Trading The Wyckoff Way

[mikew 10]

This is an old quote but maybe someone can answer

 

  lote_tree said:

I see that you're confusing the futures and cash market here. Remember, the price changes in the S&P 500 futures market is 98% governed by changes in the S&P 500 Index price.

 

So, when trading the ES for example, should someone be looking at the S&P index chart instead of the ES chart when analyzing price and volume?

[YertleTurtle 10]

If you are trading the ES you should look at ES volume.

[Gary Fullett 10]

Emini S&P chart

 

[YertleTurtle 10]

Hi Gary,

 

Thanks for reviving this dead thread. Can you tell me what your views are on interpreting volume on a PnF chart? Also - what box size would you recommend for day or short swing trading?

 

I've really enjoyed your Wyckoff material.

[Gary Fullett 10]

Thanks Yertle! I appreciate the compliment.

 

Wyckoff P&F doesn't have volume or time, but I use volume to show activity of strength or weakness.

 

Regarding box size, which size to use varies on commodity and volatility. Please let me know a commodity and I can make a suggestion. Using box size and reversals is really a personal niche, but I can share what I would use.

 

Thanks again!

Gary

 

 

 

 

There is a substantial risk of loss in trading commodity futures, options and off exchange foreign currency products. Past performance is not indicative of future results.

[YertleTurtle 10]

Gary,

 

I only trade forex so it would be pip size (although I would imagine ticks is close enough). Mostly Euro and Auzzie with some Pound, Swiss and Canada.

 

I appreciate any input.

[Stock.Jock 10]

  Gary Fullett said:

Wyckoff P&F doesn't have volume or time, but I use volume to show activity of strength or weakness.

Gary,

 

Do the Wyckoff P&F charts show the ebb and flow of supply and demand and give reliable signals on which direction the market will go in the near future?

 

Also, are P&F charts done with the Wyckoff calculations more reliable than other methods of calculating them?

[Gary Fullett 10]

  Stock.Jock said:

Gary,

 

Do the Wyckoff P&F charts show the ebb and flow of supply and demand and give reliable signals on which direction the market will go in the near future?

 

Also, are P&F charts done with the Wyckoff calculations more reliable than other methods of calculating them?

 

 

Point and figure charts are only used in Wyckoff as a guesstimate of how far up or down a movement can go.

 

Gary

[Gary Fullett 10]

E-mini S&P chart

 

[motorway 10]

  Stock.Jock said:

Gary,

 

Do the Wyckoff P&F charts show the ebb and flow of supply and demand and give reliable signals on which direction the market will go in the near future?

 

Also, are P&F charts done with the Wyckoff calculations more reliable than other methods of calculating them?

 

Ebb and flow of supply and demand is the ONLY thing that makes a P&F chart move.

It is directly drawn by the Composite Man....IN HIS TIME FRAME ( = NO TIME FRAME )

 

There are sides to Wyckoff.. Eg He used P&F ( with Volume ) for tape reading and short term trading.. He also said that "We would do better " with a figure chart for longer term trading.

 

=>give reliable signals on which direction the market will go in the near future?

 

Yes but it is about Wyckoff's Method .. You will increase the reliability by using all factors including the "time element" and Volume..

 

The figure chart already does include them ( Why RDW could say we will do better )

But to at any point in time .One or other factor eg Volume could be "vital"

 

Consider that it is Volume that fills a Box ( no trade, no volume, no BOX )

But just like the waves of the Ocean have water in them . It is not the water that makes the Waves.

 

What defines volume and qualifies is The price Movement ( "A fine pair of scales" ) and Time ( changes in activity.. Speeding up slowing Down )

 

 

We should think in terms of waves.

 

Motorway

[Stock.Jock 10]

  Gary Fullett said:

Point and figure charts are only used in Wyckoff as a guesstimate of how far up or down a movement can go.

Thanks Gary. Its good to have a way to guesstimate how far a move will go, but do they give any more information than price charts as an indication of whether the prices will go up or down? So when measuring how far a move will go, will the chart tell which direction the move will go?

[Gary Fullett 10]

  Stock.Jock said:

Thanks Gary. Its good to have a way to guesstimate how far a move will go, but do they give any more information than price charts as an indication of whether the prices will go up or down? So when measuring how far a move will go, will the chart tell which direction the move will go?

 

 

Point and figure charts give a guesstimate count of how far a move can go, either up or down. If the trend is up, I use the point and figure for an upward count (though the move can also go down). If the market is in an accumulation phase, I will look for an upward count. If the move is in a downward trend, I will count that move to the downside. But the count goes both ways. I personally added the volume to my charts to show if there is a conviction to the move. But again, in it's purest sense, p&f does not have time or volume.

 

Gary

[Gary Fullett 10]

  YertleTurtle said:

Gary,

 

I only trade forex so it would be pip size (although I would imagine ticks is close enough). Mostly Euro and Auzzie with some Pound, Swiss and Canada.

 

I appreciate any input.

 

 

 

On the euro I use 10 and 20 for most days and 50 for very long view

Aussie the same

Swiss recently is hard to trade—only 20

Canada—for very quick trades even the 5 X 3 works—other wish 10

 

Pound I use mostly the 50 (once in a while 30)

 

Gary

 

 

 

There is a substantial risk of loss in trading commodity futures, options and off exchange foreign currency products. Past performance is not indicative of future results.

[Stock.Jock 10]

There appears to be similar chart patterns for an equity in both the Price chart and the PnF chart. See attachments.

[Stock.Jock 10]

Gary,

 

I've attempted to identify the Wyckoff phases on both a PnF chart and a Vertical (Price) chart. I'd appreciate any comments that you might have. See attachments.

[Gary Fullett 10]

  Stock.Jock said:

Gary,

 

I've attempted to identify the Wyckoff phases on both a PnF chart and a Vertical (Price) chart. I'd appreciate any comments that you might have. See attachments.

 

 

 

It's not the "classical" Wyckoff paradigm, but it's a good representation of the phases.

 

Gary

 

 

 

There is a substantial risk of loss in trading commodity futures, options and off exchange foreign currency products. Past performance is not indicative of future results.

[motorway 10]

  Stock.Jock said:

Thanks Gary. Its good to have a way to guesstimate how far a move will go, but do they give any more information than price charts as an indication of whether the prices will go up or down? So when measuring how far a move will go, will the chart tell which direction the move will go?

 

Wyckoff P&F Does not have time in the sense that a vertical bar chart has time.

 

That is the waves of buying and selling are not deformed by cutting them up into slices of time.. A Wyckoff P&F chart is made from the full course of sales and reveals the price path THROUGH the Slices of Time that the Vertical Bars are drawn.

 

A P&F chart IS a PRICE CHART it is a PRICE X PRICE chart. IT is a TWO DIMENSIONAL PRICE CHART moving THROUGH TIME.

 

A Vertical Bar chart is a price x time chart . It is a One Dimensional Price Chart moving through time.

 

Of course the P&F chart can reveal more. Wyckoff states this clearly ==>

 

 

 

  Quote

The figure chart may show many fluctuations on the

full figures, while the verticals are unchanged. For example, if the high full

figure of a stock on a certain day were 45 and the low 40, there might be several fluctuations back and forth between 42 and 43 on the figure chart, but no indication

of this would appear on the vertical chart.

 

For these reasons it is vital to keep both forms of charts.

 

To define the trend of the market or a single stock, therefore, both the

figure and the vertical chart should be used.

 

But you must use the Full Course of SALES and a Suitable BOX size ( NO longer a POINT We do not trade in Eighths anymore but decimals eg a Point was only 8 times the min bid )

 

The most Important thing to grasp is the Figure Chart is a TWO DIMENSIONAL CHART

in the same way Market Profile is a TWO DIMENSIONAL CHART, But without any deformation with Chronological Time and no collapsing into a Bell Curve.

 

Practice will soon reveal that in the main --Time and Volume as used in the bar chart can be dispensed with and clarity gained not LOST.

 

If you are not using the full course of sales this restricts you immensely and is not WYCKOFF P&F.

 

Motorway

[Stock.Jock 10]

Gary,

 

Sometimes I get confused on the terms Buying and Selling, because it depends on who we're talking about. I've marked some columns of X's on your E-mini S&P chart to ask you about who is buying or selling on the two columns of X's that I've marked. I need clearification on whether columns of X's are buying or column's of O's are selling. Please help me on this.

 

See attachment.

[Gary Fullett 10]

  Stock.Jock said:

Gary,

 

Sometimes I get confused on the terms Buying and Selling, because it depends on who we're talking about. I've marked some columns of X's on your E-mini S&P chart to ask you about who is buying or selling on the two columns of X's that I've marked. I need clearification on whether columns of X's are buying or column's of O's are selling. Please help me on this.

 

See attachment.

 

 

Strong hands buy and defend support in the accumulation phase. They sell and defend resistance in the distribution phase. Buying and selling occur all the time. It's the quality of buying and selling that's important. We characterize those bars by wider range and increased volume, which are special kinds of buying and selling bars. We are always judging the character of demand and supply bars by price and volume and by the speed at which they occur.

 

Gary

 

 

 

There is a substantial risk of loss in trading commodity futures, options and off exchange foreign currency products. Past performance is not indicative of future results.

[Stock.Jock 10]

  Gary Fullett said:

It's the quality of buying and selling that's important. We characterize those bars by wider range and increased volume, which are special kinds of buying and selling bars. We are always judging the character of demand and supply bars by price and volume and by the speed at which they occur.

What is smart money doing when the bar has a wide spread and very high volume? Then what is smart money doing when the bar has a wide spread and very low volume?

 

[Gary Fullett 10]

  Stock.Jock said:

What is smart money doing when the bar has a wide spread and very high volume? Then what is smart money doing when the bar has a wide spread and very low volume?

 

 

 

The theory of the composite operator is that they run campaigns. Be careful not to use one bar or a series of bars to make a statement about a market overall. It is too difficult to explain here the nuances of wide bar / high volume or wide bar / low volume bars. It varies on where these bars occur, trend, trading range, etc. You need to look at the whole picture, and not just one or two bars.

 

Gary

 

 

 

There is a substantial risk of loss in trading commodity futures, options and off exchange foreign currency products. Past performance is not indicative of future results.

[Stock.Jock 10]

  Gary Fullett said:

I personally added the volume to my charts to show if there is a conviction to the move.

Gary,

 

Do you use volume on PnF charts the same way as on Vertical (bar) charts? For instance on a bar chart when there is a wide spead bar with a high volume, would it be analyzed the same as a tall column of "X's" or "O's" with a high volume.

 

I don't mean to imply isolating the bar or column, but I want to keep my explaination simple. I know that I should consider the background and future confirmation.

[Gary Fullett 10]

  Stock.Jock said:

Gary,

 

Do you use volume on PnF charts the same way as on Vertical (bar) charts? For instance on a bar chart when there is a wide spead bar with a high volume, would it be analyzed the same as a tall column of "X's" or "O's" with a high volume.

 

I don't mean to imply isolating the bar or column, but I want to keep my explaination simple. I know that I should consider the background and future confirmation.

 

 

I would compare the P&F chart to the bar chart, but only as a comparison, not an absolute. Keep in mind, Wyckoff did not use volume or time in his charting. This is something I do to try and capture a possible edge. I don't look at them exactly the same, but I do compare them.

 

Gary

[Stock.Jock 10]

  Gary Fullett said:

I would compare the P&F chart to the bar chart, but only as a comparison, not an absolute. Keep in mind, Wyckoff did not use volume or time in his charting. This is something I do to try and capture a possible edge. I don't look at them exactly the same, but I do compare them.

 

Yes. I do see some similarities for volume for both charts. Isn't volume the "cause" and the price movement the "effect"? This seems to like it would be the same for a column of "X's" or "O's" in a PnF chart too.

[Gary Fullett 10]

  Stock.Jock said:

Yes. I do see some similarities for volume for both charts. Isn't volume the "cause" and the price movement the "effect"? This seems to like it would be the same for a column of "X's" or "O's" in a PnF chart too.

 

 

Volume is the effort, price movement is the effect.

 

Gary