Trading The Wyckoff Way

[BearBullTrading 10]

Chart 1 : Daily

We have come back to the lower end of the Large Trading Range, having failed to take out the previous swing high.

I have marked a line in an area where price has touched several times. Price has also made excursions below this line - the purpose is to indicate a general area of interest, not necessarily a specific level.

 

 

Chart 2 : Overnight Session

We see price fell below previous day low (cyan line) before forming a range prior to the pit open.

The ON low is formed between 8.5800/8.6000 & there are a couple of slightly larger volume bars going into the low and coming out.. I didn't notice these on this chart in RT at the time of printing. Only later in day & may be (in)significant ?

 

Chart 3 : 15 Second

First trade: Long above red line. At this point we were still in the pre open range indicated on previous chart..Violation of my plan as I should have waited to see which which out of that range we moved.

Stopped for loss on break of demand line(mental, not drawn) and Lower Low.

Second trade : Short on break of minor consolidation. Stopped for loss on pullback (error printing chart)

 

Chart 4 : 15 Second

I've shown my long entry here, break above green line (printed as quick as I could in RT) but maybe the most interesting aspects are my thoughts/observations behind it in RT as opposed to the actual entry/exit,

 

- We are in a general area where there "may" be an attempt to provide support.

 

- The DOM : . Wheat generally has about 15 > 30 contracts shown at each level on the DOM.

As price was falling from 8.6350 I noticed about 150/200 contracts bid at 8.6000.Price initially bounced of 8.6025 (the bids stayed at 8.6000).

 

Price bounced, came back and filled the large bid. There was a a nice bounce before again coming to re-test the lows.

 

This time price went through, found more volume & then reversed

 

AFTER this reaction & we got back to the 8.6000 level there were still bids in the DOM of 120/130 contracts layered at 8.5975 / 8.5925 / 8.5875.

 

I don't know, or need to know the motives behind the bids - could be exiting previous shorts or opening new positions... We DO know that we are in a possible low of day / reversal area & that higher than average bids have already been filled in this area, and there are still unfilled bids for more. Also in approx area of ON low, where there was slightly higher volume ON as per chart 2 comments

 

- Following the "spring" off the low, we test the previous reaction high.

At this point I'm thinking how the person(s) who were bidding for a further 400 contracts at the lows is thinking...How bad do they want them...Does another point or two matter to them ?....Will they be given a 2nd opportunity at the low? ..Will they get aggressive ?

 

From the reaction high we consolidate briefly. .This makes me think as we havent (yet) retested lower. may move higher, but I have to wait for the market to show its handr.. Price takes out the previous 2 reaction highs = Long

 

Chart 5 : 20 change / complete day

This chart shows just shows where the above took place in relation to how the remainder of the day played out. The lines have been transposed from my 15 sec shown and dont show everything I was thinking, my movement SL/DL lines etc.

 

As Db recently mentioned, it depends how involved one wants to be , but there were further opportunities for those who wanted to hang around, add etc.

 

Cheers

[DbPhoenix 42]

I rarely say so because most people who take this seriously figure it out on their own, but a thorough backtest ought to cover at least a year. The comfort level that a trader attains by having backtested all market conditions is impossible to reach any other way. August does not trade like November does not trade like March does not trade like June. A couple of weeks, needless to say, just doesn't cut it. Those who try to get away with the minimum end up changing their trading plans to accommodate every curve ball that the market throws their way. In a few months, they have a real mess on their hands, so many rules that they wind up unable to act at all.

 

A thoroughly-backtested trading plan will cover the vast majority of contingencies. The market can and will come up with completely unexpected behaviors, but the trader who has backtested a year's worth of contingencies will recognize the unexpected for what it is and either stand aside or try to make the best of it. He will not alter his trading plan to accommodate something that may never reoccur.

 

There is also the forward test, which too many beginners skip, thinking that RT trading is pretty much the same thing and will accomplish the same objective. It isn't and it doesn't. Those who skip it will experience far more failures in RT trading and end up having to rewrite their plans again and again, which they will likely do rather than go through the backtesting again, which is what they ought to do instead.

 

The process created in the first post was not created casually. Every step has its purpose. Those who take shortcuts will take far more time becoming a profitable trader -- if they ever do become a profitable trader -- than they would have had they gone through the process as outlined.

 

This is not directed toward anyone in particular. I don't know how extensive or thorough any of your backtests were. But I see a lot of re-examination of plans and even re-writing of same, and much of this may be unnecessary, unless of course the backtest was given short shrift. If that's the case, I suggest further backtesting, not re-writing plans every time the market comes up with something new and unanticipated.

 

Db

[Niko 10]

Although today market had the influence of the report, I think it shows clearly why planning your session with S/Rs is useful.

 

 

I am posting the chart of the day´s trading with the levels posted this morning in the TIF thread.

 

http://www.traderslaboratory.com/forums/wyckoff-forum/6274-trading-foresight-wyckoff-forum-61.html#post162461

[blocp 10]

here is what I see for today, I am just watching how price behaves at areas I notice on these charts and am not trading live or sim at the moment.

[tomerok 10]

04.10.2012

 

Good Morning.

 

34 range – R @ 2807-2808 breached yesterday, R @ 2821 tested twice after a nice pullback (all this in pre-session today), overall there is an uptrend from the S @ 2778

21, 13 range – pre-session test of R, pullback and re-test are more clear, notice the LH…. and no major HH

 

144 Tick - a hinge is forming

 

 

Areas of interest

R @ 2821

 

Will try to play the hinge at the open.

 

If I notice LH and break of the pre-session TL I will be looking for shorts (taking into account the previous R we broke yesterday as a potential S)

If I notice HH and pre-session TL holds I will look for long (no visible R up to 2853 area)

I'll try to keep it simple and really avoid the R @ 2821 area today

 

Tomer.

[Gringo 10]

Important levels for today: 2826 and 2819 with midpoint at 2823.50.

Premarket levels of importance: 2816 and 2814.

2819 is a longer term S/R and price breached this level in premarket. I would expect market to test the upper range of the new mini s/r at 2826 if it has strength.

 

PDH: 2826

PDL: 2790

 

 

 

 

Gringo

[DbPhoenix 42]

Here's the first level of S. If it continues down, next is 14, then 10, then 8.

 

Db

[blocp 10]

db. did you not get my post before the open?

[DbPhoenix 42]

Then 2.

 

Db

 

..................

[DbPhoenix 42]

db. did you not get my post before the open?

 

I missed it. Once you have 10 posts, I won't have to approve these anymore.

 

Db

[Gringo 10]

I have reverted to back testing. It is a tedious process but must be done properly to have consistent success. I had confused/mixed back testing with forward testing and forgotten the real purpose of both.

 

Even with a weak plan I have more or less stopped losing much in the RT. With proper back-testing and the kinks ironed out it doesn't seem too outrageous to believe consistent profitability might actually become a reality. I am getting far ahead of myself here. The grunt work lies ahead.

 

I am going to be active in the RT thread as the points raised there actually do help in identifying weaknesses and strengths. Still, I no long am paper-trading and only observing price behaviour.

 

Gringo

[DbPhoenix 42]

So is it a RET in a downmove or a HL in a reversal?

 

Db

[DbPhoenix 42]

Can't post fast enuf. Int R at 16, then 18, 22, 24. However, REV at 16.

 

Db

[DbPhoenix 42]

May be a RET inst of a REV.

 

Db

[Gringo 10]

How could we tell? S/R tell us whether it's a RET or REV, but they are everywhere.

Gringo

 

Edit: The fact that price wasn't able to go up after 2812 to above 2816 tells it's not a REV but a RET?

[Gringo 10]

I missed 3 violent up moves at 10:00 previously on three consecutive days. Does that mean another is in the offing today?

 

Gringo

[blocp 10]

could we possibly range for a bit?

[DbPhoenix 42]

Already winding down. With a range this narrow, there aren't going to be many RETs on a 1m bar interval.

 

Db

[DbPhoenix 42]

Some may not have traded that "REV" as a RET due to the proximity of R at 16. But that shouldn't stop you. The fact that price returned there suggests that the R wasn't as strong as supposed. So the proximity of it shouldn't stop the long trader from giving it a shot. If it doesn't work, go back into REV mode.

 

Db

[DbPhoenix 42]

And here we are at top R.

 

Db

[DbPhoenix 42]

How could we tell? S/R tell us whether it's a RET or REV, but they are everywhere.

Gringo

 

Edit: The fact that price wasn't able to go up after 2812 to above 2816 tells it's not a REV but a RET?

 

No, the fact that it held at 10 then broke the SL at 14. Note how $ reacted at 10.

 

Db

[DbPhoenix 42]

LH good reason to exit the long, even if one doesn't short here.

 

Db

[DbPhoenix 42]

And an itty-bitty hinge.

 

Db

[DbPhoenix 42]

Downside fakeout?

 

Db

 

.............

[DbPhoenix 42]

SL holding.

 

Db

 

..........