know. A possibility is that the copyright could have been handed to the public domain when Alma Wyckoff died.

 

Interestingly, it appears all the copyrights that were renewed were from 1924-1934. The 1937 version was never renewed.