Trading The Wyckoff Way

[wrbtrader 10]

No?

 

You've not heard of, say, RenTech then?

 

Finding mechanical approaches that work is certainly not easy, and such approaches tend to work best when they contain some (mechanically) adaptive element, but it is by no means impossible to do.

 

This is not to say that the human brain cannot learn to do this better, but to dismiss mechanical trading in the way that you and Joshdance are suggesting is . . . well, dismissive.

 

BlueHorseshoe

 

You misunderstand. I like mechanical trading and it has merits. I just have "never" seen proof that "market context" can be coded/programmed let alone done easily by a retail trader as implied by retail traders even though not one single retail trader has produced such a code. Simply, just because I don't believe in "one particular" perceived code does not imply there's no merits to "mechanical trading".

 

No dismissing of mechanical trading...just dismissing a particular perceived code.

[BlueHorseshoe 10]

No point, as it would be only one more example of a hindsight trade with the accompanying hindsight insight one finds on DVDs and in webinars. And you can guess how much hindsight insight I've seen over 15 years on the Web.

 

It's not my purpose to persuade anyone of the superiority or even the efficacy of the Wyckoff approach but rather to help those who are genuinely interested in it to understand it and implement it. There are many paths to profitability, and this is only one of them. Lots of room on the bus for those who prefer some other route.

 

Db

 

Db, my last reply wasn't sarcastic or antagonistic - it was a genuine request.

 

I'm not really interested in whether something is branded 'Wyckoff' or not, but I am interested in developing a better understanding of volume and how it could assist me.

 

Sorry you weren't prepared to help.

 

BlueHorseshoe

[BlueHorseshoe 10]

You misunderstand. I like mechanical trading and it has merits. I just have "never" seen proof that "market context" can be coded/programmed let alone done easily by a retail trader as implied by retail traders even though not one single retail trader has produced such a code. Simply, just because I don't believe in "one particular" perceived code does not imply there's no merits to "mechanical trading".

 

No dismissing of mechanical trading...just dismissing a particular perceived code.

 

If you were referring to specific code then I had misunderstood your post. And I perhaps don't fully understand what you mean by 'market context'. There are very simple ways of determining current trend, for example, none of which are effective all the time and none of which will adapt to market context in the way that a great 'intuitive' trader might, but are nevertheless better than nothing. Most mechanical trading is about finding acceptable compromises.

 

I do agree that there is undoubtedly a big difference in the most part between what retail traders and institutions can achieve.

 

BlueHorseshoe

[DbPhoenix 42]

Db, my last reply wasn't sarcastic or antagonistic - it was a genuine request.

 

I'm not really interested in whether something is branded 'Wyckoff' or not, but I am interested in developing a better understanding of volume and how it could assist me.

 

Sorry you weren't prepared to help.

 

BlueHorseshoe

 

I perceived it as a genuine request, not as anything antagonistic. But when I was considering whether or not to take all this up again, I decided that I would work only with those who (a) were genuinely interested, i.e., those who were willing to read and study the course and read and study the threads or (b) asked a question I hadn't already answered. Both these conditions were met, so I started posting again.

 

But I no longer have the time I had four years ago, so even if I wanted to repeat what's here (and virtually everything I know is here), I just don't have the time.

 

So if you want to go through all that, great. We can pick this up afterward. But those who are only curious or who have only casual interest will learn real quick whether or not this is right for them. Anyone, for example, who wants something mechanical or who is still in love with indicators will flee. Screaming. But even those who are genuinely interested must be willing to post their trades in advance (which is why the lynchpin of the "new" Wyckoff Forum is the Trading in Foresight thread). Otherwise, it's all just more hindsight added to the millions already posted, and I have absolutely zero interest in that anymore.

 

Db

[BlueHorseshoe 10]

But even those who are genuinely interested must be willing to post their trades in advance (which is why the lynchpin of the "new" Wyckoff Forum is the Trading in Foresight thread). Otherwise, it's all just more hindsight added to the millions already posted, and I have absolutely zero interest in that anymore.

 

Db

 

I see what you mean. This would of course be far more beneficial to me as well, so the next time I take a position I'll post in that thread and hopefully get your thoughts.

 

Cheers,

 

BlueHorseshoe

[DbPhoenix 42]

I see what you mean. This would of course be far more beneficial to me as well, so the next time I take a position I'll post in that thread and hopefully get your thoughts.

 

Cheers,

 

BlueHorseshoe

 

Of course you mean "before" you take the position

 

As for my thoughts, you're more likely to get a lot of questions. Be warned.

 

Db

[onesmith 10]

You can't win trading against a robot indefinitely ..... unless you're mechanical and objective. The weight of the ink used to print the numbers on the ping pong balls beats everthing except better physics.

 

I think my problem is I try to perceive price and volume in a very mechanical and objective way but there is a reason for this

[tupapa 10]

There's nothing wrong with a visual examination of past data--but you should not find it "disconcerting" (in your words) that every retest of a high or low on lower volume does not turn into a reversal.

 

I know that sometimes I come across as blunt or possibly rude in my replies, so I hope you do not take offense in my perceived tone. If you could hear me say it, you would realize I'm only being straightforward. I would want others to be so blunt with me.

 

Not at all, theres nothing more helpful than a straightforward answer..

 

I don't find disconcerting that every retest does not turn into a reversal, I am well aware of the nature of probability. What I find disconcerting is the use of volume and its importance..

 

Anyway, I have backtested this reversal 2-3 months and have had a good % of winners, I am now forward testing it on a daily basis using market replay as DB suggests.

 

Despite everything that has been said here, I will stick with "climactic volume, followed by a re-test on lower volume"

 

I have noticed this setup pretty much on a daily basis, here is another example for those interested:

[DbPhoenix 42]

Despite everything that has been said here, I will stick with "climactic volume, followed by a re-test on lower volume"

 

As you should, until you decide for yourself to look at something else.

 

I have noticed this setup pretty much on a daily basis

 

And you most likely will, as long as we're in a trading range. But learn how to trade a trading range expertly and you'll be basking on the beach sooner than most.

 

Db

[BlueHorseshoe 10]

Of course you mean "before" you take the position

 

As for my thoughts, you're more likely to get a lot of questions. Be warned.

 

Db

 

Well, I mean "as" I take a position . . . Things are much less frantic when trading off the daily close, so there will be plenty of time for you to respond without gaining the benefit of hindsight.

 

And questions are always good.

 

Thanks,

 

BlueHorseshoe

[DbPhoenix 42]

Well, I mean "as" I take a position . . . Things are much less frantic when trading off the daily close, so there will be plenty of time for you to respond without gaining the benefit of hindsight.

 

And questions are always good.

 

Thanks,

 

BlueHorseshoe

 

Since you're new, you may not have heard of Thalestrader. As far as I know, he's the only member who ever -- or has ever -- posted real-time trades, much less pre-trades (outside the Foresight thread). And I believe he holds the record for "Thanks" (the new owner may not keep track of this anymore). Beginners and not-so-beginners could do a lot worse than curl up with Post #1 and begin reading.

 

Db

[tupapa 10]

The following chart shows my levels for today, blue is support/red resistance.

 

My plan for the day is:

 

Go long if:

 

We test 2515 successfully.

We test 2505 successfully.

 

We breakout of 2564 I will wait for a retracement for comfirmation.

 

Go short IF:

 

2554 is Rejected

2564 is Rejected

 

We breakdown of 2505, again I will wait for a retracement.

 

I have made the lines quite thick to ensure my focus is on S/R "zones" and not specific price levels.

[DbPhoenix 42]

The following chart shows my levels for today, blue is support/red resistance.

 

My plan for the day is:

 

Go long if:

 

We test 2515 successfully.

We test 2505 successfully.

 

We breakout of 2564 I will wait for a retracement for comfirmation.

 

Go short IF:

 

2554 is Rejected

2564 is Rejected

 

We breakdown of 2505, again I will wait for a retracement.

 

I have made the lines quite thick to ensure my focus is on S/R "zones" and not specific price levels.

 

How are you defining "successfully"? The higher low retest?

 

Db

 

Edit: Should have checked the chart first. I assume you took the 1000 entry?

Edited June 14, 2012 by DbPhoenix

[tupapa 10]

I define a succesful test of support as a Higher Low and I forget about volume for the time being.

 

Entry at 09:56 @ 2516.5 stop at 210.5

 

First contract out at 2529 (break demand line)

 

Second contract out at 2527.5 (Lower High)

 

This is all using a 2 min chart.

Edited June 14, 2012 by tupapa

[DbPhoenix 42]

I define a succesful test of support as a Higher Low and I forget about volume for the time being.

 

Entry at 09:56 @ 2516.5 stop at 210.5

 

First contract out at 2529 (break demand line)

 

Second contract out at 2527.5 (Lower High)

 

This is all using a 2 min chart.

 

Please post a chart that includes what you were looking at at the time. And include volume, even though you weren't using it.

 

Db

[tupapa 10]

The chart has been added to my previous post, look forward to some feedback.

[DbPhoenix 42]

The chart has been added to my previous post, look forward to some feedback.

 

For the sake of analysis, could you post the same thing in 1m form?

 

Db

[tupapa 10]

Done I guess the first question I should ask myself is, why did I enter above 2508, when my support line was at 2505, is it justifiable to take a reversal 3 points above my Support level?

 

How "thick" is support?

[DbPhoenix 42]

Done I guess the first question I should ask myself is, why did I enter above 2508, when my support line was at 2505

 

Probably bec you were looking at it in RT (real time) and you picked up on the pace and the level of activity. Given the higher low, and the behavior of the TICKQ, it was hardly a gamble. Did you set your entry stop above the retest bar high or did you just jump in?

 

Db

[tupapa 10]

Probably bec you were looking at it in RT (real time) and you picked up on the pace and the level of activity. Given the higher low, and the behavior of the TICKQ, it was hardly a gamble. Did you set your entry stop above the retest bar high or did you just jump in?

 

Db

 

Entry was a buy-stop 1 tick above the high of the 09:54 bar (2 min chart), this is my prefered entry style.

 

In hindsight, I see a nice decline in volume during the retracement (09:50-09:54) followed by an increase in volume as the market moves higher.

[DbPhoenix 42]

Entry was a buy-stop 1 tick above the high of the 09:54 bar (2 min chart), this is my prefered entry style.

 

Mine as well. Make the market come to you. Though if you'd used the 1m chart, you'd have gotten in a minute earlier and two points lower.

 

In hindsight, I see a nice decline in volume during the retracement (09:50-09:54) followed by an increase in volume as the market moves higher.

 

Futures volume is notoriously unreliable, which is one reason why I began focusing on pace and activity using a tick chart. It's something that has to be worked into, but it gives a better sense of "volume" than a bar.

 

What may be more interesting here is that there's nothing remarkable about any of the volume throughout. The trade is in the price movement, regardless of accompanying volume. If you'd relied on volume, you may not have taken it.

 

I can't fault this at all. This was an excellent entry. What are your thoughts on your trade management?

 

Db

 

Edit: Actually, one little quibble. Your stop should have been at 08.

Edited June 14, 2012 by DbPhoenix

[tupapa 10]

Futures volume is notoriously unreliable, which is one reason why I began focusing on pace and activity using a tick chart. It's something that has to be worked into, but it gives a better sense of "volume" than a bar.

 

 

 

I can't fault this at all. This was an excellent entry. What are your thoughts on your trade management?

 

Db

 

Edit: Actually, one little quibble. Your stop should have been at 08.

 

Jesus thanks for that, I only trade futures and the ammount of time I've spent looking at volume... I feel like a fuckin idiot.. Is there any point in keeping the bars if volume is that unreliable???

 

On trade Management; I like taking the first contract out as price breaks the demand line but I'm not sure about exiting at a Lower high, since I use a small bar interval and a Lower High on a 2 min chart is often irrelevant on a 5 or 15 min chart.

 

I'd like to experiment exiting each contract using different bar intervals but its all in the air at the moment.

[DbPhoenix 42]

Jesus thanks for that, I only trade futures and the ammount of time I've spent looking at volume... I feel like a fuckin idiot.. Is there any point in keeping the bars if volume is that unreliable???

 

The smaller the bar interval, the less useful the volume.

 

On trade Management; I like taking the first contract out as price breaks the demand line but I'm not sure about exiting at a Lower high, since I use a small bar interval and a Lower High on a 2 min chart is often irrelevant on a 5 or 15 min chart.

 

Once you're in profit, try to give the trade room without welcoming any sort of fear response. If your heartbeat and respiration increase, just TTMAR (take the money and run). Otherwise, shift into a more relaxed mode and just observe what's going on. If the pace and activity slow down, don't be too quick to bail. Did you consider at the time that that congestion occurring at the top of that run might be a springboard for a further advance (or a decline)? If so, push the reset button and re-analyze the situation. Forget about what you've done and look only at what's in front of you. You may find an opportunity for a new trade that's independent from what you've already done.

 

If you think you're ready for a new tool, you may want to look at the TICK thread.

 

I'd like to experiment exiting each contract using different bar intervals but its all in the air at the moment.

 

Sounds like an effort to make it more mechanical. I don't think you need it anymore.

 

BTW, where are you?

 

Db

[tupapa 10]

Not many changes from yesterday. I have added a ressitance line around the 2541 area which was rejected 3 times yesterday, although it looks like buyers are pushing making higher lows and we could brake it today.

 

I have also increased the thickness of the lower support around the 2505 area. Yesterday we found support at 2508 so I consider 505-508 as the lower support.

 

Longs:

 

Test of 2516

Test of 2508-2505

Breakout of 2551

 

Shorts:

 

Rejection of 2540

Rejection of 2552

Breakdown of 2505-2508

 

Thanks for the post DB, I will look into using the TickQ and I am in England, hence the confusing Timeframe

[DbPhoenix 42]

So how did it all work out?

 

Db