Trading The Wyckoff Way

[DbPhoenix 42]

To Everyone Who's Interested In Learning This and Nobody In Particular:

 

"Accountability" is not about here's a trade I took this morning (or last night or yesterday) and posting the (alleged) results of these (alleged) trades, whether one does it every day or only occasionally, whether the results were positive or negative, regardless of how "good" the trade "felt" or "looked" or "seemed".

 

True accountability is about posting a plan for the coming trading session, whenever that might be, trading that plan, then reviewing the results according to whether or not the plan was followed and, if the plan was followed and the results were negative, if the plan needs to be revised. If one doesn't do this, he can expect to have to deal with impatience, overtrading, revenge trading, and a variety of other "emotional issues" that plague traders who have no trading plan (preferably one that is consistently profitable).

 

The trading plan can be as simple as (1) here's resistance and here's what I plan to do if and when we get there and (2) here's support and here's what I plan to do if and when we get there. The only reason not to follow the plan is, if and when price reaches one of these levels, the trader is not ready to assume the risk. If he is not ready to assume the risk, then the trade is off, and he can later determine why he was not ready to take the risk.

 

To ignore this process and instead wait for the trading session to begin so that one can determine how it all feels and seems and looks accomplishes nothing but to extend and flatten the learning curve so that one can spend (waste?) years learning what should otherwise take months.

Edited November 14, 2009 by DbPhoenix
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[DugDug 10]

DbPhoenix, "To ignore this process and instead wait for the trading session to begin so that one can determine how it all feels and seems and looks accomplishes nothing but to extend and flatten the learning curve so that one can spend (waste?) years learning what should otherwise take months."

 

Possibly the best thing I have read regards trading in a long time.

All the indicators, systems, discretionary styles amount to nothing if you dont have a plan - stick to it and then analyse it afterward.

thanks for putting it so perfectly- this should be a requirement for everyone starting to trade.

[wjrusnak 10]

Alright, back to work. I missed today, but noticed we failed again at 1792. I have marked what seemed to be a small range (1792 to ~1772). Judging from this, buyers might have issues at 1780 (maybe even 1776 since we can't forget that this is the upper level of a previous range), but a short may not be the best considering that its basically a midpoint of the newer range. If they get to 1760-1763, I would be looking for the long, thinking that buyers should be stepping in at about that point. If not, my next big bet is on 1740.

 

[DbPhoenix 42]

If they get to 1760-1763, I would be looking for the long

 

You may want to look at 72 for a long as well.

[Head2k 10]

 

Long zone 1768.5 - 72.25, preferably the top of this zone

Short zone 1789.5 - 93.5

This is the current range. Price now found R in midpoint at 81. I will not consider the midpoint to be R.

This range wraps around 80, the Oct high. If price is accepted outside of the current range, then I will look for a trade from 79-81 zone.

No R above the current range

S below the current range: 1758, (1747), 1737-40, 1730.

[DbPhoenix 42]

 

Long zone 1768.5 - 72.25, preferably the top of this zone

Short zone 1789.5 - 93.5

This is the current range. Price now found R in midpoint at 81. I will not consider the midpoint to be R.

This range wraps around 80, the Oct high. If price is accepted outside of the current range, then I will look for a trade from 79-81 zone.

No R above the current range

S below the current range: 1758, (1747), 1737-40, 1730.

 

Welcome back, Head. When you say that if price is accepted outside of the current range then you will look for a trade from 79-81, how will you define "accepted"? Do you mean that if it finds support between 68.5 and 72.25 that you will short at 79-81 (or the reverse if it finds resistance at 89.5 to 93.5)?

 

Granted it may be a little late for this discussion at this point.

[wjrusnak 10]

It was planned, initiated, and managed... Thanks for the level, Db. Buyers didn't quite make it to 1770 as I had drawn, but your 1772 was perfect. Another lower volume test at Support with a stop in placed ahead of the reversal. Too bad I can't scale yet. With time... and my account size.... (and yes I am paper trading the scaling points, hence the reason I'm not looking for a short yet).

 

[Head2k 10]

Welcome back, Head. When you say that if price is accepted outside of the current range then you will look for a trade from 79-81, how will you define "accepted"? Do you mean that if it finds support between 68.5 and 72.25 that you will short at 79-81 (or the reverse if it finds resistance at 89.5 to 93.5)?

 

Granted it may be a little late for this discussion at this point.

No, I meant accepted outside the outer limits, that is above 93.5 or below 68.5. And as for acceptance vs. rejection, I judge that discretionary.

I have a rule to never consider a midpoint of the current range as S/R. But if the current midpoint is a former extreme (the current range wraps around the former extreme, as in this case), and then if the current range is broken and price is accepted outside, then I consider the midpoint (= the former extreme) as S/R again.

[DbPhoenix 42]

No, I meant accepted outside the outer limits, that is above 93.5 or below 68.5. And as for acceptance vs. rejection, I judge that discretionary.

I have a rule to never consider a midpoint of the current range as S/R. But if the current midpoint is a former extreme (the current range wraps around the former extreme, as in this case), and then if the current range is broken and price is accepted outside, then I consider the midpoint (= the former extreme) as S/R again.

 

Gotcha. Thanks for the clarification.

[DbPhoenix 42]

A couple of charts . . .

 

 

 

 

[wjrusnak 10]

Interesting situation here. Already in the evening session, traders have broken the recent highs, leaving us with air above and our familiar levels below (1792, 1786, 1780ish, 1772). So far tonight, they have been having trouble getting above 1798, which may be broken soon, but could in fact provide us a level for the morning session (long or short depending on where we open). My plan is to focus on whatever levels are produced overnight (possibly 1798) and also 1792. If this is a true break-out, we should hold that support and possibly break even higher. As a side note... I still can't believe we're going higher, but I won't argue with the market.

 

[DbPhoenix 42]

Interesting situation here. Already in the evening session, traders have broken the recent highs, leaving us with air above and our familiar levels below (1792, 1786, 1780ish, 1772). So far tonight, they have been having trouble getting above 1798, which may be broken soon, but could in fact provide us a level for the morning session (long or short depending on where we open). My plan is to focus on whatever levels are produced overnight (possibly 1798) and also 1792. If this is a true break-out, we should hold that support and possibly break even higher. As a side note... I still can't believe we're going higher, but I won't argue with the market.

 

Also note that five of nine sectors have made new highs.

[Head2k 10]

 

 

Long zone 1792.5, 1781

Short zone 1801.5, (1807), (1815)

Price broke above the last 3 days range, but we are at a potential R, in the space between two large historical ranges. 1801.5 is the very extreme of the lower one while 80 is the top of its value. The value area bottom of the upper range is not so easily definable, but it could be 1807 or 1815. So until we get through 15 the way up is not clear yet.

1781 is a long level for sure, I must be more careful with 1792.5. And I must be careful with all shorts, because the R is a bit unclear to me. No harm done if I just watch.

[wjrusnak 10]

1792 was the perfect level, but the trade set up at 1794 and had me stopped at 1793 before hitting 1792. There was no TD at 1792 and it was a perfect V bottom. That hurt...

 

EDIT: I figured it would only be right to post a losing day. Anyways the plan went well, I longed the 1792 area and shorted the 1800 area (both stopped out with the 1800 stop catching an entire point of slippage) then I shorted what looked to be a climax at 1805. There were TDs for both of the shorts, but buyers just wanted this day. Had I caught the long, I definitely wouldn't have been shorting.

 

In any case, I usually start the week off bad, so better luck tomorrow.

 

Edited November 16, 2009 by wjrusnak

[Head2k 10]

I missed the 92 long because it wasn't my setup. I have a V reversal setup but it has quite strict requirements which weren't fulfilled in this case. But then I entered after the 1801.5 breakout, during the formation of springboard at 9:43. Not a big profit from that trade but at least something.

I was apperently wrong with 1807, but didn't do anything there anyway.

[wjrusnak 10]

Already we have some selling in the evening. Tomorrow I'll be looking to get long around 1794-1792 if the opportunity is given. Today also provided us with some R levels (1800, 1805, 1811-1813). Even tonight we had price break through 1800 then reject it from the lower end. I'm guessing buyers would want to try out the 1813 area again to see if the supply is serious at that level. If not, a short upon the break of price into the lower range (1770-1792) could be warranted.

 

[firewalker 10]

Yesterday we still went up further, but we reached an interesting point imo. We have a big area spanning from 1810-1815 to 1870-1875, the big range that we were stuck in during July 2008. It looks like we reached the lower end of the range, and I'd be surprised if we can get to the opposite side so easily. That is, assuming those areas are still as valid today as they were in the past...

 

[Head2k 10]

 

 

Short zone 1812-14, 1837-42.5

Long zone ~1796, ~1792, 1781

Continuation trade through 1805 possible, if there is a strong momentum and a setup.

It seems like a higher S was found at 1795-6, which could be VAL of the potential current range. The first rejection found R in 1805 midpoint and price returned to 96 again. Now we are getting a higher high again there.

I will look for a trade off a higher low (expected ~97.75-98). If this fails then there is 95 and finally 92.5-89.

As for R, the 1814 is within tolerance of the 15 level I had yesterday. This is where retracements went after breaking the July 2008 range, and that would suggest that I can consider it as VAL of that range. The next major R is 1837-42.5 midpoint zone.

[Head2k 10]

 

Result: The higher low I wanted to trade off occured premarket so I missed it. And it reached higher than I expected anyway.

Then I took a continuation trade after a break of 1805 and it was a bad trade. I need to remember when I can take continuation trades. I can take them when a proper pullback is not expected. The move to and through 1805 was indeed quick, but it lacked volume / violence. That means 1805 was not enough of a resistance and I got stopped out by a subsequent pullback to a previous swing high.

Then I was tempted to take a long off 1797 at 10:51 but I passed. Technically it wasn't my trigger, but this hesitation shows I am quite unsure of (in)validity of my triggers.

Then I took a long off a higher low, which was OK, since it was my setup. Got SO at reduced stop.

And eventually I took a long off a lower low a few minutes later, which was my setup incl. a proper trigger too.

[wjrusnak 10]

Result: The higher low I wanted to trade off occured premarket so I missed it. And it reached higher than I expected anyway.

Then I took a continuation trade after a break of 1805 and it was a bad trade. I need to remember when I can take continuation trades. I can take them when a proper pullback is not expected. The move to and through 1805 was indeed quick, but it lacked volume / violence. That means 1805 was not enough of a resistance and I got stopped out by a subsequent pullback to a previous swing high.

Then I was tempted to take a long off 1797 at 10:51 but I passed. Technically it wasn't my trigger, but this hesitation shows I am quite unsure of (in)validity of my triggers.

Then I took a long off a higher low, which was OK, since it was my setup. Got SO at reduced stop.

And eventually I took a long off a lower low a few minutes later, which was my setup incl. a proper trigger too.

 

Almost identical to my day except for the fact that I took a short off the break of a hinge at 10:04am (resulted in only +1). Everything else resulted in a stop. Luckily I keep very tight stops due to my aggressive entries, so it didn't kill me overall. Again... better luck tomorrow

 

EDIT: The hinge that I took short:

 

[wjrusnak 10]

New range: 1797 to ~1814. I'll be looking long at the lower end and if we get some strength (maybe higher high overnight), 1805 could even provide some nice S. If we don't have the strength to break up, the short will be at around 1814.

 

[wjrusnak 10]

Not too much enthusiasm for these new highs. Lower volume and less movement.

 

 

 

EDIT: Apparently CNBC noticed the same thing

 

"Rally's Low Volume Prompts Question: Whither Buyers?"

[DaKine 10]

Back to business for me... Have the same levels as wj

Long Support 1797 - 92 zone

1805 midpont

Short Resistance 1814 -1812 zone

 

Breakout above 1814 look for long if not already long at previous R 14-12s...

Breakdown below 1797-1792 look for short w/ bottom of that range being 72 w/ mid of 81

 

I have my attempt at Supply and Demand lines drawn in and they are forming a wedge or my perception of a wedge... Still playing S/R but interested in seeing how the wedge if it is a wedge plays out...

 

Cya in chat :ciao:

[Gringo 10]

USD seems to be closing on an important s/r level. There are signs of significantly higher volume intensity and potential climax. The picture isn't clear at this moment but may require some caution.

 

 

Please note Gold has been running up while dollar has slowed its descent. Had traders stuck to believing USD and Gold are inversely related they would have had trouble sticking with holding longs in Gold after USD drop slowed down and even changed direction for a week. That's why it is recommended to compare price charts but trade each entity on its own merit. This is the post where gold and USD comparison was done earlier.

 

 

Heres' the current Gold chart. I haven't made much changes to it from last time it was displayed for comparison.

 

 

Just for comparison purposes I'll add the Oil chart as well. Oil is stuck around the 40 level still.

 

 

USO Monthly

[Head2k 10]

 

Long zone 1795-7, 1792, 1781

Short zone 1812-14, (1837-42.5)

Continuation trade through 1814 possible