Trading The Wyckoff Way

[forrestang 10]

I find this perspective really interesting. I recently started focusing on 30min bars and I use 1min bars to pinpoint entries and my trading improved. What you say about 1min & looking inside with 5 second is how I feel about 30 min & 1min. Just goes to show how the markets are fractal and how everyone has to find what works for them. Thanks for sharing.

 

I would generally agree with this. Basically while as Head mentioned you can look INSIDE various bars and find the setups on a smaller tf, you can also find the exact same setup on ANY chart as it's all relative.

 

So if one's thing is looking for Quick rejection on heavy vol followed by a low volume test, it exists on EVERY chart.

[Agpilot 10]

First hint from DbP hoenix on another website years ago. Later on I read some TA books in more detail on Wyckoff method. After that I finally starting using more of what I had read.. It takes me a while to get in the zone.. I wished I would have read about his methods a couple decades ago.. ag.

[ondrej237 10]

Ondrej,

I didn't mean you should watch only the 1 tick or 5s chart. But I think you should watch a fast chart in addition to the 1 min chart.

 

Yes, I understand. That's what I've been doing. The thing is that I've been trying to analyze also volume on these fast charts and this was probably the reason for my quandary. I've been analyzing every price bar and volume bar on 5s chart and could not see any "pattern" or relationship. So thank you for that point about watching pace on these fast charts instead.

 

Well, it seems that reading the fast charts is rather "art" than "science". It requires a lot of screen time...

[georg7e 11]

Attached are .xlsx files of the data, without dates, for Chapters 12 (US Steel) and 13 (NY Times) from the Original Course to plot the Point and Figure charts.

Chapter 12 US Steel P&F data.xlsx

Chapter 13 NY Times P&F data.xlsx

[sharehunter 10]

Dear all Brothers and Sisters!

I really love VSA and try to learn but I still confuse so many problem. One of my problem which I am not clear is support/resistance and trendline. Look a simple subject but so important in Wyckoff method.

Please brother and sisters give me a hand to make me clear some problem about trendline (trendline follow VSA method) as below:

1/ what is trendline

2/ how many type of trendline

3/ how to draw a trendline. This one is so important. If we draw a wrong trendline, our analysis will be wrong.

 

Many many thanks for your helps

[Stock.Jock 10]

These videos might help.

 

[ame=http://www.youtube.com/watch?v=lThXQvu3z3g]YouTube - How to Draw Trendlines Using the Richard Wyckoff Method - Example 1[/ame]

[ame=http://www.youtube.com/watch?v=STsXRUJ3iAo]YouTube - How to Draw Trendlines Using the Richard Wyckoff Method - Example 2[/ame]

[sharehunter 10]

Thanks you so much

but poor me, english skills is not good (can read but can not listen hix hix), please kindly share your experience or text doccument with me

[Stock.Jock 10]

I have a question on some indicators that are used in the SMI training and I was wondering if there are common equivalent indicators that are available for the same results. For example one of Hank Pruden's articles says the On-Balanced-Volume indicator is like the Optimism/Pessimism Index.

The Law of Effort vs. Results – divergencies and disharmonies between volume and price often presage a change in the direction of the price trend. The Wyckoff “Optimism vs. Pessimism” index is an on-balanced-volume type indicator helpful for identifying accumulation vs. distribution and gauging effort.

So does anyone know of equivalent indicators that most traders can use for SMI indicators such as:

 

1. The Wyckoff Wave.

2. The Trend Barometer

3. The Pulse of the Market

 

Also would using the On-Balanced-Volume indicator as the author Joseph Granville recommends be the same as the way the Optimism/Pessimism Index would be used?

[crabbydog 10]

I thought the above was an interesting question.

 

Especially since so many Gann followers seem to depart from the belief that it IS possible to predict the markets. Although I can honestly say I have not studied anything Gann related in depth, it seems like some of the foundations are similar to Wyckoff (supply, demand, support, resistance, trendlines), with one extra layer, being the 'time' factor...

 

OAC, Perhaps a reason why so little Gann talk is to be found, is because there are 'issues' about his 'credibility' (the use of astrology for example), where I believe there weren't any about Wyckoffs.

 

This might be interesting, Gann interviewed by Wyckoff:

http://www.tradingfives.com/gann/wd-gann-interview-1909.htm

 

Wyckoff's theories are well understood and can be verified. Gann's are shrouded in mystery (at least the ones that supposedly produced his 1909 successes). There have been numerous attempts to flog Gann's 'secret' method. Wyckoff was so open there is little or no mystery.

 

I have only read one of Gann's books, full of sound basic stuff about managing risk and swing trades. Nothing controversial, and nothing magical. Many think his rading sucecss was not so great but his salesmanship (selling courses for 3,000 dollars in the 1920s was pretty amazing).

[hypertrader 10]

Im looking for something similar. Stock.Jock have you found anything similar?

 

Thanks, HyperTrader

[ondrej237 10]

Hi, I started to trade FESX on sim. This is my today's trade which caused, that I have some doubts whether I get Wyckoff's theory right or wrong. I would be grateful if anyone could help me.

 

I posted some charts to explain my trade. On the "macro" chart (15 min) you can see, that market refused to make a lower low yesterday, after moving down in a channel for a couple of days. It then moved up and stopped at the last swing high, which was also resistance of yesterday's trading range (2929 - 2952). I plotted my S/R levels for today's action - the key level being 2952.

 

This was the plan: If price breaks the S/R level on comparatively high volume, I will wait for retracement on lower volume and enter in direction of the break-out. If there is a rejection on climactic volume and test on lower volume, I will go short.

 

Today, price broke through 2952 so I waited for retracement and then entered in the direction of the break-out. However, it moved only couple of points up and then retraced back through the S/R level at 2952. Now I have this question on my mind: isn't this exactly what Wyckoff did not recommend? From the micro point of view, I entered on retracement after break-out. If you look at the macro, though, you will see that it is in fact a break-out of the last swing high - Wyckoff's least favorable entry. Therefore, one shouldn't be surprised if the market acts in harmony with the auction market theory (buying and selling waves) and after making a higher high, it makes a higher low, which penetrates the S/R level on the way down. Better entry would probably be the higher low that FESX made this morning

 

I'm quite confused now. Do you have any comments about this?

 

Thank you!

[Stock.Jock 10]

HyperTrader,

 

No, I haven't found anything yet. I have some ideas that might apply to those concepts; however, I don't have confirmation that they are the same as what Wyckoff teaches.

 

For example I thought the The Trend Barometer is similar to the ADX, +DMI and -DMI parameters after I read the article ADX: The Trend Strength Indicator

 

The concept of the Wyckoff Wave is similar to using market indicies such as the S&P500, but the Wyckoff Wave uses only 8 stocks. In my trading platform, TOS, I can make a chart with the percentage relationship between the S&P500 and the stock I'm analyzing. This seems similar to what the Wyckoff Wave is trying to accomplish, but again, I have no confirmation on that.

 

I'm still looking for something related to the The Pulse of the Market.

 

Please continue looking for the correct answers and if you find something, let me know.

Edited March 10, 2011 by Stock.Jock

[erierambler 10]

Stock Jock

You will find here in the Wyckoff section what one needs to study the market as far as Wyckoff is concerned. SMI has taken the Wyckoff course and provided some of their own information , such as indicators which are proprietary. Db has posted everything here he believes you need to know.

 

erie

[Stock.Jock 10]

Ask Any Wyckoff-Related Question

Sorry, I must be in the wrong thread.

 

Regards,

StockJock

[erierambler 10]

Sorry, I must be in the wrong thread.

 

Regards,

StockJock

 

Lol, you are not in the wrong thread, it is a good question. Wyckoff Wave was used by Wyckoff , but indicators were not . The indicators are SMI. I'm surprised Gassah doesn't answer your question.

 

erie

[Stock.Jock 10]

Yes. It appears that SMI has come up with their own indicators. Anyway, as I said before one of Hank Pruden's articles says the On-Balanced-Volume indicator is like the Optimism/Pessimism Index. Well, in the Investopedia website they have something else to say about the OBV.

One of the most commonly used indicators to determine the money flow of a security is the accumulation/distribution line (A/D line). It is similar to on-balance volume indicator but instead of only considering the closing price of the security for the period it also takes into account the trading range for the period. This is thought to give a more accurate picture of money flow than of balance volume.

I wonder what Dr. Pruden would say about the A/D line, if he read this. Would the Optimism/Pessimism Index be better represented by the A/D line?

[gassah 10]

Apparently Wyckoff came up with what is SMI's Force and Momentum indicators but called them by something else (I can't remember what). Bob Evans added the Technometer and OP Index. I don't see a similarity with the OP and OBV. The OP, and all the other SMI indicators, break the intraday chart into 5m swings and tally the up and down swing volumes. Using EOD volume, as OBV does, isn't similar, IMO.

[Stock.Jock 10]

Tell me, gassah, what books have you read that cover only Wyckoff's method and does not include any SMI materials?

Edited March 8, 2013 by DbPhoenix

[gassah 10]

I think I've read everything Wyckoff has put out. Of the Wyckoff material I only read the original course annually.

[georg7e 11]

Sorry, I forgot to add the third page of data for the P&F in Chapter 13, for the NY Times.

I also added some extra numbers in the beginning, so that the real numbers would not start plotting on the left edge. Attached is the full data for Chapter 13.

Chapter 13 NY Times P&F data (2).xlsx

[ondrej237 10]

Hi! Is there anyone who trades European markets using this Wyckoff/DbPhoenix approach? I would like to share my charts with other traders and get some feedback. Thank you.

 

Ondrej

[Stock.Jock 10]

Good question. I'd like to hear from some experienced traders who use the Wyckoff method, if the trading game that's done in other countries is similar to the game played on Wall Street. I see that SMI offers a different course for trading on the international market, so this aroused my curiosity.

[Stock.Jock 10]

"Introducing

Wyckoff Secrets Revealed

For decades, Wyckoff investors have wondered and frequently asked how the O.P., Trend Barometer and intra-day waves are determined. For as long as people have been asking, our response has been that which is not included in the Wyckoff Course is proprietary. On November 1, that is going to change. Everything you have ever wondered about or asked about the Wyckoff indexes and indicators will be will be presented in Wyckoff Secrets Revealed.

These are the topics that will be discussed in this new publication.

Gathering necessary date

Determining intra-day waves

Developing and O.P. Index

Calculating the Technometer

Calculating the Force

Calculating the Momentum

How to use the Tec and Force

Applications to other markets

Wyckoff Secrets Revealed will only be available during November 2006. It will be distributed by e-mail beginning November 1 on a first come first served basis. There are three ways to reserve your copy.

Reserve your copy with a credit card by e-mail at ..

Send your request by regular mail to Wyckoff Stock Market Institute...

Wyckoff Secrets Revealed is priced at $75.""

Does anyone know where to buy this book? I've searched the internet, the SMI website and Amazon.com, but I can't find it. I'm still trying to get these indicators or their equivalents. Has anyone read it?

1. The Wyckoff Wave.

2. Optimism/Pessimism Index

3. The Pulse of the Market

4. The Trend Barometer consist of Technometer, Force, and Momentum

This is my attempt to synthesize these indicators. Click on this link to see the chart.

[Avarice 10]

Hello all !

 

First off let me say that I'm not sure whether this is the right place to post this. So if a moderator thinks that it is better off elsewhere (or maybe even integrated in the "ask any Wyckoff question" thread?) feel free to move my post around. Because...

 

A few introductory words on what I'm trying to do here:

 

I'm fairly new to Wyckoff, in fact I started studying his work only a month or so ago. Following his methodology I started out by analyzing market averages. I opted for the Dow Jones Euro STOXX family of sector indices since I found that they provided a pretty decent bouquet of EUR-denominated securities (I live in the Eurozone eh). But since I wasn't too happy with the different weightings of the index components I decided to create my own "proxy" indices which, while still based on the same constituent securities, are equally weighted. Furthermore I created a "global" index that incorporates all the securities that are currently on my watch list. It is this "global" index that I set out to analyze using the Wyckoff principles and which I posted below. So just so we're clear on what you are about to read (should you elect to, I know it's a hell of a long read): this analysis aims at determining what mode the overall market is in and thus point me at the type of position I am allowed to take: bullish, bearish or neutral.

 

I would be very grateful if one of you tape-reading Wyckoff wizards could take a couple of minutes to read through my text and tell me what you think of it.

 

Now let's be clear about one thing: I DO NOT SEARCH FOR CONFIRMATION of what I wrote, I don't want you to do my job. But I am in dire need of someone who can criticize my reasoning, rub my nose in false assumptions and point me to obvious flaws. It is how I learn best, and I suppose that I still have a lot of learning to do so please don't be gentle! :security:

 

Much obliged,

A.

 

---

 

GLOBAL Index

 

At the end of 2010 the GLOBAL index is trading at new highs: it closed at 101.48 on December 22nd after an important advance that started in late August. We will assume that we were bullish during the past couple of months.

 

On its most recent rally the index gained 8 points but falling volume and a period of three consecutive days with no further material gains indicate that buyers are having a hard time pushing prices past 102.25.

 

January 2011

On January 4th the bulls try to push prices through the 102.25 resistance line but they fail: prices fall back to close near the open on average volume. This shows that buying enthusiasm seems to be running out, and logically prices fall by almost a full point the next day. But the index closes in the middle of the bar, telling us that even if selling pressure seems to be rising bulls haven’t given up yet.

 

On January 10th prices fall to 99.77 but rebound off a previously established low of 97.95 (first established on December 9th), indicating that there is support coming in around 97.90. Prices rise on the 11th, hinting that the index might be locked in a trading range between preliminary support at 97.90 and resistance at 102.25. This is confirmed on the next day when a rally of almost 3 points on important volume is stopped just short off 102.50. Surely enough bulls retest resistance during the next session but they fail: high volume indicates that there seems to be ample supply above 102 and seeing that prices fail to advance further bulls take the chance to cash in on the recent advance, thus strengthening resistance even more. We switch our stance from bullish to neutral.

 

Up to January 19th the 102.50 zone is tested twice more, both times to no avail. Since the end of December 2010 traders have now tried to overcome this zone a total of 7 times but they never succeeded. Diminishing volume on the last two tests indicates that buying power is running out and so it seems rather implausible that the index will manage to rally through this important supply zone anytime soon.

 

And so on the 20th the index falls 2 points to retest its January 10th lows. But the next day's advance yet again confirms that demand flows in around 97.90 and that the index has hedged itself into a trading range between important demand at around 97.90 and supply above 102.50.

 

Traders seem to be indecisive as to which direction to take. But we suppose that we will not have to wait long before this situation is resolved: the August 25th to November 30th supporting trend line is closing in rapidly on the index and this might well be the trigger for further action. We remain neutral.

 

February 2011

 

On February 2nd the index tries yet again to break through the resistance line of 102.50 but, once more, fails. The next couple of days are marked by more hesitation.

 

On the 7th the index manages to close almost exactly on the resistance line at 102.48. Volume is still on an average level, but the index managed to produce a series of higher lows over the last 3 days which seems to indicate that either bulls are gaining in strength or that selling pressure is starting to evaporate. On the next day the index closes clearly above the resistance line on increasing volume: it seems like bulls have won the battle and that the index can now resume its advance.

 

But instead of continuing its advance the index hits new resistance at 104.30. It tries to push through this new zone of supply for 4 days until bulls give up and the price drops to close just above the previous resistance line of 101,50. The next days are marked by more horizontal action, indicating that the supply zone reaches as high as 104.30. If the index is to continue its advance it will have to eat through all this selling before bulls have finally overcome bears.

 

On February 21st then, prices fall back inside the previous trading range: buyers seem to have given up momentarily. But hope remains: the incoming August 25th to November 30th supporting trend line might bring the surplus demand that has been missing to allow the index to rally through the important 101.50 to 104.30 resistance zone. On the other hand, should bears manage to breach this trend line in a convincing manner and gun for the 97.90 support zone, the index would be set for a reaction to the August advance. In any case, the index is currently in a critical position and the next days are sure to provide further hints on its future course.

 

As was to be expected, traders test the August 25th – November 30th trend line on the very next day. But a close above the trend line on decreased volume indicates that selling power is probably not high enough to overcome demand in a meaningful way.

 

With a close way below the trend line, February 23rd paints a different picture. Should bears manage to keep prices thus depressed the next important test would be on the 97.90 support level. And surely enough, on February 24th prices flirt with this important supply line. But February 25th brings relief for the bulls, sending prices right back on up to close almost precisely on the August 25th – November 30th trend line.

 

We are almost 3 months into this trading range now and both resistance and supply zones still manage to keep the index in check.

 

On February 28th, traders once again try to break through the 102.50 resistance, lifting the index above the supporting trend line. But average volume fails to give comforting signals. We remain neutral for the time being but we stay on the lookout for more bullish signs to manifest themselves.

 

March 2011

 

On March 1st prices stay stable but the index marks its fourth higher low and higher high on decent volume since the recent low at 97.97. The index continues to oscillate in its trading range until March 14th where a sharp drop below the 97.70 resistance line on huge volume indicates that something is amiss. This could be a selling climax washing out weak buyers. The next day might bring clarification.

 

On March 15th, the index falls almost 4 points before recovering to close below the top third of the bar, all of this accompanied by a huge volume spike. This move is too violent to be a normal reaction to the August advance and the relative high close indicates that the worst of the selling should be over. If the index shows signs of recovery over the next couple of days we will conclude that this selloff was indeed a selling climax and that higher prices might be just around the corner.

 

Prices continue to slide on higher than average volume. The higher high and higher low are the only signs that there are still some buyers around.

 

On the 17th, prices erase the previous day's losses and volume, while still high, seems to be quieting down. The selling climax might be over. This is confirmed when the index inches higher on the next day, ready to tackle its previous support line (could this now become resistance?) of 97.90. (As an aside, prices were stopped short in their drop at the November 30th low of 92.75, indicating yet another zone where potential buyers are inclined to enter the market.)

 

On the 21st of March we move back into the trading range. Average volume indicates that the selling climax is now definitively over and that prices should rally to 102.50 without further interruptions. We start to feel more bullish. Prices hesitate to leave the support line for three days, but on March 24th the rally resumes on average volume. These are still more bullish signs.

 

On the 31st we are back to where we left off before prices slid down on March 15th (which was, of course, due to an important earthquake in Japan). Bulls are once again gunning for the resistance zone above 102.50, but due to the important selloff in the third week of March we surmise that the index should now be in a rather strong technical position and so we anticipate that bulls will succeed in driving prices higher. We change our assessment from neutral to bullish.

 

April 2011

 

The index continues its rally and enters, as predicted, the 102.50 to 104.30 supply zone on April 4th. It manages to hold on in that area for more than a week but drops back out of it after 7 days. We are not overly concerned though; a reaction to the pretty strong rally from the March lows would only be natural at this point.

 

On April 18th, the index reaches its natural target for this reaction. The rally on advancing volume over the next 2 days confirms that this recent price action was indeed only a technical reaction and that bulls are still at the helm. We are of course on the lookout for a second technical reaction but we remain bullish in our analysis of the index.

 

The index continues its rally and touches, for the first time in almost 3 months, its old highest high of 104.30. Declining volume indicates that bulls are still indecisive whether they should try to push prices higher, but we are certain that we will not have to wait for long before we know what will happen.

 

And on April 28th it is finally done: the index closes for the first time above the important supply zone of 102.50 to 104.30. Volume is slightly declining yet decent as we start to wait for a new technical reaction given the recent rally's steep slope. On the 29th the index tries to consolidate its position but volume drops sharply, showing that buyers are running out of steam. The aforementioned technical reaction is due any day now. Since this would only be normal, we remain bullish.

 

May 2011

 

As was to be expected the index falls to the midpoint of its recent rally on May 5th, reaching its targeted price for the expected reaction; all the while staying above the March 15th to April 18th trend line. Prices rally sharply on the next day, indicating that bulls are not yet done buying and that the index is set for a further advance.

[sharehunter 10]

In P&F chart, For each price level, we should choose a suitable box size for it. Now I use metastock to read P&F chart but metastock only permit me choose only one type of box size for all price level. For example: if I choose box size is 2, all price level in P&F use box size 2, no matter the price level is 12000 or 12.

 

I am looking for a software which I can choose box size for each price level (excellent if It can set standard box size for each price level), Please kind tell existing the software like this or not. If it is existing please kindly tell me its name or share it with me.

 

Many many thanks for you help!