Trading The Wyckoff Way

[DbPhoenix 42]

The hinge demonstrates a coiling effect of pressure building, and as we have seen an excursion to both the upside and downside before rejection back into the TR. From here, as price moves through time, the hinge may be a spent force and we just drift either way within the range or a break may serve as a catalyst to exit the larger TR...we'll see

 

If volume remains high or becomes higher during the formation of a potential hinge OR if price fails to break out of the hinge before the endpoint is reached, the price action is much less likely to be what is expected of a typical hinge. Rather it becomes more similar to that found in a typical TR.

 

Db

[tupapa 10]

Thanks for taking the time to put our discussion together Db, seems like a good idea to get a few others involved so we can all look at how a trading plan is put together

 

Look forward to reading other traders views on this.

[DbPhoenix 42]

89 range - long term trend channel support acts as resistance

 

Actually, it only seems to. Whatever S or R it appears to provide is only coincidental.

 

The job of TLs is to show trend. The jobs of SLs and DLs is to show the state of demand and supply. None of these provide S nor R. That is lateral. So let everything do its job and tell you what it knows. Don't ask it to do more.

 

Db

[DbPhoenix 42]

For example, using your chart, you'll note that the TL is violated so many times, it can hardly be relied upon as, in this case, R. But it does show trend, which is what it's supposed to do. S&R are found laterally.

 

Db

 

 

 

[DbPhoenix 42]

Oct 1 Pre Mkt

The sell off from the 25/09 has broke the DL from the July rally and subsequent action has shown weakness in the failure to break the 25/09 down rally midpoint at 2820.

There is however, a show of support at 2780 so this is our important S/R for today. 2790 and 2812 have also been more minor levels of S/R. (2800 is the MP of this range and in my case, one to avoid).

Pre Open - Support has been tested and held at 2780, sailed past 2790 and 2800 and we are now heading towards 2812 / 2820.

 

Gameplan

Short at R (2812 / 2820) if double tops and / or a DL has been broken

Long at 2790 / 2780, if a double bottom and / or SL has been broken

No trades at 2800

Long at 2812 + above a RET to the DL

Short at 2790- below a RET to the SL

 

Long at 2820+, above a RET to the DL

Short at 2780- below a RET to the SL

 

Congratulations, John.

 

Db

[DbPhoenix 42]

Just out of curiosity, if anybody simtraded the short at 06, what was your fill when you exited the trade at the break of the SL?

 

Db

[pjohnm 10]

Watching in RT, these points are the areas I would want to short.

[tomerok 10]

What you're referring to isn't tape reading in the traditional sense. Actually, I don't know what you'd call it since the tape is comprised of trades. As such, bid and ask "volume" are irrelevant as they represent intent (unless they are completely fake), not completed transactions. If you wait to figure out what the "big guys" are doing, you will likely find that you are consistently late. This will, of course, cut into your profits.

 

These comments apply as well to "the Book". With a little research, you'll find that those -- at least those who post -- who take their cues from "the Book" will regularly stand aside or enter trades in the wrong direction while those who post here are making money. This isn't intended to be snarky; it's just the way it is. Same goes for those who trade "the news". We ignore it and do quite well. The same can't always be said for those who take their cues from it.

 

Db

 

I think i was misunderstood, i do not observe traditional level 2 data nor take it into account.

i use the T&S in NT7 which reflects ".... the current Bid/Ask price and volume as well as color coded last traded time, price and size." (taken from NT help menu.)

 

for my understanding it is the traditional "tape" reflecting filled trades.

i don't care about the volume nor the current Bid/Ask only the flow of filled trades.

since i have the option i color code to reflect if the last trade was filled at the bid or the ask which implies (i think ... ) who is stepping in.

(your reply is making me second judge it's accuracy and i'll check if the data is reliable.)

 

the T&S is another reinforcing parameter in the trade.

i attached a print screen of what i mean.

 

i appreciate your time and effort for the reply

 

 

Tomer.

[Gringo 10]

Tried shorts earlier when 2806 was broken but was contained within a 1 point total loss. I kept my losses closer today especially at range extremes but it kept me stay calm. Brought a few stops to BE after the first gain or so and whenever price seem to stall which actually prevented any nasty large reversal losses. This did make me re-enter but I was fine with that.

 

2803.75 became my mini s/r after 9:41 so I didn't short at 2806 afterwards but waited for this S to be broken before initiating the short which had just before 10:00 exited at BE because the price stalled and kind of rebounded upwards a bit strongly a minute or two before 10:00.

 

Today wasn't a day that emotionally engaged me much. I would say the only time I felt some emotion was 10:01 when price crossed 2814 and I thought I was supposed to go long after 2812 but wasn't ready for such a fast run up and didn't pull the trigger and hadn't placed a stop-buy above that level as well, so in reality I wasn't going to buy at such violent move at market price. Last Friday, I was able to pull the trigger but today I didn't.

 

I was in a short position when I saw the hinge around 2820 area. I simply tightened my stop right above the top of the hinge and kept brining it lower to the upper SL of the hinge. Price dropped and eventually I exited at the break of SL.

 

For me the fact that S/R was around 2812 I went long after SL break and test and exited BE. It's strange that while I was looking long others were looking short when after this rise around 10:40 price dropped downwards. I didn't enter it because the S/R at 1812 and S/R at 2810 kept me aware of these supports and the risk inherent in shorting so close to them. In hindsight I could have made some money but not getting excited and sticking with the overall logic of my trading consistently is still satisfying in itself.

 

I was tempted to try and squeeze out a trade between the 2806 - 2810 range but stayed put instead of forcing something stupid. For quite some time reasonable entries were not forthcoming until of course 2820 S/R which was causing a bit of angst but not much.

 

 

The gain was 4.5 to 5 points today. Less than desirable exit prices were used because of higher volatility and to keep exit prices real. I am guessing some numbers came out at 10:00. I am contemplating whether to figure out in advance if any numbers are coming or continue to stick with complete disconnect from news as I have been doing so far. The fast price rise did shock me a bit but I had stops in place so no harm done.

 

Did anyone get to go long at 10:00? How would that be played? Perhaps not every penny can be squeezed out of the market every day and the objective of the plan is to stay mostly on the right side and avoid the wrong side of price.

 

Gringo

 

Edit: It is interesting for me to see tomerok's chart which shows price to have had some pause when he went long after the news. I only saw price just shoot to 2812 and then 2814 and probably that's why didn't see any reason to enter. His entry is quite impressive I must say.

Edited October 1, 2012 by Gringo

[tomerok 10]

Following my post from the TIF thread

 

decided to quit early (10:30)

 

trade 1 - short, no significant HH, TL breached, pulback, and LL , small reversal according to my rules

 

trade 2 - was wrong i was putting to much weight on the TL, and did not take into account the support i noticed a couple of minutes before.

 

i did not take the short before the news (i'm still not comfortable with the wide moves)

 

trade 3 - long, support was tested, entered just above the last swing high, the decision to enter was mainly because of the large buyers on the T&S window

 

trade 4 -short, i was looking for a reversal since momentum died and we saw LH, support noticed below led me to exit at entry since sellers were not dominant

 

trade 5 - short, a little late but short since S was breached and we pulled back, a down trend was clear

 

Tomer.

[DbPhoenix 42]

I suggest you uncheck the bid and ask and related "volumes" and look only at the last traded price and size along with the time. This will be most like the traditional tape. Just see how you like it. You may find that you're able to pick up on changes in speed and activity just as easily if not more so. If you're in your trades sooner, all the better. If not, then having the bid and ask may be necessary for you.

 

Db

[DbPhoenix 42]

The gain was 4.5 to 5 points today. Less than desirable exit prices were used because of higher volatility and to keep exit prices real. I am guessing some numbers came out at 10:00. I am contemplating whether to figure out in advance if any numbers are coming or continue to stick with complete disconnect from news as I have been doing so far. The fast price rise did shock me a bit but I had stops in place so no harm done.

 

Whether you know of any events in advance or not will not likely have any effect on your trading other than persuade you to do nothing or trade the wrong side. Consider all those who did just that this morning. You, on the other hand, just watched price and acted accordingly within the context of S&R. While others did nothing or lost money, you made money. Good for you. Consider as well that you were not tied up in knots during the process.

 

Did anyone get to go long at 10:00? How would that be played? Perhaps not every penny can be squeezed out of the market every day and the objective of the plan is to stay mostly on the right side and avoid the wrong side of price.

 

Exactly. And don't forget that price could just as easily have plunged.

 

Edit: It is interesting for me to see tomerok's chart which shows price to have had some pause when he went long after the news. I only saw price just shoot to 2812 and then 2814 and probably that's why didn't see any reason to enter. His entry is quite impressive I must say.

 

Maybe it's time for you to begin trading (sim/paper) with a smaller bar interval. I haven't looked at this lately so I don't know what's the least expensive, but I'm sure there's some decent provide who'd let you simtrade for a small monthly fee.

 

Db

[zdo 20]

Great thread, db. thx

 

wink This is what they use at Braeburn Capital to trade “90 minutes”

https://community.tradestation.com/Discussions/Topic.aspx?Topic_ID=88600&PAGE=1

[DbPhoenix 42]

Though I've addressed this in the Trend thread, today is fresh in everyone's mind, and it seems like a good time to remind those who'd like to add another tool to their belts that S&R can be used with SLs and DLs to stay in the trade longer than one might if he were to use SLs and DLs alone.

 

Note that price does not exceed the LSH until A. However, that swing high found R at the previous swing low, not the previous swing high. When price reaches its peak -- B -- after A, it finds R at that same swing high. If that's confusing, just look at where price finds R at each swing high. Point is that if one has wrestled his fear to the ground and has confidence in the trade, he can cut price a little slack to see if and when it exceeds the LSH rather than cut and run as soon as it has broken the SL.

 

Incidentally, notice where price ultimately found S.

 

Db

 

 

 

[BearBullTrading 10]

- First short below green line...Exit shown by red line. Higher High

 

- Re-entry short below 2nd green line....Exit shown by red line., break of swing high.

I was shorting here not far above the low of day.. Not always a place some traders like to play, but watching in real time having drifted sideways for 15 mins I felt there didn't seem like any desire to move higher, so felt an early entry as opposed to a more usual LOD break entry worthwhile.

 

The hindsight analysis tells me I "could've" taken a bit more from the market by just exiting at the break of supply lines, or waiting until higher swing points taken out but in Real Time I'm ok with the way things went.

[BearBullTrading 10]

Though I've addressed this in the Trend thread, today is fresh in everyone's mind, and it seems like a good time to remind those who'd like to add another tool to their belts that S&R can be used with SLs and DLs to stay in the trade longer than one might if he were to use SLs and DLs alone.

 

 

Yep... Working with SL/DL breaks together with S&R / swing H/L's etc is a balancing act for me and I do not have a definative "if / then" approach as to what is my "reason" to enter/exit based on the above will be.

 

Sometimes it will simply be a break of the SL, other times I want to see a HH etc.

 

When making these decisions in RT I acknowledge and accept my decisions will not always be optimal.

[DbPhoenix 42]

Yep... Working with SL/DL breaks together with S&R / swing H/L's etc is a balancing act for me and I do not have a definative "if / then" approach as to what is my "reason" to enter/exit based on the above will be.

 

Sometimes it will simply be a break of the SL, other times I want to see a HH etc.

 

When making these decisions in RT I acknowledge and accept my decisions will not always be optimal.

 

Much of this decision depends on "activity" and "pace". However, there is little to no downside to exiting as usual and re-entering. One can, in fact, make a little extra by going over the same ground a second time with a new trade. Depends on how "involved" one wants to be.

 

Db

[Niko 10]

Db,

 

It has been a while since my last post. I had been re-reading the W course, reading the Dalton Markets in Profile book, and reshaping the way I see the markets, I think I am halfway on my deintoxication from mechanical trading and I am begining to understand the flow of prices in real time.

 

I have been reading this 90 min trading tread, post by post (currently on page 22), So before I post something else i will first finish my homework of reading the full thread, but I just wanted to tank you again for all your efforts and advice, without which understanding W would have been far more difficult.

[pjohnm 10]

Using the above as a guide, the key points this raises for me when considering how to create my own plan (and then back test) are:

 

What time will I be available for trading? Should the backtest only be at those times?

 

Can the method / process for locating S&R be defined more specifically?

 

Re entries: What is meant by a double top? 2 consecutive 1 minute bar FTB's? Can this be described in more detail?

 

Where is the placement of the stop loss / what is the criteria?

 

To me, a mechanical plan is of greater value as it allows comparison between what you have done in RT, versus the back test. The more that is left open to interpretation, the harder this becomes. I would also want to limit the variables i.e focus on DT's using 1 contract only.

[tomerok 10]

Hi tupapa.

i can only give advice from from problems i solved with my own performance.

i also noticed a difference between my backtested results and RT results.

 

what really made a difference for me in RT is cutting my setup and entry into smaller pieces and giving each piece a score. the trade score is the sum of the pattern/setup/entry trigger..

 

in a matter of days i could notice the changes i had to perform in order to get a better result.

other than that there is the screen time needed to build up the confidence in a trade since every trade is a little different even though the same rules for entry apply.

 

from your posts it seems you clearly know what you're looking for in a trade setup.

 

Just my 2 cents.

 

Tomer.

[tomerok 10]

02.10.2012

 

Good morning.

No significant changes from the past days on bigger picture so I'll be short.

 

Yesterday – ended in a downtrend closing lower, resistance at the highs is valid and strong.

89 range – a trading range is formed

34, 21, 13 range – inside day, PHOD & PLOD are the edges of the trading range, price is at middle of the range.

144 tick pre session – opened up from yesterdays close, currently at the middle of the range.

 

Areas of interest

 

Edit : (mixed PLOD and PHOD...)

 

Resistance @ 2822 (PHOD & high of trading range)

Support @ 2778 (PLOD & low of trading range)

2800 – big round number and middle of trading range.

 

Tomer.

[Gringo 10]

Tupapa,

 

These are only suggestions and I have written whatever I could find so that something might be of value to you. These only meant in constructive manner and of course are extrapolations and assumptions of your trading from a small sample of data.

 

1. SL/DL lines are too far from the price. They are acting more like A TL.

Closely hugging SL/DL should:

a) Improve your exits.

b) Allow you the freedom to re-evaluate your position in a detached manner as you would have exited earlier.

c) Increase profits as quite a few of your BE trades become profitable.

 

2. Focus on the prevailing trend.

 

8/13 chart you seem to be going long when the trend is down. Notice LH any HL.

With correct determination of trend:

a) Would have attempted more shorts instead of longs.

b) In combination with correct SL/DL you would have made profits even on your longs that ended up mainly BE.

C. You could have gone both long and short and still made money both ways in the earlier phase.

 

 

 

 

3. I see a hesitation is changing direction.

08/14 chart: 141.17 price stalls and makes LH. DL has already been breached which prompted your exit.

 

You are holding back getting in on the short side. Notice on the extreme left of the chart the price dropped a lot from where ever it was earlier. So the high and the subsequent LH both are under the earlier high not visible in the chart, hence, either of them making a larger trend LH. You don't need all this information but only need to see LH at 141.17 after the first high 141.23 and prepare for the short based on your entry rules.

 

 

To me it seems only the correct trend determination and SL/DL tightening should put you over the hump as more or less you seem competent as far as entering is concerned.

 

 

Gringo

Edited October 2, 2012 by Gringo

[Gringo 10]

Buy at S after test or strength, and sell at R after test or weakness. We've been stuck in these ranges for some time now. Another box created today to represent the most recent TR.

 

2780 to 2820 with Mid at 2800. There are few mini s/r in between to allow some place to enter.

 

 

 

 

2800 to 2790 is a 10 point space available. Probably the mini s/r 2800-2804 will determine which direction I pick.

Below 2800 a possible short and above 2804 a possible long.

 

Gringo

[Gringo 10]

Hinge being formed with 2798 as mid?

 

Gringo

[pjohnm 10]

Given that we are at the mid point of the range that has developed since the 27/09, should it be treated as a hinge?