Trading The Wyckoff Way

[Gringo 10]

I don't pay any attention to claims anymore!

It's just me and the price.

 

Gringo

[Gringo 10]

Price decides to move right after our cut-off time at 11:00.

 

Gringo

[DbPhoenix 42]

That's a good example of a WTF entry. Note also the R at the LOD during the RET.

 

Db

[Bern 10]

That's a good example of a WTF entry. Note also the R at the LOD during the RET.

 

Db

 

Hi,

 

What is a WTF entry?

 

Thanks.

[Gringo 10]

Db,

 

I couldn't recognize it even in hindsight until you mentioned it. It's not in my plan but I'll attempt to keep an eye on it for future induction.

 

It is one of the weirder set-ups. The end result is remarkable though.

 

Gringo

[DbPhoenix 42]

Hi,

 

What is a WTF entry?

 

Thanks.

 

Click here.

 

Db

................

[Bern 10]

Click here.

 

Db

................

 

Thanks Db. Next time I will first use the search function

[DbPhoenix 42]

Thanks Db. Next time I will first use the search function

 

Won't do you any good. In this case, the word's too short. So this particular setup will be the Wyckoff Forum's little secret.

 

Db

[blocp 10]

I don't know if this is a wyckoff set up but it's a setup i've been playing with over the last week and seems to fit in with reversals.

[DbPhoenix 42]

I don't know if this is a wyckoff set up but it's a setup i've been playing with over the last week and seems to fit in with reversals.

 

It's a failed thrust, the opposite of a failed shakeout. You can Ctrl+F both in the course for more examples.

 

Your chart also includes the WTF entry just after 16:06 on your chart. Note the volume. The volume is essential to this particular setup.

 

BTW, re your notes on your chart, be careful of the "would have". This is how people get into curve-fitting and begin a long and slippery slope to ruin. You say you've been playing with it. Back- and forwardtest it. Maintain a record of stats. See what works and what doesn't. Then try it in real time. What looks good in hindsight doesn't always look so good in real time.

 

Db

Edited October 11, 2012 by DbPhoenix

[blocp 10]

Db I seem to have made a mistake thinking that the WTF trade was the one I showed in my chart but I can see where it is now, I haven't been looking at volume at all, in fact when I pay attention to it it seems to cause more trouble than good. I only have it on the chart as I like how it makes the price chart stumpier.

 

I have been watching the 1 tick since you posted on the 90 minutes thread about not trading and just watching, it's true after a while it all becomes clearer.

 

edit:

I have just read your last comment, thanks for the heads up, I have been watching the 1 tick and making detailed notes on the 60-90 minutes while I watch in RT. After I have 4 weeks worth of recorded days, I am going to go over them thoroughly and see what I can see and what is worth using, I will then go back over and backtest all the days that I have tick data for, which should be 90 and see if I can see the same setups, after this I am going to test it all on sim.

 

I have just started doing it this way after 3 years of watching charts and not really having any structure to my trading and it's only since treating it like a full time job that things are starting to click.

Edited October 11, 2012 by blocp
more to add

[DbPhoenix 42]

Db I seem to have made a mistake thinking that the WTF trade was the one I showed in my chart but I can see where it is now, I haven't been looking at volume at all, in fact when I pay attention to it it seems to cause more trouble than good. I only have it on the chart as I like how it makes the price chart stumpier.

 

I have been watching the 1 tick since you posted on the 90 minutes thread about not trading and just watching, it's true after a while it all becomes clearer.

 

That's okay; I understood what you meant. Fortunately, your chart shows both the failed thrust and the WTF, each with volume (which is useful now and then). A keeper.

 

Db

[DbPhoenix 42]

Saw your add-on above. Sounds like a plan. However, if the 90 days are consecutive, keep in mind that whatever you learn may apply only to that timeframe. If your results are encouraging, select days at random from the past year once you have the tick data, whether by accumulation or by downloading it from somewhere (if there's a user forum for your feed/program/whatever, somebody there might have the data you need; it's just a matter of uploading the file to you). If the results still look promising, you can be more confident that the setup applies to all the annual cycles.

 

I've also altered your chart somewhat to show both your failed thrust and the WTF setup. This isn't the thread for it since these setups can't be seen in advance. But what the hell.

 

Db

 

 

 

[Gringo 10]

Db,

 

How does a failed thrust add value? Thrust is from TR meaning the failure takes the price potentially to the bottom of the TR, doesn't it? Why is it any different from a normal range BO failure?

 

Gringo

[DbPhoenix 42]

That's what Wyckoff called it. And it's easier to search for. But pretty much the same thing.

 

Db

[tupapa 10]

A recap on the Dow:

 

1- Yesterday it broke the DL that Gringo shows on his chart with decision.

 

2- The down bars are very wide and they close at the low, showing strong selling pressure and very little buying.

 

3- Price yesterday made a Lower Low, indicating the start of a potential down trend.

 

4- So Now we wait for the rally, and if it shows weakness, we have a LL, followed by a LH which is a downtrend, and a reason to go short. One could place a stop 13661, which is a double top.

 

Gringo, I know you mentioned 14000 as the longer term Resistance, but sellers are clearly asserting themselves right now, and there is no guarantee that price will ever test 14000.

 

I believe the 4 points above, plus the analyss of the wave strucure could lead to a nice short.

 

I look forward to reading other thoughts on this.

[DbPhoenix 42]

This chart requires a couple of modifications:

 

 

 

[tupapa 10]

Thanks for the addition DB, I guess it all depends now on how price reacts at 13338, the S level you show on your chart.

 

Something else to add to the equation is the AD, which by the way shows a divergence. The Dow double topped, however, the AD line made a slightly Lower High.

 

So as I said in my previous post, I will wait for the rally. If the spread is narrow on the way up and price struggles, this would confirm the hypothesis that the strength balance has shifted from buyers to sellers, and one could go short, anticipating a LL that would confirm the beginning of the downtrend.

Edited October 12, 2012 by tupapa

[blocp 10]

here are my levels for today, i have noticed on the 10 minute chart that the 2723-27 area has been traded around over the last few days so maybe it might have some activity today. saying that price has strugled to get past 2721 so far.

[tomerok 10]

Good morning

I'l skip the charts for today.

only areas of interest

 

2745

2736

2727

2724

2716

2706

2700

2695

 

Tomer.

 

B.T.W

where's Grinkoff ?

[Bern 10]

In this msg http://www.traderslaboratory.com/forums/wyckoff-forum/13708-trading-journal-trading-log-3.html#post161709 you mentioned : "...I suggest that you're trying to apply the wrong strategy to the wrong instrument. If you're trying to trade RETs, REVs, and BOs, then whatever instrument you're trading ought to have at least some regard for S&R. This one has very little of that..." answering to a poster trying to trade rets and revs off S/R in Bund.

 

Regarding futures, are stock indexes more "respectful" with S/R and then more suitable to trade with a Wyckoff approach? What about currency futures? CL? Could you please elaborate on this and what futures do you think regard the most support and resistance levels?

 

In the same msg you also mention gaps as if they were problematic. Could you also please elaborate on this ?

 

Thanks in advance.

[DbPhoenix 42]

This is where testing comes in. Practically any setup will work if it's applied correctly to the right market. But there's no way of knowing whether or not you've got the right market to begin with if you don't test the setup (all of which is covered in the TBP thread). Support and resistance, for example, apply everywhere since they are functions of demand and supply. However, a given trader might find that the zones in a particular market or instrument are way too soft, that the stops required are much too wide, that the incursions into the previous swing high or low are much too deep. The individual trader has to determine for himself what he's willing to deal with. So I'm afraid you're going to have to find all of this out for yourself since no one but you knows what your risk tolerance is, what your objectives are, what you're willing to put up with.

 

As for gaps, besides the fact that they can blow S/R levels all to hell, we found in '99 that stocks that gapped overnite tended to drift sideways during the day. This made daytrading particularly frustrating. The B&Hers -- or at least those who traded off daily charts -- were the winners during the '98-'99 period, though they got completely screwed thereafter. Trading futures avoids all of that.

 

Of course, lots of people love trading gaps, and it's not my place to rain on anybody's parade, but given a choice between easy trading and difficult trading, I'll take the easy. Who needs the grief?

 

Db

Edited October 12, 2012 by DbPhoenix
Add link

[Gringo 10]

This post looks at different approaches to exiting in a trending market. In this particular instance the price exhibited the below behaviour repeatedly:

 

• Drop
  
• SL break
  
• Drop and stall
  
• Drop
  

 

Although, the trend is down, the stalling and SL breaks caused multiple exits and entries and I found trading this trend quite a challenge. This stalling may not be after every drop but in RT I started to see it as such. I did notice the price not going above the LSH and re-tried the replay leading to an ace in one kind of trade.

 

This lead me to examine further the advantages and disadvantages of exiting at SL break or LSH. The below points summarize the tradeoffs:

 

1. SL exit: is fast efficient and one gets to keep some profit off the bat. Re-entry is an issue as more engagement is required to keep up with the trend. Emotionally it's the easiest one to handle. Management vise it's a bit tougher.
    
   
2. LSH exit: gives some space to the price to breathe. Seems to catch most of the trend but the exits are farther from the lowest point. Emotionally it's tougher because of the price at times backing up quite a bit leading to emotional unease. Management vise it's the easiest. (Another problem is that in RT it is not known whether the trend will continue and if the trend is not long enough or consistent enough the profits evaporate)
    
   
3. Combination of both approaches: With multiple contracts the best of both worlds could be used with partial exits at SL break, S/R, and LSH leading to a more controlled behaviour.
    
   
4. Circumstantial use: Meaning under certain conditions SL is used and under others SLH? What are those conditions and how do I determine and test them? Doesn't it become arbitrary then?
   

 

I have also contemplated drawing SL somehow differently but they have served me well in the past. Changing them for a price behaviour that may not occur that often doesn't seem appropriate. Besides, the whole point of the SL is to show the supply/demand dynamics in RT and alert to possible changes.

 

Below are the charts that lead to this inquiry. Two use SL exits (I tried to play with SL a bit), one uses LSH exits, and the last one is for those who wish you show how they would have done it.

 

Gringo

Edited October 15, 2012 by Gringo
grammar

[blocp 10]

here are my charts for today,

[tomerok 10]

here are my charts for today,

 

since blocp put it so nicely and my analysis it pretty much the same

i'll skip my post entirely and just say

 

morning....

 

Tomer.