Trading The Wyckoff Way

[tune 10]

Was there any form of TICK in those days?

[DbPhoenix 42]

Was there any form of TICK in those days?

 

If you mean literally, no. But then there were only a fraction of the listings then that there are today. So given that he was a tape reader, I suspect that he had a subconscious "feel" for how many issues were rising and how many falling. He also incorporated activity and pace, which mattered as much then as it does now. It wasn't that difficult to feel when the tape was jumping to life, just as it does today after Fed announcements.

[DbPhoenix 42]

Wouldn't it be great to bring Wyckoff back, he'd probably tune in within around 10 minutes and start making money out of the e mini's.

 

I suspect he'd wet himself over RT streaming charts.

[tune 10]

I suspect he'd wet himself over RT streaming charts.

 

And be quite pleased about getting Saturday off as well.

[gassah 10]

I don't recall where I read this,.

 

It's in the course and I'll dig it out this week.

[BlowFish 10]

Well, assuming that he was better at all this, he'd also be better about distinguishing between a "preliminary" selling climax and the real thing. .........

 

 

Did he offer any advice on this? It's something I have struggled with in the past? At least you can run a pretty tight stop and you usually get a bounce swiftly.

 

Actually it can be a wee bit tricky knowing of it was just a prelim right into the test. (will the test be successful or will it fail)

Edited April 14, 2008 by BlowFish

[DbPhoenix 42]

Did he offer any advice on this? It's something I have struggled with in the past? At least you can run a pretty tight stop and you usually get a bounce swiftly.

 

Actually it can be a wee bit tricky knowing of it was just a prelim right into the test. (will it be successful or will it fail)

 

Wyckoff did not invest his ego in his trades. Nor did he trade out of fear. Therefore, he had no problem with being stopped out. But rather than moan and wail about it and about what a failure he was as most traders do nowadays, he'd immediately shift into reassessment mode and look for new opportunities. If he saw climactic action again, he'd likely re-enter. Given how tight his stops were, he'd shrug off these trivial losses because he kept his eye on the prize.

 

Today, for example, even though the last attempt at a new high hit the old one to the tick, the short's still good. But even if it had been stopped out, so what? Just get another cup of coffee and wait for the next crest.

 

Edit: For example, there was a lot of discussion at the time over whether or not the April '01 swing low was a selling climax or not. At the time, it sure looked like it, and who knows how the landscape would have looked if it hadn't been for 9/11 just five months later (though one should note that the market was falling into that for more than three months). But even if one had bought that and also bought the 9/11 low, he would not have been out much, even though the true selling climax did not come until nearly a year later. But he would have avoided buying every single swing low along the way, focusing instead on those that included climactic activity.

 

Further edit: All this assuming, of course, that one is making no use of trendlines whatsoever.

Edited April 14, 2008 by DbPhoenix

[BlowFish 10]

As I figured the answer lies in trade management rather than 'predicting' if that was the 'real' climax.

[tune 10]

He also incorporated activity and pace, which mattered as much then as it does now. It wasn't that difficult to feel when the tape was jumping to life, just as it does today after Fed announcements.

 

Do you think the noise of the printing itself was in anyway helpful with this? I've often wondered about adding sound to the slient movie we know today, whether it be useful for trading purposes or not.

[DbPhoenix 42]

As I figured the answer lies in trade management rather than 'predicting' if that was the 'real' climax.

 

Partly. I suspect that he would have bought 9/11 since the action then was the result of panic. But then I also suspect he would have moved his stop up below the December lows and exited when the index failed to make a higher high. Maybe nic can help me out here.

[DbPhoenix 42]

Do you think the noise of the printing itself was in anyway helpful with this? I've often wondered about adding sound to the slient movie we know today, whether it be useful for trading purposes or not.

 

I'm sure it did. And it would be cool to add a ticker wave to the last traded price and last traded volume off the display.

[tune 10]

Glad you think so.

 

Interesting. Lots of options here. A ticker wave? As in a .wav?

[gassah 10]

Maybe nic can help me out here.

 

My responses are slowed by my real job. I can watch but can't touch.

 

nic

[DbPhoenix 42]

Today, for example, even though the last attempt at a new high hit the old one to the tick, the short's still good. But even if it had been stopped out, so what? Just get another cup of coffee and wait for the next crest.

 

I don't want this thread to become about a particular NQ trade, but I should point out that this is the third trip up to 1808.50:NQ and shorts may be wondering if they made the correct choice. If so, a break above this level might have more oomph to it than one might ordinarily expect.

[gassah 10]

I don't recall where I read this, but at some point he said that the best entry -- though the most aggressive -- was the climax; second best, the test; worst, the breakout above the intervening swing point, largely because everybody on the planet is looking at that point.

 

It's from section 7, p4.

 

"In taking a position in the market, which, of course, would be a long position, we have had, up to now, three opportunities:

 

(1)....having completed a selling climax...if we can get in near enough to the lows.

 

(2)...secondary reaction (test)

 

(3)...overcoming the previous top (automatic rally high)...however this is the least favorable of our three buying opportunities so far, since we would now be purchasing on an up wave, thereby materially increasing our risk, whereas previous commitments were established on down waves, close to the danger point.

 

Also, regarding (3), it's the "final confirmation of an important reversal."

[gassah 10]

It seems to be struggling down;

 

Oops, now he tells me. McLaren came out with this today that I didn't know:

 

"Currencies can show a different pattern of trending than other markets. That difference is they can struggle down towards a low and appear to be forming a low and then break to the downside. Stocks very seldom behave in that manner and indexes and commodities also seldom show struggles and higher low support and (then) break."

[habi 10]

Since you are talking about waves, it could be interesting, what happend since 2000. I compared the downmove from the high to the low in October 02 with the upwave to October 07. This upmove last nearly two times longer than the preceding downmove. Volatility increased since the last high and in this view it's doubtable, if the 1250 lows forms a long term bottom. If I'm correct in Db's interpretation of support and resistance, the we have resistance at 1555 and support at aroung 800. To mitigate the worse scenario, we need now a rally up.

 

[gassah 10]

resistance at 1555 and support at aroung 800.

 

This type of range is certainly consistent with historical bull/bear secular cycles. I bet the folks in 1969-70 who experienced a 31% DJIA decline didn't expect a 40% decline only 4 years later, as part of the 1966-1982 range.

[DbPhoenix 42]

Since you are talking about waves, it could be interesting, what happend since 2000. I compared the downmove from the high to the low in October 02 with the upwave to October 07. This upmove last nearly two times longer than the preceding downmove. Volatility increased since the last high and in this view it's doubtable, if the 1250 lows forms a long term bottom. If I'm correct in Db's interpretation of support and resistance, the we have resistance at 1555 and support at aroung 800. To mitigate the worse scenario, we need now a rally up.

 

 

Swing points provide a form of support and resistance, yes, but it's somewhat different from the support and resistance provided by zones. The "resistance" provided by points, particularly if they are isolated, is provided primarily by the inability of the trader to find a trade (which, after all, is the business of the trader). There's nothing going on up there, or down there, so price returns back to an area where these trades can be found, which is where the "value area" comes from.

 

In a V formation, price never stays anywhere long enough to provide these zones, and one is equally likely to find a trade at point A as point B or C or any other point. Since the ES has reached that top zone twice now, the resistance it provides is a bit more formidable than a single point. But whether we make a trip all the way down to the bottom is anybody's guess. If you'll look closely at this particular chart, what appears to be a V has some of those value areas or consolidations within it. 2004 was spent going more or less sideways, then the first half of 2005, then the second half of that year, then a little more than half of 2006. Each of these represents a potential waystation. We're at the first of them now.

[habi 10]

In a V formation, price never stays anywhere long enough to provide these zones, and one is equally likely to find a trade at point A as point B or C or any other point. Since the ES has reached that top zone twice now, the resistance it provides is a bit more formidable than a single point. But whether we make a trip all the way down to the bottom is anybody's guess. If you'll look closely at this particular chart, what appears to be a V has some of those value areas or consolidations within it. 2004 was spent going more or less sideways, then the first half of 2005, then the second half of that year, then a little more than half of 2006. Each of these represents a potential waystation. We're at the first of them now.

 

Yes, I see this consolidations and we have one on the bottom 02/03 and on the top 00 too. Most important thing I would point out was that we needed double the time to go up than down. In my understanding, the downmove was stronger/faster than the upmove. And now, after only three (or five in the second attempt) months we arrived already in the range from where we went up more than one year. So, at least on the first move down, the speed is increasing again.

 

I was searching for reasons, if we will break to the up- or downside from the range since January, but I can't favor one side. I was then looking on this monthly chart and came to the conclusion, that it don't look nice at this time.

To enhance this impression, we should be able to break to the upside.

[DbPhoenix 42]

Downmoves will generally take less time than upmoves, partly due to the cascade effect and partly due to the retail trader's nearly always entering too late. And the fear of standing in front of an avalanche is stronger than the fear of "missing out" on a move. And traders do tend to procrastinate in any case, which is one reason why they enter so late.

 

In any case, forget about looking for reasons, at least with this particular approach.

[DbPhoenix 42]

Our "Wyckoff short" is about 25 pts in the black here, and we're approaching long-term (back to January) support.

[Tannism 10]

I thought I would try to apply Db's eyeball methods post to a chart to give me something to follow. That seems to be the best way for me to get the hang of something.

 

I picked INTC because I think it is reporting today. Maybe it will move.

 

TannisM

[DbPhoenix 42]

You wouldn't be the Tannis from the "old" days, would you?

[Tannism 10]

Why? Recognize my work?

 

Hi. Db. I had some chocolate for you over Easter, but didn't know where to find you. Great to "see" you.

 

The old days...1998.

Edited April 15, 2008 by Tannism
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