Trading The Wyckoff Way

[DbPhoenix 42]

Actually it's the same. Yours goes back farther than mine does, or at least the one I posted.

[DbPhoenix 42]

No. Counting bars doesn't make much sense since they're entirely dependent on the bar interval you choose. When price stops moving up, or down, and retraces, I then wait to see if it's going to continue or bounce back and forth. If the latter, that becomes a congestion or a trading range (if it's tradeable). That earns a box.

[mister ed 10]

This is a useful article from Hank Pruden, and in it he explains one take on using the Wyckoff method. In the article you will see numerous references to how Pruden uses the P&F chart as part of the procedure for setting up buys and sells. The article is not about P&F itself, and frustratingly the only two P&F charts are drawn on only the last page of the article, but hopefully value can be found in it for the discussion started here, especially when read in conjunction with the two articles Gassah has linked in his OP.

 

Link to article http://www.hankpruden.com/WyckoffBuy-sell.pdf

 

Or, download from attachment, below.

WyckoffBuy-sell.pdfFetching info...

Edited May 22, 2008 by mister ed
add attachment

[pnf.guy 10]

I really hope this thread becomes active. I am an avid P&F craftsmen and am looking for a nice place to have a serious discussion of P&F principles. Traders Laboratory is the best trading forum on the net. Lets make this wyckoff forum the best forum on the net as well. By the way there is decent thread about P&F over at elite trader. If your a beginner to P&F take a look over there its a great place to get started.

[erierambler 10]

today then should be quite simple, should we open with yesterday's range. On the ES s/r match with your analysis of the ES. 1421 and 1409.

 

[DbPhoenix 42]

That's the drill, as I mentioned in the longer post above and in more detail in the Dailies. The general idea is to find S&R then trade the extremes, selling R and buying S. The worst chop is most likely to be found at the midpoint, which in this case is 1415 (and it looks like we're going to open right there).

 

OTOH, moves do originate from the midpoint, and the midpoint sometimes acts unexpectedly as S or R. Seeing this can be frustrating. But if one reviews several dozen charts (or more), the probabilities for good entries with tight stops are most often found at the extremes.

 

Note: I should also point out that we'll be opening just above the midpoint of that long upmove from 5/9. So if price doesn't take off straight out, there may be a lot of jockeying here.

Edited May 21, 2008 by DbPhoenix

[gassah 10]

  DbPhoenix said:

OTOH, moves do originate from the midpoint, and the midpoint sometimes acts unexpectedly as S or R. Seeing this can be frustrating.

 

As I mentioned once before Tom Alexander discussed buying out of the midpoint but it required a mature range as defined by MP and a bell shaped curve after the four stages of development. I don't know how you would define mature by only looking at a bar chart but you probably can.

[DbPhoenix 42]

If one were statistics-minded, he could determine the typical length of time that traders spend in a particular box or range and thereby determine how likely they are to want to look for a new value area. I suppose one might also be able to determine how far they're willing to go to find it.

 

Sounds like a P&F project.

[gassah 10]

  DbPhoenix said:

If one were statistics-minded, he could determine the typical length of time that traders spend in a particular box or range and thereby determine how likely they are to want to look for a new value area. I suppose one might also be able to determine how far they're willing to go to find it.

 

Barros does something like that by counting the bars in the rally or reaction that led to the range and relating that to the time spent in the range (TPO count), coming up with probabilities as to the likely end of the range. I'm trying to get more details.

[heretodaygone... 10]

  erierambler said:

today then should be quite simple, should we open with yesterday's range. On the ES s/r match with your analysis of the ES. 1421 and 1409.

 

 

I like to use 5 levels for the day:

unfair high - 1421

vah - 1418

poc - 1415

val - 1412

unfair low - 1409

 

these extra levels alert me to look for strength or weakness of pv a little earlier.

[erierambler 10]

  DbPhoenix said:

That's the drill, as I mentioned in the longer post above and in more detail in the Dailies. The general idea is to find S&R then trade the extremes, selling R and buying S. The worst chop is most likely to be found at the midpoint, which in this case is 1415 (and it looks like we're going to open right there).

 

.

 

Support was right there on the ES, made for a nice trade to the midpoint.

erie

[DbPhoenix 42]

And went all the way to the opposite end of the range.

 

Like shooting fish in a barrel

[firewalker 10]

  erierambler said:

Support was right there on the ES, made for a nice trade to the midpoint.

erie

 

I take it you went long around 1409, to ride it back to 1415 (midpoint of 1409-1421).

 

What I find very remarkable is that, at the time the ES was back at the midpoint, the YM tested an important support level from last couple of weeks (12790) from the other side, turning it into resistance. Incidentally, it was also the previous day low on the YM.

 

Really amazing how many elements coincide at one point in time, almost poetic...

[DbPhoenix 42]

The nice thing about maintaining these boxes is that nobody can hurl accusations of hindsight analysis. This is more like foresight analysis.

 

Note that neither could get back to the midpoint of the downmove in each. You can see where each found resistance. You can also see the ranges they slid through and where each wound up. I went ahead and drew a box around the activity in the bottom of the NQ since it appeared to be "congestive".

 

 

 

I hadn't expected this thread to get so many views. So I'll likely keep it up until people are able to do it themselves. However, I don't see any point in posting a macro more often than the weekend. And I'll try to keep the "theory" part to the S&R thread.

[Tannism 10]

I've been practicing, too. This monthly is neat. The congestion is between 2 halfway areas established some years ago.

 

I can see the range isn't really large enough to trade.

 

Thank, Db.

[Tannism 10]

I have been practicing with some charts. I have found that some of the longer term charts, set some pretty neat potential parameters for position trades.

 

This one is neat. The range is between 2 halfway marks from several years ago. The range isn't really big enough for my position trade.

 

Thanks, Db.

[DbPhoenix 42]

You have the right idea, though I'd add a box around 2001.

 

The problem with this kind of activity is that the volume is spread pretty much throughout the range, so price could stop at any one of those swing points.

 

Of course, it all depends on what you mean by "position". If you don't plan on keeping it so long that you've forgotten you have it, you may want to look at something else. OTOH, that rise up was pretty dramatic, and perhaps a large part of it could be retraced, or at least enough to make the trade worthwhile.

[Tannism 10]

Re: Wyckoff(SMI) Stride charting.

 

Another advantage of boxes? They seem to pretty well take care of the traditional stride charting which is so time consuming.

[DbPhoenix 42]

If nothing else, they force the trader to look to the left, like he's supposed to, and see where support and resistance actually lie. And why.

[DbPhoenix 42]

Regarding posts 2 and 4 here, yesterday was another day that was easily managed all the way to the end using trendlines (or supply lines) and swing points IF the trader was willing to allow price to come back to him -- after his short of the test of resistance -- in order to arrive at that first swing point, and that would require him to trust the resistance.

 

These trend days are management "by the numbers", and I don't see the point of posting example after example. But others may require these examples. So if anyone wants me to post yesterday's example, I'll be happy to do so. Otherwise, I'll assume that everyone gets this.

[winnie 10]

Dear DbPhoenix,

 

According to your experience, could Wyckoff method be use in day trading ?

thanks

[DbPhoenix 42]

  winnie said:

Dear DbPhoenix,

 

According to your experience, could Wyckoff method be use in day trading ?

thanks

 

Sure. However, since your posts to the VSA thread show up on "new posts", they're hard to miss, and so are the responses you receive. Therefore, I know you've been investigating VSA. But since Wyckoff and VSA have fundamental differences, you may find it difficult to reconcile the two. This is not to say that you can't take bits and pieces of each, along with bits and pieces of all sorts of approaches, and put them all together into a trading strategy that's unique to you. But that's a heavy burden to place on a beginner.

 

If you find that analyzing bars has been helpful, I suggest that you focus on VSA. I'm sure that mister ed and Sledge will continue to be helpful. On the other hand, if you view price action as a flow which bars are used only to illustrate, then you may find a better fit in the Wyckoff approach.

[Tannism 10]

  DbPhoenix said:

You have the right idea, though I'd add a box around 2001.

 

The problem with this kind of activity is that the volume is spread pretty much throughout the range, so price could stop at any one of those swing points.

 

Of course, it all depends on what you mean by "position". If you don't plan on keeping it so long that you've forgotten you have it, you may want to look at something else. OTOH, that rise up was pretty dramatic, and perhaps a large part of it could be retraced, or at least enough to make the trade worthwhile.

 

I did buy this as it broke the downtrend line a few years back, but sold it as spiked on earnings earlier this year. I would really rather still be owing it.

 

The KO trade is one of my preferred kinds of trade. Something blue chip that I can buy relatively low. Its dividends beat what I am getting elsewhere with that money and I expect it to appreciate.

 

I appreciate your volume comments and perspective.

[Tannism 10]

Here is GLW, something I would like to buy when it clears 27.45. This is the high close of 2006. The summer of 07 high close of 27.07 is also nearby.

 

It has recently breached the area and is currently retesting an area on the daily I have identified as having too much volume.

 

Attached are 3 charts. Anything I am forgetting to consider support and resistance wise?

 

Thanks.

[DbPhoenix 42]

Looks fine to me. The group is reasonably strong as well.

 

Hope you're not expecting it to get back to $100 any time soon.