Trading The Wyckoff Way

[Niko 10]

Just in case it helps, i have read the whole course 3 times, I am a slow learner :crap:.

 

I think that the whole book is of great aid, but one must study it, not only read it like a cosmo in a salon.

 

And after reading the book, one should spend a good amount of time in this forum in order to get the between the lines insigth that Db provides.

 

I also recomend buying dbs book.

[Gringo 10]

 

In W we need to focus on the best posible entries, that are:

 

Rev: On trading ranges or at the end of trends as in DB or DTs

Ret: after the BOs or at climaxes after the test.

 

Niko,

 

After the climax the test itself is the RET.

Reversing your line: At the test after the climax.

 

Gringo

[pat15 10]

Many thks Db for the chart and explanation. I had one of the levels right the S level but had the R level wrong. More importantly my whole thought process was wrong compared to what you described. That is experience on your part and thanks for sharing it. Need more work on my end. However, the S/R levels need to be paid attention to and how the P/A behaves at these levels.

 

 

Regards

 

 

Pat

[DaKine 10]

Well, I trade mainly the european morning, so the Dax and eurostoxx are 2 other options. I chose the Bund because it seems like a nice balance between the daxs high volatility and the stoxxs low volatility.

 

Why, what are ur thoughts on the bund??

 

the thing is, Id rather not jump from one market to another, I'm not sure if it will be good for my development, now that I started with the Bund, I feel like I should stick with it.. you know what I mean?

 

Have you tried 6e? It's my instrument of choice, great for the eu morning sesh.

[tupapa 10]

So, it appears that Dow sellers mean business, yesterday we blasted through a major trendline, and the 13100 support level.

 

Now the next level to look for is 13000, here one would anticipate some support, but you never know, we could just slide through it.

 

It's worth pointing out that after such a prolonged and violent down move, Wyckoff would expect some sort of correction, a normal 50% reaction for this 500 point drop would be 250, which would take us up to around 13,350. This would be no reason to panic, and could be a good opportunity to add to our position, if one is not satisfied with his current size.

 

So as a recap, we now have support at 13,000 at R at 13,380. As things stand, there is no reason to close our shorts.

[tupapa 10]

Have you tried 6e? It's my instrument of choice, great for the eu morning sesh.

 

I will look into it Dakine, whats your trading style? Is it based on wyckoff, using a small bar interval?

[edswifa 10]

Sorry, what is db's book called and where is it sold?

[Niko 10]

Gringo, you are right. Thanks for the edit.

[Niko 10]

Hi tupapa.

i can only give advice from from problems i solved with my own performance.

i also noticed a difference between my backtested results and RT results.

 

what really made a difference for me in RT is cutting my setup and entry into smaller pieces and giving each piece a score. the trade score is the sum of the pattern/setup/entry trigger..

 

in a matter of days i could notice the changes i had to perform in order to get a better result.

other than that there is the screen time needed to build up the confidence in a trade since every trade is a little different even though the same rules for entry apply.

 

from your posts it seems you clearly know what you're looking for in a trade setup.

 

Just my 2 cents.

 

Tomer.

 

Tomer,

 

Have you posted your scoring methodology somewhere in TL? It seems interesting.

[Gringo 10]

Price is close to S at 65. First sign of some conviction in demand or slowdown in supply is the break of the SL. A price rise to 66.25 tp a minor LSH, more visible on the 2h chart, could also be in the cards. Last but not least, a natural reaction could take price back all the way to LSL around 66.5. The less price is able to go up before supply takes over, the more value we give to continued weakness and vice versa.

 

There's also the possibility of price dropping below S at 65. Our job is to stay prepared and when and if the event occurs just focus on the price, supply/demand, support/resistance, and trend for our decision making.

 

 

 

 

Keep in mind the trend is down for now even though price is around support.

 

Gringo

Edited October 24, 2012 by Gringo

[tupapa 10]

Thanks for keeping us updated on this Gringo, looking at the NQ weekly chart, I noticed a major DL remains intact, and as you point out in your previous post, we are approaching a very important level (the top of the range around 2650).

 

Would you consider a SAR here, if buyers step in, due to the Support, major uptrend and demand line confluence?

 

I am thinking one could at least expect a test of R at 2800, or even the top at 2880? Look forward to reading your thoughts on this.

[Gringo 10]

I will look into it Dakine, whats your trading style? Is it based on wyckoff, using a small bar interval?

 

Tupap,

 

Your only objective is to learn to trade and then make money. A trading vehicle is simply that, a trading vehicle, and is based on your choice, meaning you choose what gives you the greatest advantage in getting to your goals.

 

Also, note that you don't have to trade with a small bar interval simply because most in the Wyckoff forum do that. This is also only a choice and once you understand the principles of price behaviour, supply/demand, support/resistance, and trend, then choosing the bar interval becomes secondary. Yes, you would choose something that would help you to maximize profits while also keeping you sane and balanced. Too many gaps bring a bit of unnecessary chaos in my opinion at least in the shorter bar intervals.

 

Changing one's behaviour doesn't necessarily involve a corresponding change in a personal trait. Changing the environment can also lead one into a position where the unwanted behaviour doesn't have place to manifest. You don't have to suffer a bad trading vehicle and changing it might be akin to changing your environment. The trading plan also requires I believe to properly select something that helps us stick to our plans, the plans that are suitable for that environment.

 

I hope I am not intruding too much with my constant implorations. I see your potential and how close you are to your goals and would hate to see all your good work go to waste.

 

Gringo

 

p.s. Db, the past few posts may be more suitable for the Journal thread. Please feel free to move them.

[Niko 10]

Another quote, I think might be of help in this thread:

 

 

For those who aren't scalping and who like a deliberate approach to trading, the profit opportunities will most likely be found in the reversals which occur between support and resistance in these zones and in the breakouts which occur when price's state of equilibrium is fouled and it seeks a new one. But whether one trades reversals off of S&R or breakouts through S&R, he is working the edges and avoiding the "chop". If price isn't approaching S or R, much less testing it, he's waiting, and observing, and monitoring.

 

[pjohnm 10]

Hi Bloc - Re 2310 Chart.

Having watched price action in real time for the past few weeks, I thought it would be interesting to revisit a day with volume switched on. Seeing as you have already provided a chart, I will make my notes on this.

 

Re note 1 - I had been looking at the pre mkt supply line that had been broken and anticipated a LL after the swing high (14:20ish). Instead, price headed down for another test of pre mkt S, so then the entry becomes after a bounce should one occur, in this case the opening bar. We technically make a double top 3 minutes later (which was mentioned in chat) but given the break of SL previously and proximity of S, it would have appeared that the sellers were done. Volume declines on the way up, prices then retraces, but when we do get another shot of volume, price makes a HH. So we had no follow through to the down side and HH’s being created on volume spikes.

 

Re Note 2 - Volume declines again on the way to making a new high but also notice that following the compression bar at the high, price declines. The compression bar and resulting decline indicates a potentially important level. From the high at 2, price breaks the DL (exit long) but volume then kicks in and we get a bounce up. There is therefore no follow through to the sell side, yet. We then have a lower volume test of the high which indicates a lack of demand, and in fact price can only make a LH. Given previous break of the DL from the open and the lack of demand, a short below the low of the LH bar may be justified.

 

Sellers now test the opening SWH, and volume has tapered off on the trip down (sellers have retraced with less effort) The SL is then broken on higher volume, so buyers have shown that they are interested here and are lifting support from the level set at the open. In conclusion, supply failed to generate increasing activity on the way down. Note also the angle of descent v angle of opening upwave, there was less urgency in the downmove.

 

If the above action is enough to make one believe that buyers strength is greater, then one could hang their hat on the swing low, entering after the break of SL, but given the proximity of R, it may be better to wait for a BO. Note when the hinge develops, we eventually get a volume spike and it is enough to send price onto new highs.

Edited October 24, 2012 by pjohnm

[tomerok 10]

Tomer,

 

Have you posted your scoring methodology somewhere in TL? It seems interesting.

 

Hi Niko

No i haven't, attached is my october trading log, i left it as is so you can see the excel formulas in action.

 

on the last sheet "Entry Rules" each setup has it's rules, on the first sheet "Trade" i enter the trades i took during the trading session, and on Q&R column i enter how many rules per setup i followed. all this is done at the end of the day when i analyze each trade taken.

 

in RT i have a separate log in which i document the trade and also which rules of the setup triggered the trade.

 

this way i can compare my decision making in real time to my analysis in hindsight.

 

i sum things up weekly and monthly, and since i like graphs i started integrating them into the spreadsheet.

 

this process allow me to refine my rules as time passes, besides all the "regular" stats you can extract from the data.

 

note it's a work in progress so be skeptical..

i have not finished the backtesting nor the forward testing of the rules and setup's

 

 

hope it helps.

 

Tomer

Oct.xlsx

[blocp 10]

I didn't know if to put these charts in the journal thread or here. as what I want to focus on is the entry at point 15 this seems the best place for it.

I saw this entry in RT and mentioned it in chat, Db commented that would you want to take it as there isn't much upside with minor R at 2664. This might be wrong but I think I would be quite happy to take it as how do I know in advance if price will go through R or not. what made me take the trade(in sim) was the way the waves behaved testing the S at 2656, in the W day trading course there is a wave chart which W talks us through and when he enters it is similar to this entry I feel.

On the other hand this might be wrong and I am a lot less experienced than many on the forum so would be grateful for any opinions, this is probably why I am posting as i'm not 100% sure if this is correct

 

thanks

 

bloc

 

 

Edited May 3, 2013 by DbPhoenix

[tupapa 10]

Not at all Gringo, I really appreciate yours thoughts and comments, and yes, this should probably be moved to the journal thread.

 

The 2 main issues I am facing with the Bund are: First of all, the gaps, which as you point out create problems with S/R levels, and secondly it often price reverses in the middle of nowhere.

 

However, it is not all that bad, and the reason why I am hesitating about moving to another instrument, is because I feel I am starting to get a feel for the Bund, most mistakes I make are due to my emotions or my stupidity, but I feel like I am improving.

 

Also, all the hours of testing I am doing, they would be in vane, I would have to start all over again, with another market, I am a firm believer that when one makes a decision, he should stick to it unless it is truly intolerable.

 

So, for instance, today's Bund action so far hasn't been excessively challenging. I posted the levels last night, and here is how price reacted to them:

 

The first chart shows a reversal at Support, first price breaks the SL, violently, it felt as if price hit a wall, then on the retest price fell slowly and calmly, which indicated selling pressure was lessening. After this, 2 economic figures where released and price blasted through my 2 R levels, 140.09 and 140.25

 

Last night I pointed out that there was little to stop price from rising to 140.79, which is where I had my next R levels, however, sellers came in and rejected price at 140.63, since I didn't have a level here, I missed this reversal.

Edited October 24, 2012 by tupapa

[DbPhoenix 42]

I didn't know if to put these charts in the journal thread or here. as what I want to focus on is the entry at point 15 this seems the best place for it.

I saw this entry in RT and mentioned it in chat, Db commented that would you want to take it as there isn't much upside with minor R at 2664. This might be wrong but I think I would be quite happy to take it as how do I know in advance if price will go through R or not.

 

There isn't much time in chat for elaboration. In fact, uv prb ntcd tht I uz a lt of abbrv n my psts thr.

 

But the issue here is not so much the distance to R. As you point out, one cannot know in advance whether R will hold or not. The more important issue is that the entry is at 14, and if you wait, then your price risk increases substantially. If you enter at 15 rather than 14, your profit potential is less, your chance of being faded is greater, your chance of being trapped inside a hinge is greater, etc.

 

This is not to say that you shouldn't take it, but to remind that there are risks involved in not taking the proper entry that should be considered before taking action. And even if the trade works out, one should not feel too satisfied as the market has just taught you a bad habit, and it will make you pay at some other point in the future.

 

Db

[Bern 10]

Sorry, what is db's book called and where is it sold?

 

http://www.traderslaboratory.com/forums/trading/12796-my-ebook-trading-price.html

[Niko 10]

... The more important issue is that the entry is at 14...

 

Db

 

Db,

 

Is there any disadvantage in considering 12 as the entry instead of 14?

Edited May 3, 2013 by DbPhoenix

[blocp 10]

here are my levels for today

[blocp 10]

thought I would add the 1 minute chart as it's referenced in the last post.

[DbPhoenix 42]

Db,

 

Is there any disadvantage in considering 12 as the entry instead of 14?

 

Depends on your trade management. By the time 12 comes along, you've established a 4pt TR. If one is going to play this at all, he has to decide if he's going to short at R and go long at S. If he is, then sure. But if he's trading only to the long side looking at the more macro TR, then he has to decide if he's going to exit when price turns back before 14 or hold on and hope for the best (the latter is discouraged). In RT, of course, one doesn't know that 14 is in the offing.

 

These are typical of the "if only" problems inherent in analyzing potential trades in hindsight. And though this is one of the primary features of backtesting, it must all be tested forward. It is during that process that one learns just how truly screwed one can get by taking these curve-fitted trades.

 

I do understand that RT is sometimes viewed as an acceptable alternative to forward-testing. But the testing takes much longer this way, and even if it is "completed", one still has to look forward to the RT testing of whatever one has learned.

 

Db

[blocp 10]

hi john are you referring to the above chart?

 

thanks

[blocp 10]

Db I know I need to do my back testing but all the numbered notes relating to the arrows are my RT notes that I am making in real time, the notes in red are how I analyse what has happened after the fact, I want to avoid as much curve fitting as possible, what is the point in cheating yourself by believing you can make it trading.

 

also do you or anyone else think that the setups are set in stone using this wyckoff method and once we have all tested our setups they will all match and we will be trading the same way, or could we all end up with different setups that we could all profit from?

 

I am assuming that everyone will have different risk parameters, and will be able to hold trades longer, or might even be happy with less profit.