Trading The Wyckoff Way

[Niko 10]

Levels for the morning:

 

 

Remember the chat link is http://stinto.net/en/sn6x5

 

We are almost at the top of the current TR.

 

Edited January 17, 2013 by Niko

[Niko 10]

My levels for the morning:

 

[Niko 10]

I am currently working in honing my context definition skills:

 

 

I am using the 15m and the 60 m charts as DB suggested but I am having difficulty getting a convincing definition to use as a base for decision making.

 

What i see is current weakness after the failed BO at the top of the current TR.

 

But the 60 minute tells me that right now we are approaching an important level (28-34) and still within the context of an uptrend towards the top of the TR.

 

This could either mark the continuation of the down move all the way to the bottom of the TR at 05 or a reversal at the MP of the TR towards the top.

 

Any suggestions?

 

P.S. In the 15 min chart SDS means Stronger Down Swing

[Niko 10]

Chat link:

 

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

[DbPhoenix 42]

I am currently working in honing my context definition skills:

 

I am using the 15m and the 60 m charts as DB suggested but I am having difficulty getting a convincing definition to use as a base for decision making.

 

What i see is current weakness after the failed BO at the top of the current TR.

 

But the 60 minute tells me that right now we are approaching an important level (28-34) and still within the context of an uptrend towards the top of the TR.

 

This could either mark the continuation of the down move all the way to the bottom of the TR at 05 or a reversal at the MP of the TR towards the top.

 

Any suggestions?

 

Perhaps you're paying too much attention to levels and lines and too little to what traders are doing. The ZigZag in particular is most likely a bad idea in that the point of keeping an eye on the waves is to provide you with a greater sensitivity to the flow, i.e., who's in control. To reach that you needn't draw anything. You can tell by the way the movements look whether buyers or sellers are in control or traders are just "keeping busy" waiting for something to prompt them to act.

 

The range here is 50 to 00. If you didn't short 50, then you're faced either with surfing or with waiting until you see something actionable that you recognize, such as that hinge that formed between 0930 and 1030 this morning. I suggest you get rid of all the lines and zones and so forth and back up to focusing on price movement. If you can't be there to trade the extremes and you don't want to surf and you don't see anything that screams Trade Me, then I suggest you do nothing. The opportunities will come. Your primary task is to stay awake so that you can take advantage of them when they do.

 

Otherwise, when does your trading session begin? end?

 

Are you in front of the screen throughout your trading session?

[Niko 10]

 

The range here is 50 to 00. If you didn't short 50, then you're faced either with surfing or with waiting until you see something actionable that you recognize, such as that hinge that formed between 0930 and 1030 this morning. I suggest you get rid of all the lines and zones and so forth and back up to focusing on price movement. If you can't be there to trade the extremes and you don't want to surf and you don't see anything that screams Trade Me, then I suggest you do nothing. The opportunities will come. Your primary task is to stay awake so that you can take advantage of them when they do.

 

 

Db, as always thanks. I am trading intraday only, and not holding positions after the end of the trading session (11:00 in my case) so I can only take advantage of what happens between the open and the end of the session, so essentially I have to surf for the time being. My plans for the future are to start taking longer term trades, but that will have to wait until I am proficient with intraday.

 

The problem I think am having is that when I actually reach a mayor S/R level during my session, I trade it as a minor S/R and end up with a 10 point trade at best, when I could get 50 points if I just sit on my hands.

 

Will give that a thought to see what solution I can come up with.

 

Now, regarding that hinge you mentioned, I did not see it as I was focused on the hinges found on the 30 tick chart (looking at the trees again) but I think I would have not trade that hinge as the short entry was too close to my S level at 30.

 

 

Anyway, thanks for your comments I will take them into account.

[DbPhoenix 42]

Now, regarding that hinge you mentioned, I did not see it as I was focused on the hinges found on the 30 tick chart (looking at the trees again) but I think I would have not trade that hinge as the short entry was too close to my S level at 30.

 

Which brings us back to your lines. First, support is only support if it provides support. Price has crossed back and forth over 30 repeatedly for two weeks. But even so, if you had taken the short and been stopped out by a rally off 30, what's the worst that could have happened? While you're waiting for opportunities that are in your forecasts, you're ignoring those that are being presented to you in the moment. Forecasts are possibilities, even probabilities. What's in front of you is a certainty.

[Niko 10]

Db, I am a little lost then.

 

The TIF levels are traced according to past TRs, some of these TRs are old and the S/R levels found through them have been crossed, anyhow, when watching PA around those levels one can see a change in pace in the tick chart and usually around those levels I have been able to find interesting setups (hinges, DB, LH, HL, etc)

 

What I understand from what you are writing is that I have to find S/R in RT via PA (Without tracing lines), and then check the history to see if that level corresponds to an extreme or MP of a BOX?

 

Now, I understand that we are in the middle of a TR between 0 an 50, but within that large TR, there are smaller TRs and S/R levels, so how does one take this levels into account in RT, or one should not pay attention to those minor levels and focus on PA to define current S/R levels in order to surf.

 

Thanks again.

[DbPhoenix 42]

I'm not suggesting that you have to do anything. However, based on your recent posts, you do seem to be in the weeds, which is a place in which we all find ourselves now and then. By focusing on what might happen and where it might happen and when it might happen with regard to multiple levels of potential support and resistance, you're not focusing on what's happening in front of you. You're looking to the future rather than the present.

 

Therefore, if I have anything to suggest, it is that you forget about support and resistance for a while and insinuate yourself into the rhythm of the movement. Are buyers or sellers in charge? For how long? To what extent? If the minor TRs and S/R levels are so minor that they yield little more than ticks, why bother with them? Either surf price or wait for more substantial opportunities.

 

Remember that tiny patterns and tiny movements yield tiny profits, if any. Unless you're trading commission-free, the trades just aren't worth it.

 

We can't always know in advance what we're going to do. There is a TR here between 00+/- and 50. Traders seem to find 30 an attractive level for trading. Beyond that, you may just have to wait until you're ready to open up your screen and wait for whatever opportunities present themselves.

Edited January 18, 2013 by DbPhoenix

[tupapa 10]

Copper has formed a hinge over the last few months and it looks like it will soon be exiting it.

I am opening the thread to discuss how this develops and how one might trade it:

 

We can anticipate an explosive move from this price compression but we don't know if it will take place to the upside or to the downside. Above price we have resistance at 4.55 and below price there is support at 2.8

 

Just because the lines are drawn, doesn't mean they are used as targets, much less for reversing a position, but it is useful to monitor traders behavior if/when they approach the level.

 

I read somewhere in the Wyckoff forum, than hinge breakouts should take place two thirds of the distance between the base and the apex, if not, it will most likely lead to choppy range. Breakout or not, this week we should have a resolution.

[tupapa 10]

Db, regarding this Oil hinge, which line do you take into consideration for the breakout, the solid or the dotted? Or do you just wait for the expansion in volume?

 

Any further material upside progress will lead to an upside breakout of the dashed hinge tomorrow.

[DbPhoenix 42]

If the move out is strong, the dotted lines are more likely the correct range.

[DbPhoenix 42]

-

 

The bottom of what has acted as a trading range appears to have altered its trajectory. This makes trading support a greater challenge. Therefore, I suggest that, barring a breakout from the top of the range, the trader focus on intraday springboards, whether lateral or triangular, such as the hinge shown in the second chart down. If he prefers and has the skill and psychological fitness, he can also choose to surf (see Trading in 90m).

 

 

 

 

 

[DbPhoenix 42]

-

 

Two hours of surfing using the 1m chart:

 

-

[PrymeTyme 10]

-

 

Two hours of surfing using the 1m chart:

 

-

 

aweosme just awesome !

 

are you in a kind of flow state while *surfing* like that ?

[DbPhoenix 42]

-

And to the end of the session:

 

 

 

are you in a kind of flow state while *surfing* like that ?

 

One could call it that:

The small buying and selling waves which occur during every stock market session run so many minutes. They are caused largely by the restlessness of active professional traders, much like the ripples produced by the wind upon the ocean. Traders must have activity; they make their livelihood by trading on fluctuations. Therefore, they engage in a ceaseless tug of war, trying to put prices up whenever the condition of the market is favorable, or drive them down when they find that the bulls are weak or have over-extended themselves. The degree of success or failure attending their efforts enables us to determine whether the market is growing stronger or weaker.

[PrymeTyme 10]

-

And to the end of the session:

 

 

 

 

 

One could call it that:

The small buying and selling waves which occur during every stock market session run so many minutes. They are caused largely by the restlessness of active professional traders, much like the ripples produced by the wind upon the ocean. Traders must have activity; they make their livelihood by trading on fluctuations. Therefore, they engage in a ceaseless tug of war, trying to put prices up whenever the condition of the market is favorable, or drive them down when they find that the bulls are weak or have over-extended themselves. The degree of success or failure attending their efforts enables us to determine whether the market is growing stronger or weaker.

 

Hi db

I actually meant your state of mind while trading , like peak performance

Flow state or trading in the zone . Do you experience such a state of mind

While trading ?

 

Thnx

[DbPhoenix 42]

Hi db

I actually meant your state of mind while trading , like peak performance

Flow state or trading in the zone . Do you experience such a state of mind

While trading ?

 

Thnx

 

No. More like follow the yellow brick road. It's much more difficult if one is trying to follow "the book" and DOM and indicators and so forth.

[tupapa 10]

Afternoon Bund Plan:

 

Short a re-test of 78, if we break above, short 85.

 

Long at a rejection of 54, if we break below, watch out for 39.

[Niko 10]

Levels for today.

 

Given the Hinge formed during the past few days I would wait for a BO before taking a position either long or short.

 

[Niko 10]

If anyone want to discuss backtesting issues I will be in the chat until 11:00

 

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

[david_uk 10]

Db,

 

Many thanks to you and all the others who have contributed to this thread. I only came across it yesterday and so far have managed to read upto page 43, but I thought I would put my two-pennies-worth into the mix.

 

From what I have read so far it appears as though the advice (to better understand the market's price action) is to have open a tick chart or (at the most) say a one minute time chart.

 

Speaking personally I have to say watching 'the tape' ie small timeframe charts not only tires me out but makes me dizzy. But more importantly I think concentrating on the market's tick by tick movement makes me lose sight of the 'bigger picture' which is the key question: is this market going up, or is it going down or is it range bound?

 

I absolutely believe that markets (sadly) do not follow a clear mathematical pathway -- if only they did, a trader's life would be a lot easier. But rather they move from one 'extreme' to the next 'extreme' and since markets are 'fractal' in nature these 'extremes' look different when the market is viewed in charts of differing timeframes.

 

On the ES, I tend to look at the 200,000 vol chart for the 'big picture' and the 100,000 and 25,000 vol charts for my trading. I find 'volume charts' brilliant for identifying market turns (or pivot points if you prefer) but something like the 15 minute or 30 minute chart to give a better perspective of 'speed' or 'market urgency' as it moves from the one extreme to the next. These 'market turns' I have highlighted on my charts with 'ellipses' and you will see that on the 25,000 vol chart there are more of these 'pivot points' than there are on the 100,000 or 200,000 vol charts.

 

Any chart, on any timeframe will show areas of 'congestion' (where a lot of 'to and fro' trading has taken place, within a relatively narrow price band). And often markets 're-visit' or 'retest' those areas before 'breaking out' beyond the 'congestion area'.

 

However until this 'breakout' takes place, those areas of congestion can and do act as 'regions' of potential support or resistance which means that they become price levels where you the trader has to make a call: be that an entry or an exit or a decision to remain on the side-lines.

 

Am I to be consigned to the 'dust-heap' because:

 

(a) I personally like a simple 10 period moving average on my charts?

 

(b) Or because I only look at charts that are usually never shorter than a 15 minute or a 25,000 vol chart?

 

© Or because I do look for 'patterns' (simple ones only) or trendlines (are they acting as support or resistance) or simple 1-2-3 reversals (in good old Dow Theory these were called 'swing failures') as denoting a possible change in the market's direction (or trend if you like)?

 

http://www.sierrachart.com/userimages/upload_2/1358864167971.png

 

http://www.sierrachart.com/userimages/upload_2/1358864305103.png

 

http://www.sierrachart.com/userimages/upload_2/1358864491737.png

 

Our current 'range' lies between ellipse 8 and 9. How we react at those levels will determine whether we break out of this narrow price band. We are presently drawing out on the 25,000 vol chart what appears to be a 'coil' (or triangle) how that pans out will determine what happens next

 

I look forward to comments.

 

Cheers,

 

David

[DbPhoenix 42]

I look forward to comments.

 

Cheers,

 

David

 

I don't know that reading the thread is going to be of much if any benefit to you unless you've read the course, or at least the part of the course I've designated as Wyckoff Lite.

 

To begin with, the markets are not fractal (and trendlines don't act as support or resistance, but then neither do MAs). Beyond that, however, Wyckoff's approach is based on price movement. If one is focused on bars, whether they be tick bars or volume bars or price bars or whatever, then he is not focused on price movement. That's why a tick chart or a T&S display (with price, time, and volume only) is necessary to understand the context (a 1m chart can be used in a pinch if one is watching the price move in real time; otherwise, one is watching price move up and down within a bar, like a bird whistle). If one doesn't want to study price in this way, then he won't be successful with this approach.

 

It's easy to overlook the fact that there were no intraday bars until fairly recently. There were ticks. And the total of these tick movements from the open to the close made up a daily bar. If one understands how this bar was created and that it did not spring fully-formed from some sort of pod, he sees it differently and interprets it differently. If he doesn't, then it becomes just a bar, and candles and color-coding become reasonable, even though they have little to nothing to do with price movement.

 

If none of this makes any sense, I suggest you scroll back and look at the charts I posted yesterday. One of the most common problems I've found amongst traders, beginning and otherwise, is that they can't tell up from down. This is particularly true amongst those who focus on "order flow". If the trader can't tell up from down without the use of indicators or some other extraneous aid, then his profit potential will most likely be limited.

[david_uk 10]

To begin with, the markets are not fractal (and trendlines don't act as support or resistance, but then neither do MAs). Beyond that, however, Wyckoff's approach is based on price movement. If one is focused on bars, whether they be tick bars or volume bars or price bars or whatever, then he is not focused on price movement. That's why a tick chart or a T&S display (with price, time, and volume only) is necessary to understand the context (a 1m chart can be used in a pinch if one is watching the price move in real time; otherwise, one is watching price move up and down within a bar, like a bird whistle). If one doesn't want to study price in this way, then he won't be successful with this approach.

 

Db,

 

I shall whilst we are on holiday in February (sunny Florida in place of cold and wet London) look at the Wyckoff course (or at least your 'lite' version).

 

I don't know what sort of intraday charting capability existed in Wyckoff's days ... was that why he needed to watch the 'tape' in order to get a 'feel' for the price action within the entire day? Point is today we are able to see that by means of the charting we all have access to.

 

Conceptually I find it difficult to comprehend how the way price 'winds' its way through the day on a tick by tick basis gives a swing trader a better idea of where the actual support and resistance levels make themselves felt.

 

But anyway let me revisit this forum after I have read more about Wyckoff and his methods.

 

It is coming up to 11:45 EST as I am writing and my 25,000 vol chart shows that we are still stuck within a rather narrow range (quiet before the coming storm, perhaps?) and now infact the 'minute range' is bounded by the purple horizontals I have drawen in on the attached chart.

 

http://www.sierrachart.com/userimages/upload_2/1358872977481.png

 

Cheers,

 

David

Edited January 22, 2013 by DbPhoenix
Correct formatting error

[Niko 10]

 

It is coming up to 11:45 EST as I am writing and my 25,000 vol chart shows that we are still stuck within a rather narrow range (quiet before the coming storm, perhaps?) and now infact the 'minute range' is bounded by the purple horizontals I have drawen in on the attached chart.

 

 

It looks like a hinge.

Edited January 22, 2013 by DbPhoenix
Correct attribution