Trading The Wyckoff Way

[DbPhoenix 42]

This has less to do with definition and more with your tolerance for and acceptance of risk. Given the establishment of the importance of the 145.25 area by that November trading range, buying the test of it at 10:38 should not be much of a leap. If one takes it, though, he must also accept the possibility that he will have to face multiple stopouts and multiple re-entries if he wants a tight stop. Here, a stop just below 145.26 would be sufficient. Otherwise, one would have to re-enter at least three times.

 

If a trader is going to consider being stopped out a failure on his part, he should not take the trade at all. If instead he's going to view being stopped out as information (what after all is the implication of being stopped out) that he can use to make a subsequent trade, he should go ahead with it.

 

Db

[tupapa 10]

This has less to do with definition and more with your tolerance for and acceptance of risk. Given the establishment of the importance of the 145.25 area by that November trading range, buying the test of it at 10:38 should not be much of a leap. If one takes it, though, he must also accept the possibility that he will have to face multiple stopouts and multiple re-entries if he wants a tight stop. Here, a stop just below 145.26 would be sufficient. Otherwise, one would have to re-enter at least three times.

 

If a trader is going to consider being stopped out a failure on his part, he should not take the trade at all. If instead he's going to view being stopped out as information (what after all is the implication of being stopped out) that he can use to make a subsequent trade, he should go ahead with it.

 

Db

 

Not sure if I agree with you on this one. The 145.25 is certainly important, but I don't want to enter the trade just because I have a level here, I want to observe price behavior at the level, and enter only, when there is a high probability of a reversal.

 

For me, this isn't the case until the test at 11:06. Here there is a rejection that breaks the SL, and a test resulting in a HL. It is at this point that I would be comfortable entering the trade.

 

You are suggesting entering the trade at 10:38, but I don't see much here that would make me enter a long, just a series of LLs and LHs. Then again, I am a beginer, and I am trying to keep it simple, and master one setup.

 

[DbPhoenix 42]

You have several subsequent tests and could enter on any one of them. If your objective is to find some way of entering V reversals, that is a separate setup.

 

Db

[tupapa 10]

No, I am not looking into V-reversals for the time being. My main objective with the post was getting my thoughts in order, regarding reversals, which takes me back to definitions regarding: S/R, Rejection, Test and re-test.

 

Its easy to use this terms and even identify them using hindsight charts. But in order to perceive them in real time, I need a specific definition, that allows me to identify and act upon it with no doubts. I find this even more important when focusing on a tick chart.

[tupapa 10]

Tomorrows plan for the morning.

 

At A, look for long on a rejection, enter at the test. If we break below A, go short on a test from the downside.

 

At B look for longs on a rejection, if we break below, go short on a test from the downside, and target is A.

 

Above C short on a rejection and long if we break and hold above, target becomes D.

 

At D, short a rejection, if we break and hold above, go long and target becomes E

 

If we break below A, I have 142.26 as a potential support level, if there is rejection I will go long.

[tomerok 10]

Tomorrows plan for the morning.

 

At A, look for long on a rejection, enter at the test. If we break below A, go short on a test from the downside.

 

At B look for longs on a rejection, if we break below, go short on a test from the downside, and target is A.

 

Above C short on a rejection and long if we break and hold above, target becomes D.

 

At D, short a rejection, if we break and hold above, go long and target becomes E

 

If we break below A, I have 142.26 as a potential support level, if there is rejection I will go long.

 

I would also keep an eye for a hinge play

Taking into account the S&R mentioned.

 

Tomer.

[DbPhoenix 42]

So you have no problem with having missed yesterday's trade?

 

Db

[tupapa 10]

I assume you are referring to Friday's trade (which I posted yesterday). Which I planed in foresight, but missed because there was no re-test (or no significant re-test).

 

 

 

The rant I've being going on about in my previous posts, is related to this, and it isn't the first time I miss such a trade, so my conclusion regarding this is:

 

145.20 Was my level, price broke below it so it is no longer "virgin". In such a scenario, waiting for a rejection and a test is a bit to demanding, and entering on the first rejection is accepted.

 

Regarding specific entry point, I can enter at the break of the Dl, or when I see some strong selling on the tape (Buyers can't hold 145.20-154.19 bid)

 

[DbPhoenix 42]

I suggest you not confuse definition with mechanization. Since you're trying to do all of this while trading, it is not unexpected that you would focus on entry criteria rather than on the behavior of price. That's why trying to do this while trading usually prolongs the process.

 

As to Friday's trade, I suggest you look at the waves and forget about demand/supply lines for the moment. If you do so, you'll find that you have a re-test of sorts immediately after the high point. This sort of re-test may be all you can expect on a tick chart.

 

Db

[tupapa 10]

Yes, but don't you need the entry criteria? Without it, you don't what you are looking for, and you won't see it right?

 

Here is the tick chart with the test that I believe you mentioned, to end the discussion.

 

As I said above, in these cases, I find it useful to focus on the price ladder, and initiate the trade when I see that buyers can't hold the bid at higher prices. (I would normally see buyers trying to make 145.20-145.19 bid, but sellers would immediately make it offer)

 

Personally, what I have gained from this discussion, is that I must be more aggressive, when entering at S/R levels that have either already been rejected or broken. On the other hand, when entering at virgin S/R levels, I am looking for more confirmation.

[DbPhoenix 42]

Or follow the buying and selling waves:

 

 

Note that the balance between the two suddenly shifts at the top. This is followed by a lower low and a lower high. That, if you like, can be your short signal.

 

A retracement may only be a matter of degree.

 

Db

[tupapa 10]

This morning price found R at D, resulting in a nice short and Support at 142.80, which is the MP of the hinge and the Value Area Low of the current range.

 

For the afternoon, the plan is:

 

At 143.13 Short a rejection. If we break above and hold above watch out for 143.19, if price rejects this, short, if it holds above go long.

 

Att 142.78 go long on a rejection, if we break below go short on a pullback.

 

At 142.52 go long on a rejection, if we break below go short on a pullback.

[DbPhoenix 42]

Yes, yes, and yes. However, you'll note that this swing low is at the same level as the major swing low on the 31st and that price has rallied. Therefore, I'd be inclined to exit the short and look for a long. Whether W would or not, I can't say. He might choose instead to bang his head against the wall.

 

Certainly there have been more and better opportunities to make money over the past couple of days using smaller bar intervals. But people like those who inhabit trading forums can't trade smaller intervals because they're not in front of their screens. So rather than feed these daytrader fantasies, I'd rather trade the longer interval. Whether it is as profitable or not is debatable, but at least it's doable.

 

On the daily, you've had both an upthrust and a downthrust, neither of which accomplished anything. We may here be in the middle of another failed attempt at an upthrust (actually, I should say failed attempt at an upmove; if it does fail, then it's just a thrust). Given that we're looking at another market closure here, one could be forgiven for exiting and waiting until Sunday night to see if there's another gap.

 

Db

 

Well, the "rally" failed even as I was posting the above. Should have waited five minutes. And no gap over the weekend. So the short's still on, and we're at marginal S. The uber fact is that we failed to get past the midpoint of the range. If the short were exited, there may be an opportunity to re-enter very soon (I was going to say "shortly", but . . .). However, one mustn't lose sight of the fact that the top of the most recent trading range is at 2700+/-.

 

Db

[tomerok 10]

Hi all

opened up a new chat room

Your Own Chat - Free & Easy! • » stinto.net «

 

Tomer.

[Niko 10]

Prices are in a hinge and the BO can be either up or down:

 

 

Levels of R

 

22

30

38

47

58

 

Levels of S

 

12

04-00

96

90

82

[tomerok 10]

today's plan embedded on chart

 

 

 

 

 

 

 

Tomer

[pjohnm 10]

Price moved from the High yesterday at 2724 to the Low at 2698 and has sinced bounced up through the MP at 2711, reversed at 21 overnight and has now tested 11 from above pre-open.

 

The move up from yesterday's low at 2698 to the overnight high gives an MP of 2709.

 

The extremes for today then are S at 2700 +/- and R at 22 +/-

 

The plan for today:

 

Go long at a succesful test of 11 / 9

Short failure at 9

SAR at 2700 / 2722 if there is a reversal signal

Take BO's of extremes if not already in position

[tomerok 10]

today's plan embedded on chart

pretty simple range plan

 

 

 

 

 

 

 

Tomer

[DbPhoenix 42]

Though I and others have provided plenty of wave charts, they tend to play a secondary role in day-to-day posts, even though they are particularly useful when one feels as though he's lost his way in the up-and-down and is no longer sure whether he should be trading to the long side or the short.

 

Waves are particularly good in real time for regaining one's bearings. Regardless of support, resistance, midpoints, trend and all the rest of it, waves are a reality check. If the selling waves are longer than the buying waves, then the pressure is down. If the buying waves are longer than the selling waves, then the pressure is up. If they are equal, or equivalent, you have a stalemate.

 

These need not necessarily be maintained on the chart. However, one should be able to eyeball them at all times. If he can't, then they should be drawn.

 

[Niko 10]

Thank you DB, we were discussing that in the chat, where btw you are missed.

 

I have been using the zig-zag tool in the RT tick chart, the setup is that 1 point retracement is needed to define a new wave, this has decreased considerably the number of entries I was getting in my backtesting and improving my overall performance, I just wanted to check if the Zig Zag tool is compatible with the Wyckoff wave chart and wanted to know your thoughts about it.

[Niko 10]

This is my recount of the day´s activity, I have also highlighted the Hinges that I identified in hindsight, as I am testing hinges in my back testing, I want to compare what I identify in hindsight with what I see in RT, still different things so I have to work harder. Anyway, the red diamonds represent entry levels, the exit is up to the strategy and number of contracts of each trader.

 

 

 

1. Price reached R at 22, sellers rejected buyers with strength and then tested it with a LH. CSW trade could be to short the break of the DL after the LH. But that is not what I am testing.

 

2. Price congested around S/R at 22, there were 2 entries activated using hinges but both of them failed, the only one that was successful was at the last hinge just before breaking R at 22.

 

3. Strong rejection around R at 30, the dynamics of the market changed fast an sellers took control of the market. CSW trade could have been tho short the hinge but it would have been to far away from R so I am not so sure, perhaps a break of the DL below the LSH (not large enough to classify in the ZigZag chart, but can bee seen in the gray price chart)

 

This is all hindsight as I am just back testing, so all the comments and critics are welcome.

[DbPhoenix 42]

I don't have any religious objections to it, but my point was that it can be of use during RT trading, and the ZZ is a hindsight tool. In order to get anything out of it re RT trading, one must compare what is forming to what was formed in the immediately preceding wave. Secondarily but also important is the overall context of buying and selling waves, and the ZZ may be of use there.

 

Db

[pjohnm 10]

The plan for today:

 

Go long at a succesful test of 11 / 9

Short failure at 9

SAR at 2700 / 2722 if there is a reversal signal

Take BO's of extremes if not already in position

 

The opportunity to take a long at 11 came during the pre-mkt, and from there price rallied to 22 at the open, failed to follow through with a HH, reversing to 17 before attempting a test. The test was in fact a LH, and the LL presented a short entry op. (1.5 pt profit)

Price instead found buyers at 14, broke the SL, returned to 20 and came to rest at the MP of the opening activity. This to me therefore, was not another short op.

 

Re chart 2

Price appeared to make a short lived hinge, and from there, made a HH. This time, there was a follow through and a long could be taken, with an exit and the break of the dl. (2 pt loss)

Price broke the dl soon after and congested between 21 and 24, the resolution of this provided another short op (exit at sl brk / breakeven).

 

Chart 3

Buyers made another HL at 20 and the breakout from the previous congestion area provided another long op, this time at the HH following the pullback. (0-4 pts depending on where you got filled and trade mgt tactics)

 

Worst case estimate, 4 trades, 0.5 pt net loss before charges etc

[DbPhoenix 42]

Now that we have a higher high, we can drawn a new trend channel:

 

[DbPhoenix 42]

Well that worked out nicely: