Trading The Wyckoff Way

[Gringo 10]

Hello,

 

First chart is from the Trading in Foresight which was my preparation more or less for the day. The second represents the ebbs and flows of price. I got about 10+ points out of it today and as the minute chart was slow in updating at times some reduction in return is due to price suddenly refreshing and showing a gap down! I still took the gap down price as my exit even though later it did show that price moved down deliberately which I in RT didn't see and exited. I am not worried as for free charting service it's not bad and serves it's purpose of getting me used to following my plan.

 

I tried to add some reasons on my chart and avoided to pinpoint entry/exit points but at times to show my thinking did add some comments indicating why I avoided something in RT.

 

Pre-planning chart from the Trading in Foresight tread:

 

1min RT chart:

 

I was a little stressed during the first 5 mins when it wasn't clear if any S/R would hold but calmed down afterwards and was generally in control and accepted my right or wrong decisions.

 

There was a RT hinge that I identified but couldn't play profitably. I hadn't accounted for multiple bounces at the mid of the hinge and after one bounce got worried I wasn't sure what I was doing and kind of exited the long, though it turned out to be a pretty nice entry in hindsight. This didn't distract me to taking the BO above the consolidation area which gave a few more extra points and at 11am I stopped due to a big Mid being very close so didn't want to take a long even though price behaviour wasn't weak at that time.

 

Another point to note is that in RT previous day's consolidations were indicating where price was stalling which I had not identified specifically in my pre-planning but was still keeping an eye on which gave perspective to price suddenly stalling and breaking up or down. These were visible on the 1min chart not but isn't visible in the posted chart now.

 

Gringo

[DbPhoenix 42]

You don't say where you took your first long, but I assume it was the test of S at 38. That this is correct becomes evident as soon as you make your entry given the violent upmove at that point.

 

I was hoping you'd see that hinge. It was one of the more interesting hinges I've seen in a long time. Actually, three hinges. But anyone not knowing what a hinge is or what to look for would most likely be "nervous". You also picked up on the S level that the hinge provided for the subsequent hinge before the BO.

 

 

 

 

 

 

Notice here that you have fakeouts both above and below your first hinge. These lead to a follow-on hinge (which would not likely be seen by anybody not following this in RT). That BOs to a little TR which in turn segues into a third hinge which has a fakeout below (to S) and a BO to the upside which takes you to the mega midpoint of the macro range.

 

As for my dotted blue SL, you can if you like ignore breaks which turn into springboards. This can give you a better idea of what the genuine SL is. Or you can at least keep it in the back of your mind, particularly if you have difficulty drawing a new SL.

 

One more thing. You could have taken the first RET after the initial runup, but you would have had to exit. At that point, you'd want to wait to see if you got (a) a higher low or (b) a bounce off the midpoint of that rally which, in this case, was 44. If you then got a higher low off that, which you did, that would make for a legitimate long. If you had taken it and had been tempted to exit at the break of what would have been your SL, notice where the downside fakeout finds S.

 

Db

[DbPhoenix 42]

Just saw your note in the other thread about the short. Perfectly legitimate, and worth a few points. However, when you hit S like that, and tested it, the test trumps whatever SLs you have drawn. At that point, you have to consider an SAR at around 41. If you had, you would have earned up to 15 pts off these trades.

 

And if you'd hung around, the short off the midpoint at 1125 was an easy entry and good for another 10+, but that would be longer than 90m.

 

Db

[DbPhoenix 42]

Just to wrap it up for posterity. Call it Trading in 180 Minutes this time.

 

 

 

[DbPhoenix 42]

Turns out there were reports today at 1000. Good thing I didn't know that

 

Db

[Gringo 10]

Hi Db,

 

My short was earlier and exited before we hit S. It was from 45 to 41 when SL is broken. That I don't consider it to be bad.

 

I did make a mistake and didn't actually realize it was a mistake until you brought it up. I didn't take the long at 40 at around 10:00am. I am not sure what happened but I waited until I saw a sign of strength and took it at around 42 . In RT perhaps I should have drawn the new SL after NL and would have seen it but not doing that kind of got me mixed up. I knew support was not giving up but the pink SL was not giving even one HH which threw me off a bit. Once the big spike came I recognized the supply/demand struggle shifting in favour of demand and got in after the RET and subsequent rise around 42.

 

I did take the long at 10:24am. Not the first rise at 10:20am or so, but the 2nd one, just before the drop and stop out. First one I didn't take because the RET was a bit deeper than what I had expected after such strong rise in price and got a bit perplexed (In hindsight it looks like quite a normal RET and I don't know why in RT I was hesitant). When LSL held I got in long but obviously got stopped out when price fell suddenly. (I also wasn't aware of any numbers coming out simply because I never bothered to check. Now that I think about it I might have felt hesitant in taking positions had I known some major news was coming out). I simply followed price behaviour and that's it.

 

I didn't notice the 2nd hinge and I remember thinking that I was trying to find too many patterns in price behaviour and should just focus on simplicity and reverted to the TR rectangle for clarity. I also was beginning to feel exhausted by that time (something strange considering it was only like an hour or so into trading). There is a lot of focus required to stay alert and today I felt it. Playing re-plays perhaps because of higher speeds didn't exhaust me that much in one 90 min session condensed into 30 mins.

 

The last hinge I didn't identify but did notice LH and was ready for exit had the price dropped below the range into the previous range. I did identify both TR's in RT. I did realize the now identified mini hinge BO as a sign of strength after LH's even though I didn't identify the pattern of the hinge itself. This I guess is the result on focusing on price behaviour itself instead of whether a certain formation was in place. At this juncture the price staying within the TR for about a minute but I somehow understood it was getting ready to BO above TR.

 

Oh yes, I did see the drop and was playing in my mind the short and it was easy and from the price behaviour it was becoming evident price was heading lower. I would have gotten from 51 to 43 but wouldn't have taken a short after that because of the S right beneath.

 

Today was packed with a number of lessons and required quite a bit of changing directions. I'll work on my missed long but certainly appreciate the beauty of today's price movement for educational purposes.

 

I don't know how people are able to concentrate for the duration of the entire day. By 11am I was more mentally spent.

 

Thanks again for your help. I wasn't reading the comments on the forum during trading but later did appreciate your timely updates. Learning would have improved faster with a chat room to bypass this back and forth. Then again this back and forth might help someone else and myself consolidate ideas.

 

Gringo

[DbPhoenix 42]

Hi Db,

 

My short was earlier and exited before we hit S. It was from 45 to 41 when SL is broken. That I don't consider it to be bad.

 

It wasn't.

 

Once the big spike came I recognized the supply/demand struggle shifting in favour of demand and got in after the RET and subsequent rise around 42.

 

Which is fine. If you need that extra confirmation, wait for it. Eventually you won't need it so much. There were, after all, plenty of people who didn't make anything today. Or lost.

 

Now that I think about it I might have felt hesitant in taking positions had I known some major news was coming out). I simply followed price behaviour and that's it.

 

Exactly right.

 

Today was packed with a number of lessons and required quite a bit of changing directions. I'll work on my missed long but certainly appreciate the beauty of today's price movement for educational purposes.

 

Plotting S&R ahead of time will save your ass again and again. If you know that one or the other is coming up, you will be more alert as to price behavior, such as today at 52 and again at 38 then again at 52 and later at 30. If you've prepared and you're ready when the time comes, you'll know what to do. If you haven't and you're not, you won't.

 

As for the first long, remember that the SLs and DLs and TLs are all essentially training wheels. S&R are trumps. If price hits one or the other and gives you the appropriate signal, then set aside the lines and go with the tests. You'll know real quick whether or not you did the right thing. And if price instead plunges through S or R and you're looking at a continuation, you won't be freaked out and will instead know what to do (which doesn't include sitting there, wringing your hands, thinking I Failed Again).

 

Excellent work.

 

Db

[tupapa 10]

What a great post guys, thanks to both of you for going through it in such great detail. It shows how simple trading can be and how complicated we make it when we bring emotions into play..

 

Just one small question about the short at 52. Did you guys take the short at 11:13 or just the entry at 11:25? As I see this, the first rejection of R takes place at 11:06 and the re-test at 11:13, in which case one would've been stoped out at 2853 right (1 tick above the high)?

 

I know this shouldn've stoped one from shorting again at 11:25 but just wanted to know if there was a reason why you would neglect it.

 

Thanks again for the great work.

Edited September 25, 2012 by tupapa

[DbPhoenix 42]

There's no rejection. Price doesn't drop more than a point until :15, and then only by a tick. Nor are there a lower low and lower high. A short would therefore be countertrend. The fact that all of this is taking place at what one thought was R at 52 is not as important as the price action. In this case, R is at 53, which is well within tolerance, since R is a zone. The short op at :29 is clearly a failure to match the previous swing high, much less make a new one.

 

Db

[tupapa 10]

My levels for tomorrow.. Price left the up channel it had been in during the past few days so will be interesting to see where it opens tomorrow.

 

I will pay attention to the gren box, a test of either limit could dictate price initial direction.

[DbPhoenix 42]

There's no rejection. Price doesn't drop more than a point until :15, and then only by a tick. Nor are there a lower low and lower high. A short would therefore be countertrend.

 

The following is a line chart of what I posted earlier. Never forget that this is not about bars or candles; it's about price movement. Note here that there is no test-retest at 52. In fact, the "test-retest" at 53, while hardly visible on a bar chart, is detectable on the line chart. This is not particularly pertinent to the trade since the entry was taken on a much more clear-cut RET after a REV, but it's of interest nonetheless.

 

 

 

 

 

 

Lurkers who don't know where the DL and SL should go or where the S&R are should ask and I'll repost the chart with same.

 

Db

[DbPhoenix 42]

My levels for tomorrow.. Price left the up channel it had been in during the past few days so will be interesting to see where it opens tomorrow.

 

I will pay attention to the gren box, a test of either limit could dictate price initial direction.

 

If I may, the bottom of your box should moved up .20 and the top .10. But aside from that, I suggest that you're trying to apply the wrong strategy to the wrong instrument. If you're trying to trade RETs, REVs, and BOs, then whatever instrument you're trading ought to have at least some regard for S&R. This one has very little of that (the S&R has to be on the chart, not just in your head). In addition, the movements almost demand wide stops, and you don't have enough experience for that. You're going to be making a lot of trades, and few of them will be successful. I assume this is not consistent with your objectives.

 

There is also the issue of the gaps and the trend/no-trend issue. Trying to trade this as one might trade the NQ will seem like trying to hit a housefly with a dart. I suggest that you look for something that doesn't try to screw around with you so much.

 

Db

[Gringo 10]

Have a look below to see the behaviour in almost RT.

 

A

 

 

B

 

 

C

 

 

D

 

 

E

 

 

F

 

The A, B, C, D, E, and F will make it easier to discuss what's happening and where. I wouldn't have picked test at 53 that Db pointed out. For me waiting for DL to break and then looking for test or weakness would have been the course of action.

 

Gringo

Edited September 25, 2012 by Gringo

[philmg 10]

thanks DB,

I get the point not to to be distracted by the bars. i find it kind of irritating to include volume into the structur of price behavior visualization as soon as you use constant volume bars. the more volume the more bars. on the other hand it seems easier to see immediately the price levels, where large volumes have been traded, which I would view as an advantage. Somehow I cannot decide, with which bar interval to continue my practice.

 

do I understand correctly that you mainly use 1 min chart for the NQ100? if yes, why do you opt for a min chart instead of constant volume tick charts?

[tupapa 10]

If I may, the bottom of your box should moved up .20 and the top .10. But aside from that, I suggest that you're trying to apply the wrong strategy to the wrong instrument. If you're trying to trade RETs, REVs, and BOs, then whatever instrument you're trading ought to have at least some regard for S&R. This one has very little of that (the S&R has to be on the chart, not just in your head). In addition, the movements almost demand wide stops, and you don't have enough experience for that. You're going to be making a lot of trades, and few of them will be successful. I assume this is not consistent with your objectives.

 

There is also the issue of the gaps and the trend/no-trend issue. Trying to trade this as one might trade the NQ will seem like trying to hit a housefly with a dart. I suggest that you look for something that doesn't try to screw around with you so much.

 

Db

 

Thanks for the view on the levels, I am keeping them in them in mind today and we'll see how this all pans out.

 

Regarding the markets behavior at s/r levels I have found it to be consistent with what is taught in this forum, but the Gaps do cause some headaches..

 

I am not trying to trade this as I would trade the NQ, I am for the time being focused on reversals at pre-defined levels. I am also studying breakouts and pullbacks as part of my testing.

 

I will post my results here once I have something more concrete.

 

Thanks again for your views!

[DbPhoenix 42]

I am for the time being focused on reversals at pre-defined levels. I am also studying breakouts and pullbacks as part of my testing.

 

What are your stats?

 

Db

[tupapa 10]

What are your stats?

 

Db

 

For my testing? I am still working on this since I don't have a large enough sample.. I presume you are referring to the probability of a reversal at S/R??

[DbPhoenix 42]

For my testing? I am still working on this since I don't have a large enough sample.. I presume you are referring to the probability of a reversal at S/R??

 

No, your win:loss ratio, your profit:loss ratio, your maximum drawdown, your longest string of consecutive losses, etc. The sample size is not pertinent.

 

Db

[Gringo 10]

Today's game plan:

 

Price is close to R at 2800. Might test it before drop or go above.

Below the S is around 2780 and Mid is around 2790. Midpoint is also an S&R of the pink consolidation.

 

There might be some tussle between 2800 and 2790 because of both being quite sold S&R in their own respects. Demand and supply is the ultimate judge so we'll see how it all pans out. Price might just chose to not even care about these levels.

 

 

Gringo

[DbPhoenix 42]

That drop from 32 to 00 was pretty cool. Unfortunately, you'd have to have sat through a 90m sideways drift before price began to move again.

 

Db

[Gringo 10]

Should have been attentive to the premarket high around 97. Realized it too late...

 

Gringo

[DbPhoenix 42]

You may be relaxing too much into the big picture. If you're going to continue posting these charts in this thread, include a 1m or at least 5m zoom-in and these levels will be more apparent. A 5m will take you back at least to the PDC without crowding things too much.

 

Db

[DbPhoenix 42]

thanks DB,

I get the point not to to be distracted by the bars. i find it kind of irritating to include volume into the structur of price behavior visualization as soon as you use constant volume bars. the more volume the more bars. on the other hand it seems easier to see immediately the price levels, where large volumes have been traded, which I would view as an advantage. Somehow I cannot decide, with which bar interval to continue my practice.

 

Use both, keep your stats for each, then see after 3 mos. or so which one suits you better. As long as you have no money on the line, there's no hurry.

 

do I understand correctly that you mainly use 1 min chart for the NQ100? if yes, why do you opt for a min chart instead of constant volume tick charts?

 

I use what is freely available online for the Forum. That means 1m standard bar charts. I see no reason for anyone to spend big bucks on charting programs and datafeeds and so on before they know whether or not they're even interested in this, much less that they can do it profitably. Personally, I find the 1m interval too long, but it's more than sufficient for these purposes.

 

Db

[Gringo 10]

I really got trumped today. Early in the day I didn't pay attention to the 1 or 5 min charts to identify consolidation around 2797 or 2797.5 area. This lead me to not be alert the first time price reversed downwards dramatically and miss the down move. By the time I identified in RT the risk/reward weren't clear to me so I didn't force a trade.

 

For some reason either I or my plan weren't adequate. I had plan to enter BO from a TR but didn't have it for a BO of S/R. Still RET was in the books but most downside BO were so close to the next S/R that I chose to not take them and started wondering whether my S/R were correctly drawn in the first place as BO were coming in the middle or just above S/R.

 

I'll have to get some input regarding today as it was a very instructional day and in my opinion it's good to have days like these where one's plan is tested and flaws exposed.

 

In the end I made 1 point out of all this 30 or so point 90 min play. I have to admit not losing much is still quite impressive in my case as I would have gotten crazy not getting in and done something stupid in the past. That being said a day like this shouldn't have slipped through the fingers so easily as well.

 

Perhaps others can illuminate how they interpreted the price behaviour.

 

 

Gringo

[Gringo 10]

I am beginning to realize a few things that I did incorrectly.

 

1) I started to 'assume' price was going to bounce or slow down when it approached S/R. This generally is the case but not always. Instead of judging the price behaviour itself around S/R I expected the price to behave according to my perception and bias of it. In a way I put the cart before the horse.

 

2) I didn't play the BO and even RET to the downside well. There were ample opportunities to re-enter which in hindsight I can see weren't that tough but were missed in RT.

 

3) Pre-open ranges were not identified as mentioned previously.

 

4) Second guessing my own plan and S/R levels causing distrust and breakdown in my own analysis and observation of supply/demand behaviour.

 

More observation might yield more insights.

 

Gringo