Trading The Wyckoff Way

[Niko 10]

Niko

 

for my taste the TL from 40 to 30 is redundant and wrong, trend lines “serve to define the stride of the price movement...".

you should have plotted it as close as possible to the immediate trend.

 

just my 2c

 

Tomer.

 

Tomer, you were right about the bad trend line, but it was not a trend line but a line that connects the high and the low of the Fib tool in Ninja, I use it for finding the 50% RET, and the line is just collateral damage. But thanks anyway.

[DbPhoenix 42]

Tomer, you were right about the bad trend line, but it was not a trend line but a line that connects the high and the low of the Fib tool in Ninja, I use it for finding the 50% RET, and the line is just collateral damage. But thanks anyway.

 

Thank you for this clarification. I had been concerned that you had become the victim of alien abduction and had been retooled to draw a trendline incorrectly.

 

Whew!

 

Db

[pat15 10]

Fri was just a frustrating day ..missed the S at the R level and then tried to get entry but just cud not pull the trigger as price fell so fast ..did not want to chase but yesterday was one of those days even if one chased they cud make $$.

Was looking back over the 1m chart and cud see some potential 1 or 2 places to enter but while during the Live session it just dazed me how quickly the price fell.

 

Would appreciate if someone cud comment or how they traded the day this Fri 19, 2012.

 

Thank you.

 

 

Pat

[DbPhoenix 42]

See my post in the CWS thread. You may also be interested in the discussions which follow.

 

Db

[eminiman414 10]

I can't seem to get my 1 tick chart to look like the ones in the tickq thread. Looks like I can't zoom out enough to get a sense of how price is moving on the tick chart. Could a 1 tick range bar chart work?

[pat15 10]

Many thks Db. I saw your post and link to this forum. I read your comments and the explanation on the chart. Along with your thoughts/comments as to price behavior on the chart. I see now what to look for (still a lot of learning to do) & think about the price behavior. Taking trades bring another dimension in the picture and will watch the next few days to see the 1m chart and observe. Plot the S/R levels and see how price behaves at these locations.

 

btw what is C notch that you refered to? I do look at 5-10t chart along with the 1m chart but find it more distracting as it moves too fast/quick! may be look at higher tick chart for some nuaces to the price with in 1m charts .

 

I will look thru this forum now. Thank you for posting the chart for Fri. Just to check my S/R levels - Do you post these in Wyckoff forum?

 

Warm Regards

 

 

Pat

[DbPhoenix 42]

I can't seem to get my 1 tick chart to look like the ones in the tickq thread. Looks like I can't zoom out enough to get a sense of how price is moving on the tick chart. Could a 1 tick range bar chart work?

 

Ticks don't have a range. If whatever programs and providers you're using don't provide you with anything satisfactory, try a 5s chart. The point is not so much to duplicate what somebody else is doing but to view price movement with as little separation from the activity as possible.

 

Db

[DbPhoenix 42]

Many thks Db. I saw your post and link to this forum. I read your comments and the explanation on the chart. Along with your thoughts/comments as to price behavior on the chart. I see now what to look for (still a lot of learning to do) & think about the price behavior. Taking trades bring another dimension in the picture and will watch the next few days to see the 1m chart and observe. Plot the S/R levels and see how price behaves at these locations.

 

btw what is C notch that you refered to? I do look at 5-10t chart along with the 1m chart but find it more distracting as it moves too fast/quick! may be look at higher tick chart for some nuaces to the price with in 1m charts .

 

I will look thru this forum now. Thank you for posting the chart for Fri. Just to check my S/R levels - Do you post these in Wyckoff forum?

 

Warm Regards

 

 

Pat

 

Each OHLC bar has a notch on the left to show the open and a notch on the right to show the close.

 

Charts are posted premkt by participants in the Trading in Foresight thread.

 

Since you've never posted here, I don't know what your objectives are. If you're just beginning, there's quite a lot of preparation to do before plotting S&R levels, much less entering a trade. If you have not already done so, I suggest you read the Stickies, beginning, naturally, with the Introduction. Otherwise, entering trades off S&R levels will be just another deadend.

 

On the other hand, it's perfectly okay to determine for yourself whether or not others find success with this process in order to decide whether or not going through all this is worth the time and effort. The best way to do this is to compare results with intentions, i.e., compare what one plans to do with what one actually does. No other thread addresses this on a daily basis. Loads of people claim success in hindsight, but unless one knows what they planned to do ahead of time, much less what they actually did in real time, the hindsight claims are meaningless.

 

Db

[pat15 10]

Db I read the 90 mins trading thread last 3 weeks and found it valuable. I find the idea of following the price action [P/A] without any indicators better way to understand what the buyers/sellers are doing. Reading thru that forum made sense to me and what thot process that you and others posted taking place in live trading. The simple act of looking at few SL/DL, hinges, ranges plus the S/R is suffcient to understand the PA.

 

I will look at the PA action without the trades next week and also pst my S/R levels from htf charts. Of course one can plot many S/R levels and so many lines that one will be hit. It seems to me S/R going back 2 days is sufficient plus the pre-mkt TR on the day of trading.

 

I will mark up the charts and S/R. Hope I can find a way to post them. Meanwhile I will check the Trading in Foresight.

 

Thank you again for taking the time to post comments.

 

 

Regards

 

 

Pat

[Gringo 10]

 

It seems to me S/R going back 2 days is sufficient plus the pre-mkt TR on the day of trading.

 

 

Hello pat15,

 

There are times when the price drops out of a trading range and enters an area where there was no previous price activity in the preceding few days. In those cases finding S/R during the trading session becomes a juggling act.

 

It's not to say that S/R levels that are a few days old are not important, it is just that having looked at a smaller sample set you may not have yet identified the importance of levels that are older but not in immediate play.

 

Plotting your S/R levels in advance going back a few weeks makes it easier to just refer to them on a per need basis, while continuing to pay attention to the potential S/R that are in the vicinity.

 

Gringo

Edited October 21, 2012 by Gringo

[tupapa 10]

Thanks for opening this thread Niko, I think it will be very useful for folks to discuss entry strategies as it is the most important part of a strategy, without and entry, there is nothing to manage!

 

I am currently testing 2 types of entries, one is a trend continuation set-up and the other is a trend reversal set-up. I have found both set-ups to occur in any timeframe and any bar interval, to show this, I am providing 2 examples of the reversal, one is on the Bund using a 1 minute interval and covering a timeframe of a few hours, the second example is a daily silver chart that covers a few weeks.

 

So onto the reversal pattern, I am using the example of an up-trend reversal but the principles also apply to a reversal in a downtrend.

 

 

 

 

 

1- First of all I am looking for a trend, this might seem obvious, but without a trend in place there is nothing to reverse! This is a reminder, that there is no point on blindly searching for a reversal pattern, in a market that isn’t trending.

 

2- The rejection, this is the first signal of a potential reversal: What I am looking for is a strong wave in the contrary direction of the trend.

 

3- The test and confirmation: This is the final phase of the reversal sequence, and what I am looking for here, is a contraction of volatility, and a struggle, from the part of the buyers to continue with the uptrend. This confirms that buying pressure has been exhausted for the time being.

 

4- At this point, one can enter the trade at the break of the low of the previous bar, and wait for a trend to develop in the opposite direction.

It is a simple and very simple setup, the opposing wave at point 2, tells me there is strong interest in the opposite direction, and the shorter and slower wave during the test (point3) confirms the exhaustion. Now it is up to the sellers, to confirm the reversal.

 

As I said, I have only just started testing this sequence, and I am doing this to answer a few questions:

 

1- What conditions trigger an entry? Is it simply price breaking the low of the previous bar? Is a double top on the 1m chart enough to enter? 2 or mars that fail to make a new high?

2- Where do I place my stop?

3- Under what conditions do I exit, before my stop has been hit? (The market doesn’t behave as I anticipate it would)

4- Under what conditions do I re-enter?

5- How do I manage the position?

 

I am sure more questions will rise as I carry on the testing. Testing this sort of thing takes many hours, and whilst I am doing this, I am finding new questions and doubts which can be frustrating.. It is an absolute mission but it should give me the confidence in the strategy!

 

One more thing I have started to play with is HI-LOW bars, I find it much easier to stay tuned with the flow of the market, It allows me to judge the strength of buying and selling waves instead of focusing on the open and close of the bar, which as we all now are irrelevant.

Edited October 21, 2012 by tupapa

[tupapa 10]

 

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.

 

So the scenario I presented a few days has materialized, the dow made a LH on thursday and on friday it plunged, as I am sure you all know.

 

I believe price is at an interesting juncture. It is sitting at Support, but on friday there was no sign of rejection so it all depends on how price behaves this week. If buyers step in, they may reverse price but if they don't come in, sellers could push price through 13300.

 

If we break the lows, that small congestion around 13200 could provide support, below this, the next level is 13000

[eminiman414 10]

Sorry db I meant a range bar chart with the setting of 1. My range bar charts get set to the number of ticks not points. So a setting of 1 is 1 tick and a setting of 4 in the NQ would equal one point. Would that be closer to a tick chart then a 5 second chart. I suppose its already been too much talking about charts but just want to set myself up in a proper manner to better understand everything to the fullest.

[MightyMouse 12]

So the scenario I presented a few days has materialized, the dow made a LH on thursday and on friday it plunged, as I am sure you all know.

 

I believe price is at an interesting juncture. It is sitting at Support, but on friday there was no sign of rejection so it all depends on how price behaves this week. If buyers step in, they may reverse price but if they don't come in, sellers could push price through 13300.

 

If we break the lows, that small congestion around 13200 could provide support, below this, the next level is 13000

 

So what you are suggesting is that this week the market may go up or it may go down from the close on Friday.

 

Is there a reason for boxing in the area to the left and calling it support or is it simply an after-the-fact visual convenience to box it in and suggest that it stopped there because it is there? To put it another way, is there a good reason to call failed resistance support on the way back down or is it merely the assignment of something nonsensical?

[tupapa 10]

So what you are suggesting is that this week the market may go up or it may go down from the close on Friday.

 

Is there a reason for boxing in the area to the left and calling it support or is it simply an after-the-fact visual convenience to box it in and suggest that it stopped there because it is there? To put it another way, is there a good reason to call failed resistance support on the way back down or is it merely the assignment of something nonsensical?

 

 

Hello Mightymouse, first of all let me inform you that there is nothing after-the fact about this as the box and lines were posted before the fact, here.

 

The boxes certainly are convenient, and they are a great way to locate “value” in a chart. Markets can either trend or range. When they are ranging, they oscillate between support and resistance and boxes are a great way to show this! (If you are interested in this you should read the threads on this Forum, start with Cajas Famosas and then move to The nature of support and resistance).

 

Regarding the reciprocal quality of support and resistance, I believe the theory behind it is that those that sold at resistance, are going to hold on to their losses until price reaches their entry point, where they will be glad to close their position at breakeven, and remove the pain.

 

The way I see it is, support is the price where buyers come in, they are confortable placing their bids because they expect price to go up. If price instead makes a LH and comes back to their entry point, they might get scared and close their position, that’s why It’s important to monitor price at these inflection points, because it’s where buyers and sellers have the most to lose.

 

This might all sound very confusing to you but, if you are interested in this there is plenty of information here, just take your time with it, I promise there is nothing nonsesical about it

 

All the best.

Edited October 21, 2012 by tupapa

[MightyMouse 12]

Hello Mightymouse, first of all let me inform you that there is nothing after-the fact about this as the box and lines were posted before the fact, here.

 

The boxes certainly are convenient, and they are a great way to locate “value” in a chart. Markets can either trend or range. When they are ranging, they oscillate between support and resistance and boxes are a great way to show this! (If you are interested in this you should read the threads on this Forum, start with Cajas Famosas and then move to The nature of support and resistance).

 

Regarding the reciprocal quality of support and resistance, I believe the theory behind it is that those that sold at resistance, are going to hold on to their losses until price reaches their entry point, where they will be glad to close their position at breakeven, and remove the pain.

 

The way I see it is, support is the price where buyers come in, they are confortable placing their bids because they expect price to go up. If price instead makes a LH and comes back to their entry point, they might get scared and close their position, that’s why It’s important to monitor price at these inflection points, because it’s where buyers and sellers have the most to lose.

 

This might all sound very confusing to you but, if you are interested in this there is plenty of information here, just take your time with it, I promise there is nothing nonsesical about it

 

All the best.

 

OK, so, given your analysis, do you go short or do you go long now that price is at an area that you designated as support?

[tupapa 10]

OK, so, given your analysis, do you go short or do you go long now that price is at an area that you designated as support?

 

None, just because price is at support, doesn't mean you have to enter. Support is just an area were one might find a trading opportunity.

 

See this and this, where I outline my reasoning for a potential entry that materialized itself.

 

Let me make clear my friend, that I am by no means an expert, and I am still learning to judge the markets by their own action, by comparing the lenght and duration of the buying and selling waves, and I do not claim I can predict the future action of the market, nor is this my objective.

 

As things stand, there is no reason to exit the short, if however, buyers step in at support, a long should be executed.

[MightyMouse 12]

None, just because price is at support, doesn't mean you have to enter. Support is just an area were one might find a trading opportunity.

 

See this and this, where I outline my reasoning for a potential entry that materialized itself.

 

Let me make clear my friend, that I am by no means an expert, and I am still learning to judge the markets by their own action, by comparing the lenght and duration of the buying and selling waves, and I do not claim I can predict the future action of the market, nor is this my objective.

 

As things stand, there is no reason to exit the short, if however, buyers step in at support, a long should be executed.

 

Don't mistake my posts as attacks of method or integrity. If your prior posts led to a decent entry and you took the entry, then that is great. If you didn't take the entry, but see how you may be able to use your analysis, then that is great too. The key is to make your analysis actionable.

 

No one can predict what will happen next so I wasn't expecting a prediction.

[pat15 10]

That is quite right gringo... My comment was based on Price/ Vol histogram and it was my understanding that very old levels are not relevant but when the price drops thru near by levels it may look for those previous levels.

 

Last Fri drop was one of those days where all the nearby levels were broken and my only good act on Fri was not to look for S level to hold ... Thus I did not attempt any L trade but as my post in the 90 min forum which led to my frustration of missing the earlier S ..

 

Db posted a chart and comments along with it ..and gave me something to think about and how he interprets the P/A it was great help for me. I need to adjust my smaller tf chart of 5T to something bigger so it does not become distraction during the Live session. May be someone has tried some other small tf and found it helpful.

 

Look forward to go thru this forum in future.

 

Thank you

 

Regards

 

 

Pat

[Gringo 10]

Price is close to potential support around 65 and an interesting day lies ahead.

 

 

 

It may take most of the readers only a few minutes to read these comments but to think things through and write all that in the chart is taking quite a bit of time and I am beginning to wonder what I have gotten myself into.

 

Lets hope I can keep up with this a bit longer.

 

Gringo

 

It clearly has been paying off.

 

Db

Edited October 22, 2012 by DbPhoenix

[Niko 10]

Here is the first part of my homework, I am looking into ways of making the most of this exercise, so any suggestions would be appreciated.

 

This is what I have done so far with the data:

 

According to the initial strategy post, these are the entry conditions:

 

 

1. At the BO of the last high, this can be done with a stop or an stop limit order, placed before the price had reached the last high,

 

2. After the BO, at the RET to the LH, this can be done waiting for price to go back to the last high and entering with a limit order at that level or waiting for price to go through the last high and placing a stop or a stop limit order above market price.

 

At both places I am assuming one sets the stop loss at the same place....

 

I have done that at with the chart provided for the 17th of October, the trades were taken in market replay, stop entries are marked with a blue dot, limit entries are marked with a purple dot. Long entries are highlighted in green and Short entries are highlighted in red.

 

The trade information is provided in the spreadsheet.

 

Although impossible in real life, because of FIFO position closing. it was assumed that only the trades that went to touch the stop loss during the trading session (8:00 AM to 12:00 PM) where exited, the rest remained opened until the end of the trading day.

 

For each trade, I calculated the Best Price During Trade or BPDT in the spreadsheet.

 

As can be seen from the chart and the spreadsheet, there was no practical difference in entering with a stop or a limit order, except in trades 13, 20 and 27, where the limit orders were not executed. Now, please acknowledge the trades were taken in market replay RT, and everything that moved above LSH or below LSL was considered a breakout, perhaps If one defines more strict rules about what is a valid BO the differences between Stop and Limit entries would be much notable.

 

 

 

The spreadsheet can be found in here:

 

http://www.traderslaboratory.com/forums/attachment.php?attachmentid=32254&stc=1&d=1350900785

 

 

I will post next what would have happened if the only trades open were those around S/R.

entryevaluation.xlsx

Edited October 22, 2012 by Niko

[Niko 10]

I have removed the trades that were not happening near predefined S/R levels, according to the levels posted before the 17th trading session in the TIF Thread.

 

http://www.traderslaboratory.com/forums/wyckoff-forum/6274-trading-foresight-wyckoff-forum-79.html#post163725

 

In this scenario only 13 of the original 31 trades would have been taken.

 

entryevaluation2.xlsx

[Niko 10]

This last chart, just in case someone wants to see how volume interacted with price during the session.

 

[Niko 10]

Tupapa, thank you for participating in the thread.

 

I have quoted the entry description part of your post, and wrote some questions that come to my mind;

 

 

1- First of all I am looking for a trend, this might seem obvious, but without a trend in place there is nothing to reverse! This is a reminder, that there is no point on blindly searching for a reversal pattern, in a market that isn’t trending.

 

 

Q: At which point you start defining the movement as a trend? Higher Highs and Higher Lows?

 

 

2- The rejection, this is the first signal of a potential reversal: What I am looking for is a strong wave in the contrary direction of the trend.

 

 

 

Q: When you say strong you mean, strong volume or a wide movement in price will suffice?

 

 

3- The test and confirmation: This is the final phase of the reversal sequence, and what I am looking for here, is a contraction of volatility, and a struggle, from the part of the buyers to continue with the uptrend. This confirms that buying pressure has been exhausted for the time being.

 

 

Q: What do you mean by struggle? Is it strong volume with no advance or even decline in price.

 

 

4- At this point, one can enter the trade at the break of the low of the previous bar, and wait for a trend to develop in the opposite direction.

It is a simple and very simple setup, the opposing wave at point 2, tells me there is strong interest in the opposite direction, and the shorter and slower wave during the test (point3) confirms the exhaustion. Now it is up to the sellers, to confirm the reversal.

 

 

Q:Why wait for the low of the previous bar. I mean, if trading in RT, and imagining one has a very low Time frame for execution (10 seconds or 10 ticks), don´t you think one could enter at a better price?

 

Q: How do you take into account S/R levels. Would you enter a trade irrespective of these levels?

[Bern 10]

After going for the first time through the "Wyckoff Lite" selection, I would like to start reading now for the first time the "Course".

 

Wyckoff says at the begining "...that everything in the Course is important. Nothing is superficial..." and he even wrote a warning:

 

"Every paragraph -every line- in this course is vital -it was put for a very definite purpose.

Do not neglect any part of it ...."

 

And my doubt concern the parts of the Course dealing with point a figure charts. Do you advice to follow Wyckoff´s warning to the letter and read them or could they be skipped, at least in a first reading?

 

Thanks.