Trading The Wyckoff Way

[erierambler 10]

Ehm, I'm not sure we are still talking about the same thing here :\

I don't see anything special about 1366, so I don't pay much attention to that level, hence the only rejection I would look for occurs at or near resistance.

 

LOL, I guess not.............i was wondering how you would define rejection in this case, ex. at what point (price) would rejection be confirmed in your instance?

Mine is that when price comes back to 1366 , we would have rejection. That may or may not be what happens.........

[firewalker 10]

LOL, I guess not.............i was wondering how you would define rejection in this case, ex. at what point (price) would rejection be confirmed in your instance?

Mine is that when price comes back to 1366 , we would have rejection. That may or may not be what happens.........

 

Oh... I see. Looks like a bit of miscommunication there

 

I wouldn't wait for price to come back to 1366, I think 5 points is a lot to wait for. If I see price failing to go higher and reverse off resistance on decent volume, I'll usually short. If I'm right, price will usually continue lower fairly immediately, if not I can always stop myself out or wait for a re-entry (which sometimes is fairly soon there after)...

[firewalker 10]

I was basically looking at the same yesterday, which I why I was surprised to see the NQ hit resistance but the ES stay behind. Might be worth following both next to eachother, I've often found breakouts to be far more reliable when the corresponding resistance level on a correlated market is breached simultaneously.

 

Well... the NQ is back below 2000... so that does seem to confirm the 'false break' scenario... (2000 was a fair entry signal too imo)

[firewalker 10]

Well... the NQ is back below 2000... so that does seem to confirm the 'false break' scenario... (2000 was a fair entry signal too imo)

 

and again reaction off 2000...

[firewalker 10]

Well... the NQ is back below 2000... so that does seem to confirm the 'false break' scenario... (2000 was a fair entry signal too imo)

 

and again reaction off 2000...

 

Here's the chart of the trades...

 

There's obviously the context needed, and that context was what I posted this morning in this thread. The NQ finished yesterday at resistance (my horizontal lines), but the ES still had some way to go (up to 1371). The action overnight (congestions) also showed that 2000 was indeed an important level.

 

Price opened above resistance at the NQ, but in the middle (1368) on the ES. There was no short on the ES (the rejection erie and I talked about), so I took my eye towards to NQ to see what happened there. We broke back below 2000, but instead of going short immediately, I prefer to wait for a move back which in this case I was lucky enough to have, so I could enter with a very tight stop at 2000. First red dot.

 

The exits are my own personal preferred style, but what I wanted to illustrate was that if breakouts occur on one market, but not on the other, they tend to be less reliable. I know the NQ can have a "mind of it's own", but it's still very much correlated with the other e-minis (see correlation matrix).

 

 

Note: I should point out that others might see different things when talking about rejection, breakouts and things like that. But I have my own kind of definitions and they work okay for me. (I also realize that technically the whole 2000-2006 area might be considered as resistance, and that this isn't a 'breakout' of that area).

Edited June 17, 2008 by firewalker

[erierambler 10]

 

Note: I should point out that others might see different things when talking about rejection, breakouts and things like that. But I have my own kind of definitions and they work okay for me. (I also realize that technically the whole 2000-2006 area might be considered as resistance, and that this isn't a 'breakout' of that area).

 

It could be pointed out as well that even though you show a correlation between certain futures that one's strategy , exits and entries , are different for each , one reason why others see different things. When I looked at the YM, and NQ and tried to trade the ES, I only confused myself. Now I look only at the ES and only look at the others as a matter of interest, not with respect to trading.

erie

[firewalker 10]

It could be pointed out as well that even though you show a correlation between certain futures that one's strategy , exits and entries , are different for each , one reason why others see different things. When I looked at the YM, and NQ and tried to trade the ES, I only confused myself. Now I look only at the ES and only look at the others as a matter of interest, not with respect to trading.

erie

 

I understand what you mean. That's why I look for clearly defined elements.

I was wondering, do you take premarket trades? After all, 1371 was the place to be...

[erierambler 10]

I understand what you mean. That's why I look for clearly defined elements.

I was wondering, do you take premarket trades? After all, 1371 was the place to be...

 

No premarket. As I'm still evolving, only taking one trade if one presents itself, premarket doesn't interest me. It only appears 1371 was the place to be in hindsight, but I preferred some confirmation of rejection.

erie

[DbPhoenix 42]

No premarket. As I'm still evolving, only taking one trade if one presents itself, premarket doesn't interest me. It only appears 1371 was the place to be in hindsight, but I preferred some confirmation of rejection.

erie

 

I haven't studied the ES as much as the NQ, but it likely has the same sort of tells that the NQ does since the dynamic of these is "organic", i.e., they are the result of trader behavior and not of random plots.

 

Here, for example, R is tested twice premkt, and one might think there are no other ops for the S/R trader post-open unless R is tested again.

 

However, note the tight range that occurs just before and during the open. Going short or long a break of this type of range is generally a good entry. Otherwise, there is a test of this just a few minutes later, at 0935, which also provides a good entry.

 

The advantage of this sort of entry is that it is nearly always good for enough ticks to enable you to get to BE if you do so quickly without waffling around about it. If, for example, you were to short the break of the range, you'd easily get to BE. However, you'd have to keep your wits about you in order to short the subsequent test (this is much easier to do if you know what you're looking for and you know what to do if and when you see it).

 

[erierambler 10]

Here, for example, R is tested twice premkt, and one might think there are no other ops for the S/R trader post-open unless R is tested again.

 

However, note the tight range that occurs just before and during the open. Going short or long a break of this type of range is generally a good entry. Otherwise, there is a test of this just a few minutes later, at 0935, which also provides a good entry.

 

The advantage of this sort of entry is that it is nearly always good for enough ticks to enable you to get to BE if you do so quickly without waffling around about it. If, for example, you were to short the break of the range, you'd easily get to BE. However, you'd have to keep your wits about you in order to short the subsequent test (this is much easier to do if you know what you're looking for and you know what to do if and when you see it).

 

Thanks for the note. Now that you point it out I can see it , but this morning it was a different story I had seen price and planned ahead of time if price came back into the previous day's range I would take the trade at 1366. ( looking for confirmation of rejection )

You have this down as an art.

 

erie

[DbPhoenix 42]

You have this down as an art.

 

 

I wouldn't go that far. But if one is going to trade Wyckoff intraday, it makes sense to get as close to true price movement as possible, and anything more than a tick chart is a summary to some extent. After all, he traded off the tape, not 5m or 15m bars.

[DbPhoenix 42]

I'm copying this here because (a) it's consistent with what I've been saying about these boxes and (b) it's brief and to the point.

 

The following is a basic idea of how one can look at MP to get an idea of future market conditions. I will try to make it simple and to the point. To get more detailed it is best for the newbie to get dirty with that screen time.

 

Market opens inside VA:

One looks for a two-sided range bound day until we exit the VA and find interest. If we test one side with no interest we expect price to return to the POC if not completely to the other side of VA to test for interest.

 

Market opens outside VA:

One looks for a test of the VA without any interest. At this point we anticipate that price will continue in the direction away from the VA looking for the new VA (many times behing held up by previous Value Areas).

Confirmation:

One of the best ways to confirm the above is by using Market Internals (e.g. TRIN). If we punch outside the VA but the Market Internals are not confirming the move one should be very cautious. Many times this will result in a move back inside the VA at which time we would look for a possible 80% rule to the other side. The opposite is true as well. If we are wiggling around inside the VA and Market Internals are strengthening in one direction, we would look to trade the move outside the VA in that direction.

 

Volatility Outside VA:

One can usually estimate the volatility by looking at A) Market Internals and B) previous Value Areas. If we exit one VA just to enter another one with two-sided internals you can expect some consolidation. One should also take note of significant highs, lows, and consolidation areas (intraday MP areas) both in rths and overnight.

 

Again, this is VERY BASIC information. In my opinion the best way to learn MP is to throw up the volume by price (or the pretty letters if you feel so inclined) and tpo lines and just study-study-study the chart. This will also allow you to start getting the feel for how the different distributions affect the above.

 

I do have one small quibble about market internals, or at least the TICKQ. I find quite often that if the T is taking off and price is just sitting there, price is more likely to go the opposite direction, at which point the T will follow. But this is of course not a sure thing.

[Hlm 10]

I do have one small quibble about market internals, or at least the TICKQ. I find quite often that if the T is taking off and price is just sitting there, price is more likely to go the opposite direction, at which point the T will follow. But this is of course not a sure thing.

I agree, I do not use (haven't for awhile) TICKQ as a market internal. Actually overall I have gotten away from using any of the Market Internals even though I still keep a couple up and take notice of their movement. However, that is how I started when I was learning Market Profile. The key is to find an overall market strength indicator that you are comfortable with and works with your strategy. For some it might be a larger Market Profile time frame while for others it may be a simple stochastic. Many Market Profile traders use a hybrid type system. They look for certain momentum setups around the upper and lower value areas to protect their position while the market decides if it will indeed continue the move. Enter on a smaller time frame and exit on the larger. Well...I don't want to get off topic. I guess that was a long way around to just say that I agree with your "quibble".

[DbPhoenix 42]

You're not off-topic at all. In fact, I went into some detail on TICKQ divergences in the Dailies section of my blog, and it's the only one I use. I agree that one should find something that "works" with his strategy, become familiar with how it behaves, then trust it. Since the T isn't massaged (like, for example, the TRIN), I prefer that.

 

As to MP, I don't use it either as such. But the auction market theory behind it, since it's so consistent with what I've learned studying Wyckoff, makes trading a lot easier.

Edited September 5, 2015 by DbPhoenix

[firewalker 10]

I haven't studied the ES as much as the NQ, but it likely has the same sort of tells that the NQ does since the dynamic of these is "organic", i.e., they are the result of trader behavior and not of random plots.

 

 

Your chart shows exactly the same setup that made me short the NQ (on my 1-min chart). The one difference is that I prefer to wait for a re-test instead of taking the break itself. Shorting on the break and moving your stop to breakeven would've taken you out by the tick. A tick chart illustrates the principle even better though. So I guess they do have pretty much the "same sort of tells"

Edited June 18, 2008 by firewalker

[erierambler 10]

Yesterday I was an observer, in otherwords I didn't really know what to do:)

So today here is my chart of potential S/R on the ES.

 

[DbPhoenix 42]

Don't neglect the macro:

 

 

[firewalker 10]

Don't neglect the macro:

 

Your demand line crosses price (on the right)... Some posts ago you commented on a chart of mine where I had drawn trendline 'through' price, and you said it was not drawn correctly.

 

Do you consider a channel to more important to guide when price is overbought/oversold, therefore ignoring these 'peaks', and just making sure the lines are parallel?

[DbPhoenix 42]

First, you're confusing demand/supply lines with trend lines. The two, again, are not the same.

 

Second, the demand line was drawn before price dropped through it.

 

Third, channel lines have to be parallel. Otherwise, you're tracking swing points, not the progress of the channel. You can do both simultaneously, but, again, they're not the same thing.

[firewalker 10]

First, you're confusing demand/supply lines with trend lines. The two, again, are not the same.

 

Second, the demand line was drawn before price dropped through it.

 

Third, channel lines have to be parallel. Otherwise, you're tracking swing points, not the progress of the channel. You can do both simultaneously, but, again, they're not the same thing.

 

I know they're not the same, that's why I asked if there was a difference in the way you draw trendlines as opposed to demand/supplylines. Perhaps I didn't formulate the question that well. Anyway, doesn't matter as you drew the line before price dropped through it, that answers it.

[firewalker 10]

Yesterday I was an observer, in otherwords I didn't really know what to do:)

So today here is my chart of potential S/R on the ES.

 

Sorry this is not posted in real-time, but the confluence of several elements gave a high probability long signal imo (or several long signals depending on what you're looking for).

 

The difficult part when trading these patterns, is determining the right exit imo.

Around 1349 is resistance, but price has had trouble overcoming 1342 on two occasions already today.

 

[erierambler 10]

Sorry this is not posted in real-time, but the confluence of several elements gave a high probability long signal imo (or several long signals depending on what you're looking for).

 

The rejection this morning at 1344 created today's "R" , thanks for the chart. I did a commentary on the first hour in my blog.

http://www.traderslaboratory.com/forums/blog.php?b=313

 

If your interested I don't want to keep posting here all the time , I might wear out my welcome

erie

[DbPhoenix 42]

 

The difficult part when trading these patterns, is determining the right exit imo.

 

It needn't be. As I've suggested, sell the first contract at R, the second at the break of the TL, the third at the breach of the LSL, and so on. It's only difficult if you make it difficult.

[firewalker 10]

It needn't be. As I've suggested, sell the first contract at R, the second at the break of the TL, the third at the breach of the LSL, and so on. It's only difficult if you make it difficult.

 

Well we just hit R...

 

Edit: Taking some off at 1342 just seemed the safest thing to do (at the time)...

Edited June 19, 2008 by firewalker

[DbPhoenix 42]

I was referring to the chart you posted.