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Volume is the effort, price movement is the effect.

 

Gary

 

Volume is Effort Price movement is RESULT

 

A certain price movement ( That seen on the Figure Chart )

 

is a CAUSE that will have an EFFECT.

 

Without a Cause there is NO EFFECT.

 

Wyckoff Measures a Cause by the number of swings up and down in a trading range.

 

Not by the length of time and not by the amount of volume.

 

( Hence why the Figure chart appears to not use time and volume )

 

Volume is always qualified by price movement and time.

IF we ask what was that Volume .

Then we look at the Price movement.

 

Now consider what draws a figure chart ?

Volumes and time do.

 

TRADES

 

A Trade is the only way to get a PRICE for the Figure chart to MOVE to.

This is the cause that will have an effect.

 

Each of these swings Up and Down

naturally had a certain volume and a certain range.

 

But consider

why does a swing Up end and become a swing down ?

why does a swing down end and become a swing UP ?

 

Because demand and supply in turn gets exhausted.

And this is what matters==>

REGARDLESS of the VOLUME or the TIME involved.

 

So what happens with an aggregate of UPs and DOWNs ?

of Buying and Selling Waves ( The count across the rows on the Figure Chart )

 

One or the Other side is Exhausted to a greater extent.

Floating Supply is reduced and GATHERED TOGETHER in a way that effects future DEMAND and SUPPLY to some extent, to a greater extent.

 

Again each of these swings Up and Down

naturally had a certain volume and a certain range.

And this is Effort and Result.

 

All These relate to all the Waves of Buying and Selling.

 

A Bar chart is just a tool to see these Waves cut up into slices of time ( time framed )

 

But it is the Waves that are the market reality ( and they last as long as they gather a following ( No Time Frames )

 

A Figure chart

cuts the waves up into something else instead of slices of time.

 

Into Discrete units of price movement in their own time.

 

Demand and Supply

Effort and Result

Cause and Effect

 

Are properties of the Waves does not matter what chart you are using.

 

 

Motorway

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Motorway,

 

Very well said. I apologize for mis-typing in my earlier post. Price movement is the result, not the effect. You are correct.

 

Thanks for pointing out my error.

 

Gary

 

Gary I knew it was a Typo. You have great knowledge and experience !

Often look in at the LTG Wyckoff Archives .

 

Always worthwhile.

Great Free Resource for anybody !

 

 

 

Motorway

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Gary I knew it was a Typo. You have great knowledge and experience !

Often look in at the LTG Wyckoff Archives .

 

Always worthwhile.

Great Free Resource for anybody !

 

 

 

Motorway

 

 

Thank you so much for the compliments. I have read the material for years on your Aussie website, and personally gleaned much knowledge from your postings.

 

Cheers!

Gary

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Gary,

 

A little off topic but what application do you use for your PnF charting?

 

 

I use CQG for my charts.

 

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.

Edited by Gary Fullett

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A little off topic but what application do you use for your PnF charting?

YertleTurtle,

 

You can also use NinjaTrader 7. It's free for simulated trading and it has PnF charts. It's not free for real trading.

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YertleTurtle,

 

You can also use NinjaTrader 7. It's free for simulated trading and it has PnF charts. It's not free for real trading.

 

Thanks SJ,

 

My trading platform (Enisgn) has PnF available but it has some quirks. It does everything else brilliantly. I've used ninja before and did not like it at all. I've dabbled with PnF some but haven't dug deep.

 

I trade the spot forex market generally on hourly charts. I wonder if anyone has any suggestions for how to pick a box size and reversal size that correlates to the timeframe one trades in. Perhaps volatility or average true range would be important? Or do people mainly use PnF for a big picture view?

 

Any thoughts would be appreciated.

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Hi YT,

 

I wish I could help you, but those things are not clear to me either. My only understanding of changing box size or reversal size is to make the PnF patterns fit reasonably on a chart. I seem to remember something like that after going through the study materials at the PnF University.

 

After fitting the pattern to the chart, then the horizontal and/or vertical counts can be made using the box size and reversal size in the calculations. If there is anything else that I missed, maybe Gary Fullett can help us out.

 

Was it you who told me about NJ7 last year? Anyway, Bull's Eye Broker has a beta version 5 available and it supposed to connect to a few real time data sources for trading with both PnF and price charts. Another platform for PnF charts is Amibroker.

 

You have a good question about PnF charts. So far as I can find out is that they are for guesstimating a projected retracement for planning to take a profit. This is Wyckoff's method. I've seen other methods for this guesstimating using chart patterns like the flags, pennants, wedges, etc. Although these patterns are described to show up on price charts, there is some literature that says these patterns also show up on PnF charts. I don't think Wyckoff traded directly from PnF charts only, but there seems to be some traders who see breakouts patterns on PnF charts just as most traders do on price charts.

Edited by Stock.Jock

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

 

Actually I have started trading spot forex and have been looking at futures volume since this is contracts traded versus tick volume. Although there are occasionally minor differences, they tend to provide the same overall picture. I would imagine this would be true when comparing ES volume to spot S&P.

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Thanks Stock.Jock!

I take a look in your file, it is general count guide in Wyckoff method. My problem is how to use P&F to count target price following Wyckoff method ( one box reversal)

 

The horizontal and vertical count methods are the same for any type of PnF chart. Even though Wyckoff has a different method of plotting the reversals, the count methods are the same. Here's an excellent video on PnF charting which includes how the count methods are performed.

[ame=http://www.youtube.com/watch?v=JTVejaFTFJk]Point And Figure Charting Basics - YouTube[/ame]

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This is an epic thread. I've read it from start to finish.

 

Box size is unclear here. There are charts with hard coded rules such as:

 

Price Range Box Size

$5 - $20 $0.50

$20 - $100 $1.00

$100 - $200 $2.00

$200+ $4.00

 

Then, there have been quite a few people Motorway, Gary & others who have said box size depends.

 

Can someone comment on what it depends upon? So that us inexperienced can have some rough guidelines to use whether we are using the E-mini, Forex, Stocks, etc.

 

For example, there may be a lot of noise if I use a 1 point box for the /ES (with regards to trading the daily chart, not day trading).

 

Thanks

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This is an epic thread. I've read it from start to finish.

 

Box size is unclear here. There are charts with hard coded rules such as:

 

 

 

Then, there have been quite a few people Motorway, Gary & others who have said box size depends.

 

Can someone comment on what it depends upon? So that us inexperienced can have some rough guidelines to use whether we are using the E-mini, Forex, Stocks, etc.

 

For example, there may be a lot of noise if I use a 1 point box for the /ES (with regards to trading the daily chart, not day trading).

 

Thanks

 

A good analogy for box size is time frame. For intraday trading you may use a 5 or 15 minute time frame to take advantage of smaller moves. For swing or position trades and longer term analysis you may use daily or weekly time frames. Same with box size. The smaller the box size, the smaller the signals and projected targets will be. The bigger the box size is the bigger the signals and projected target will be. With small time frames you get more noise, same with small box sizes.

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What is the best US software for backtesting and scanning stocks for point and figure patterns?

 

For PnF scans on stocks check out stockcharts.com. Not sure if the free access allows PnF scans or not, but the $25/month does.

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I've been thinking about this. I trade spot forex on 20 minute charts mostly day and swing trading. I still haven't settled on a box size but here are my thoughts. Average true range over a big sample might be a help in determining box size. What we want is for our box size to do two things:

 

1 - show accurate buying and selling waves

2 - show coiling during accumulation/distribution areas that allow us to accurately predict the extent of a price move.

 

If you determine on your chart (whatever time frame) how wide an average accumulation/distribution area is you would want your box size to be below 1/3 of this distance (maybe 1/4?). If you can determine how big a non-swing generally is (i.e. a price move you consider to be noise rather than a legitimate leg up or down) you would want your box size to be greater than 1/3 of this move size. Obviously its a balancing act but we want to balance removing noise while showing coiling.

 

Another approach might be to mark out a bunch of trading ranges on your time frame and instrument and try out a bunch of different box sizes until you find the one that seems to project the distance of a price move the best.

 

I've been busy studying other aspects of the Wyckoff method but if I come up with something more definitive I'll post it in this thread.

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A proper P&F chart .. catches all the changes of the "Market Price"

 

So what is the Market Price ?

 

It is not the movement from Bid to Ask and Back.

 

That is the necessary Bid Ask Bounce Through the Market Price

 

 

A chart catching the BID ASK Bounce is a valid chart.

But not under the proper definition of a P&F chart which always removes Fluctuations that are not of the Market Price.

 

Such a chart looks like a P&F chart but is better called a Tape Reading Chart.

It will have extensive sideways movement ( sometimes you need to use with very low priced stocks )

 

Your aim is to pick up the flow of information and recognize

Esp Asymmetrical Information ..

That changes the "Market Price"

 

This does exist at the BID Ask Bounce BUT along with a lot of noise

 

A proper P&F chart will filter out the necessary Bouncing through the changes of the Market Price (The market price of interest to YOU.)

 

A good start is to use 2x the Bid Ask Spread, 5x and 10x ( then 20 , 50 , 100 etc )

 

Then examine the chart to see if it achieving its and your purpose.

 

 

When you double the box Size

everything will change detail by on average a factor of 4 ( 2^2)

Time Volume Fluctuations etc ( THAT ARE FILLING YOU BOXES )

 

Everything ! ( except for the non random aspects )

( it is interesting to keep say these three charts and note divergence )

 

This is with One Box reversal charts. which is where you should scale your chart from.

then use the three box reversal with each of the Box sizes in coordination )

 

EG So you decide to use 5X the spread

 

So your charts are a 5 X 1 , 5 x 3

 

and if you then want the 10 x 1 , 10 X 3 etc

 

Time and Volume will look after themselves

Both will scale with resolution

 

So do not scale your chart with Time or Volume (IMO)

Scale it with size of moves and the structure of the chart .. ( Hint -->The ratio of Horizontal to vertical)

 

Then you can add and work with Time and Volume ( recommended esp Time )

to the extent you want..

 

You will only learn by doing

and a lot of theoretical things will then make sense.

 

P&F and Tape Reading Charts have a long history

 

With High Priced Stocks etc

some thought can be given to using LOG charts

 

defining the Bid Ask in multiples of %

( But no good at all for low priced securities which need a stepped Scale )

 

Motorway

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Hello everyone,

 

I have noticed that most of the work published in this blog (by DB et al) on wyckoff trading was published back in 2008-2009 and there has not been much activity over the last 2 years.

 

I am interested in the method but have a basic question; Is this methodlogy aplicable today, in 2012 and if so in which markets?

 

I have often read that the principles of supply/demand will always prevail but is this true, with all the automatic and algorythmic trading out there?

 

I am very interested in hearing from those of you who are currently trading using wyckoff methods.

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I trade using Wyckoff principles in the forex market. These principles work as much today as they did 100 years ago. VSA which is a derivative method of trading is gaining popularity and has many successful practitioners.

 

As for markets - it works in all markets with sufficient liquidity which represents interest from the composite operator. Basically stay away from penny stocks and instruments which have been trending sideways for an extremely long time.

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I trade using Wyckoff principles in the forex market. These principles work as much today as they did 100 years ago.

 

I am not well familiar with " Wyckoff Methods". Please share more details about it. Which time frame, currency etc. work well in this trading method?

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Wyckoff taught a way of understanding imbalances in supply and demand which cause price to move up or down. These principles work in all time frames. Most Wyckoff traders I know look at multiple time frames and the timeframes one chooses has a lot to do with how much time you have to trade and whether you want to day trade, swing trade or position trade. Generally the smaller the time frame you use the more trading opportunities you will have but the smaller the moves.

 

I look at daily, 4 hour, 1 hour 15 minute and 5 minute time frames mostly. I focus mostly on the 1 hour and 5 minute time frames for setups whereas the other time frames are to look at the bigger picture or for additional confirmation. There aren't firm rules here.

 

As for the pairs that these techniques work best in, I chart 5 USD pairs, the AUD, EUR, YEN, GBP and CAD. Most of my trades are in AUD or EUR recently. These techniques should work on any non-exotic pair.

 

There are stickies in this forum if you want to read more about the Wyckoff method.

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Gold’s Outlook – Uptrend may continue, but US jobs data could trigger profit-taking. Always trade with strict risk management. Your capital is the single most important aspect of your trading business.   Please note that times displayed based on local time zone and are from time of writing this report.   Click HERE to access the full HFM Economic calendar.   Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding of how markets work. Click HERE to register for FREE!   Click HERE to READ more Market news.   Michalis Efthymiou HFMarkets   Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.
    • Date: 31st March 2025.   Trump Confirms Tariffs on All Countries, Sending Stocks Lower.   The NASDAQ continues to trade lower due to the US confirming the latest tariffs will be on all countries. In addition to this, bearish volatility also is largely due to the higher inflation data from Friday. The NASDAQ declines to its lowest price since September 11th 2024. Core PCE Price Index - Inflation Increases Again! The PCE Price Index read 2.5% aligning with expert forecasts not triggering any alarm bells. However, the Core PCE Price Index rose from 0.3% to 0.4% MoM and from 2.7% to 2.8% YoY, signalling growing inflationary pressure. This increases the likelihood that the Federal Reserve will maintain elevated interest rates for an extended period. The NASDAQ fell 2.60% due to the higher inflation reading which is known to pressure the stock market due to pressure on consumer demand and a more hawkish Federal Reserve. Boston Fed President Susan Collins recently commented that tariffs could drive up inflation, though the long-term impact remains uncertain. She told journalists that a short-term spike is the most probable outcome but believes the current pause in monetary policy adjustments is appropriate given the prevailing uncertainties. Although, certain investment banks such as JP Morgan actually believe the Federal Reserve will be forced into cutting rates. This is due to expectations that the economy will struggle under the new trade policy. For example, JP Morgan expects the Federal Reserve to delay rate cuts but will quickly cut towards the end of 2025. Market Risk Appetite Takes a Hit! A big factor for the day is the drop in the risk appetite of investors. This can be seen from the VIX which is up almost 6%, Gold which is trading 1.30% higher and the Japanese Yen which is the day’s best performing currency. Most safe haven assets, bar the US Dollar, increase in value. It is also worth noting that all indices are decreasing in value during this morning's Asian session with the Nikkei225 and NASDAQ witnessing the strongest decline. Previously the stock market rose in value as investors heard rumours that tariffs would only be on certain countries. This bullish swing occurred between March 14th and 25th. Over the weekend, President Donald Trump indicated that the upcoming tariffs would apply to all countries, not just those with the largest trade imbalances with the US. NASDAQ - Technical Analysis In terms of technical analysis, the NASDAQ continues to obtain indications that sellers control the price action. The price opens on a bearish price gap measuring 0.30% and trades below all Moving Averages on all timeframes. The NASDAQ also trades below the VWAP and almost 100% of the most influential components (stocks) are declining in value.     The next significant support level is at $18,313, and the resistance level stands at $20,367.95. Key Takeaway Points: NASDAQ falls to its lowest since September 2024 as the US confirms tariffs on all countries, adding to inflation concerns. Core PCE inflation rises to 0.4% MoM and 2.8% YoY, increasing the likelihood of prolonged high interest rates. Investor risk appetite drops as VIX jumps 6%, gold gains 1.3%, and safe-haven assets outperform. NASDAQ shows strong bearish momentum, trading below key technical levels with support at $18,313 and resistance at $20,367.95. Always trade with strict risk management. Your capital is the single most important aspect of your trading business.   Please note that times displayed based on local time zone and are from time of writing this report.   Click HERE to access the full HFM Economic calendar.   Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding of how markets work. Click HERE to register for FREE!   Click HERE to READ more Market news.   Michalis Efthymiou HFMarkets   Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.
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