Trading The Wyckoff Way

[BlueHorseshoe 10]

Hi DB,

 

I have no questions about the entry and exit rationale, or none that I haven't asked you before, but I wonder what sort of a dent you would expect that typical retail commission would make in the profit from this process in this timeframe?

 

And, did you trade this, and did you experience any execution difficulties beyond those you have indicated?

 

Thanks,

 

BlueHorseshoe

 

 

If you're referring to the profit %, none. As I said in the introductory post, the profit % has to do with how many points traded resulted in profit. The degree of profit is not considered.

 

If you're asking about the impact of commissions on trading a small interval such as the 1m vs a large interval such as the daily, total commissions would of course be higher with the former. However, profits, if any, will depend entirely on the skill of the trader. Scalping is no more a guarantee of monetary success than is trading a 15m bar or a weekly bar. Our current NQ long is 170pts in profit with only one commission, but a bad daily trade can easily be counterbalanced by a series of successful intraday trades, regardless of commissions.

Edited May 9, 2013 by DbPhoenix

[DbPhoenix 42]

  TradeRunner said:

Can you go into more detail on why in the first short you do not hesitate but the second short is given more time?

 

Re the first short, price doesn't do what's expected, even though it has at least two minutes to do so. If it were a good short, it wouldn't be hanging around at that level for two minutes before reversing and breaking the supply line. And there's also the fact that one is underwater as soon as the trade is executed. What a beginner feels at that time is not conducive to clear thinking. And even though your 1s chart shows a probably coincidental pause at your line (the market can't know what lines you've drawn), price doesn't waste any time pushing north.

 

Re the second short, however, you're in a more comfortable position when price hesitates, plus you've had a series of lower highs and lower lows. And when price breaks through the line, it retreats immediately. On a 1m chart, this shows a "close" in the middle of the bar.

 

As for showing the "buy" on the 1s chart, I assume you mean the cover. And no, I really can't as that would be pure conjecture as I wasn't watching the 1s chart. But, again, the key question isn't where to exit the short but that price isn't falling. An equally legitimate choice would be to exit before the supply line is even broken. Price is in effect waving a flag and saying Yo, I'm not going down, fool, I'm going up.

[DbPhoenix 42]

  BlueHorseshoe said:

I wonder what sort of a dent you would expect that typical retail commission would make in the profit from this process in this timeframe?

 

If you're referring to the profit %, none. As I said in the introductory post, the profit % has to do with how many points traded resulted in profit. The degree of profit is not considered.

 

If you're asking about the impact of commissions on trading a small interval such as the 1m vs a large interval such as the daily, total commissions would of course be higher with the former. However, profits, if any, will depend entirely on the skill of the trader. Scalping is no more a guarantee of monetary success than is trading a 15m bar or a weekly bar. Our current NQ long is 170pts in profit with only one commission, but a bad daily trade can easily be counterbalanced by a series of successful intraday trades, regardless of commissions.

[BlueHorseshoe 10]

  DbPhoenix said:

If you're referring to the profit %, none. As I said in the introductory post, the profit % has to do with how many points traded resulted in profit. The degree of profit is not considered.

 

If you're asking about the impact of commissions on trading a small interval such as the 1m vs a large interval such as the daily, total commissions would of course be higher with the former. However, profits, if any, will depend entirely on the skill of the trader. Scalping is no more a guarantee of monetary success than is trading a 15m bar or a weekly bar. Our current NQ long is 170pts in profit with only one commission, but a bad daily trade can easily be counterbalanced by a series of successful intraday trades, regardless of commissions.

 

Hi DB,

 

I was asking about small interval trading above.

 

I have attached a chart which shows activity in the ES during the same period as your charts for NQ show, along with the type of entries that could have been triggered using a single indicator and a basic awareness of trend.

 

Trading like this (with the indicator) works well for as long as the trend has been correctly identified; to what extent (if any) would you incorporate a longer term directional bias when making decisions from a one minute chart as per the thread? At all?

 

Many thanks,

 

BlueHorseshoe

 

 

I can't answer that. I don't use indicators and the approach you present is different from that addressed in the content thread. Since the ES is generally mean-reverting, it's unlikely that the approach presented in the content thread would be of much benefit.

Edited May 9, 2013 by DbPhoenix

[DbPhoenix 42]

I can't answer that. I don't use indicators and the approach you present is different from that addressed in the content thread. Since the ES is generally mean-reverting, it's unlikely that the approach presented in the content thread would be of much benefit.

[Seeker 11]

DB, great posts, thankyou. Can I ask about the 50%? You wrote about this maxim, but I'm wondering from where you consider the move to have started. It seems you have drawn the 50% from the steep demand line (parabolic move), but I thought the down move starts from higher than that - just below 2816. Of course it doesn't reach the 50% of that down move, so your logic still applies, but I'm just curious about this

 

 

There's no rule about it. If you're trading real time, it's not difficult to determine where the swing begins. If it can't be done, no big deal. The 50% is just another factor to employ.

Edited May 9, 2013 by DbPhoenix

[DbPhoenix 42]

There's no rule about it. If you're trading real time, it's not difficult to determine where the swing begins. If it can't be done, no big deal. The 50% is just another factor to employ.

[BlueHorseshoe 10]

  DbPhoenix said:

I can't answer that. I don't use indicators and the approach you present is different from that addressed in the content thread. Since the ES is generally mean-reverting, it's unlikely that the approach presented in the content thread would be of much benefit.

 

Hi Db,

 

I probably overcomplicated the question by giving an indicator-based example (just trying to give some context) . . .

 

Asked more simply: would you keep in mind any kind of longer term bias (eg daily trend) when trading from a 1 min chart?

 

See the first post in the content thread.

 

And incidentally (ignoring indicators, timeframe etc), why do consider this so different from what your thread describes - i.e. trading retracements?

 

Why do I consider what so different?

 

Thanks for your thoughts,

 

BlueHorseshoe

Edited May 7, 2013 by DbPhoenix

[Trader Nick 10]

Db -

 

Thanks a ton for starting this new thread as well as the other. I'm glad I can be here at this thread's inception. Looking forward to following along. :helloooo:

[BlueHorseshoe 10]

  BlueHorseshoe said:

Hi Db,

 

I probably overcomplicated the question by giving an indicator-based example (just trying to give some context) . . .

 

Asked more simply: would you keep in mind any kind of longer term bias (eg daily trend) when trading from a 1 min chart?

 

See the first post in the content thread.

 

And incidentally (ignoring indicators, timeframe etc), why do consider this so different from what your thread describes - i.e. trading retracements?

 

Why do I consider what so different?

 

Thanks for your thoughts,

 

 

 

BlueHorseshoe

 

Hi Db,

 

The first post in the content thread doesn't really answer my question.

 

The analysis in the first post states "So, Monday morning, price could take off from here or drop back into range", and the trades you show are both long and short.

 

There is nothing wrong with this analysis as far as I am concerned - but I am asking whether it would ever be different (ie a definite directional bias from the daily chart), and whether that would mean that you would only take long/short positions on the 1 min chart?

 

Many thanks,

 

BlueHorseshoe

 

No to both.

 

Thanks Db. BH

Edited May 8, 2013 by BlueHorseshoe

[Niko 10]

DB, Is the MP of a trading channel of any relevance to you during RT trading, I have observed that when the trend is strong the MP provides some guidance, but before start testing hypothesis around this, I would like to know if it is worth the time, according to your experience.

 

 

In RT daytrading? No. On a 1t chart, maybe, but it's enough with a 1m to just follow the trend.

 

On EOD? Yes. A trend channel is after all just a trading range on the diagonal. And a rejection of the MP of the channel is just as informative as a rejection of the MP of a TR. You can see this in the NQ since December, and you don't even have to draw any lines. This strength is one of the reasons why I was not surprised by the effort to catch up with the Nasdaq and the S&P (that trade is now past 2960, BTW).

Edited May 9, 2013 by DbPhoenix

[DbPhoenix 42]

  Niko said:

DB, Is the MP of a trading channel of any relevance to you during RT trading, I have observed that when the trend is strong the MP provides some guidance, but before start testing hypothesis around this, I would like to know if it is worth the time, according to your experience.

 

In RT daytrading? No. On a 1t chart, maybe, but it's enough with a 1m to just follow the trend.

 

On EOD? Yes. A trend channel is after all just a trading range on the diagonal. And a rejection of the MP of the channel is just as informative as a rejection of the MP of a TR. You can see this in the NQ since December, and you don't even have to draw any lines. This strength is one of the reasons why I was not surprised by the effort to catch up with the Nasdaq and the S&P (that trade is now past 2960, BTW).

[BlueHorseshoe 10]

Hi Db,

 

How does the chart below (today) look in terms of entries and exits?

 

Fine except that I would try the first short after the first break of the line (the hollow red circle), which would not have been triggered. After that, I wouldn't try another long until a new high was made (your 0935 arrow).

There is of course no one way to do this. The point of the exercise is not to teach a system but to persuade beginners to become sensitive to price flow. The particular entry or exit is largely irrelevant as long as one has a well-thought-out rationale for it.

 

Would you have used the red or the magenta line for the final exit (not that it made a masive amount of difference in this particular instance)?

 

Neither (see my chart). Given the failure to make a new high at 0951 and the hour and the decline in activity, I most likely would have quit for the day.

 

Am I correcting in thinking that the nearest potential short entry would have been after the retracement at 08:40?

 

Yes.

 

Thanks,

 

BlueHorseshoe

 

Thanks again. BH.

Edited May 9, 2013 by BlueHorseshoe

[Trader Nick 10]

I just wanted to double check (my OCD was kicking in where I had to ask), where the RET was indicated and the proceeding green dot/red dot that followed, that meant was the order was actually filled?

 

RET is where the order was triggered, but the corresponding dot that followed is where the actual order was filled?

 

Thanks!

 

 

A reminder that this is not my chart, only the added annotations. I don't know what triggers would have been used.

 

The hollow circle is a tentative trade. Once the blue line is broken, the attention turns to short ops. Therefore, the first RET up is a potential short. However, the short never would have been triggered had I been trading it. Since the next RET is a higher high and therefore not a RET in a downmove at all, the attention turns yet again toward the long side.

 

The arrows are not mine. As I said in the earlier post, I would not have tried the first one due to the fact that price had not yet made a higher high, so, technically, it's ranging, the probability of which is high given the hour. If I were to take a long at all, it would be the next green arrow, after which the higher high is made. The trade here might be triggered before price actually makes the higher high, but since the trough of the RET matched the trough of the previous RET, and both of these are higher than the trough of the first RET made after breaking the line, the probability of a BO is increased, and getting in before the BO actually occurs is always a plus. Not that it amounts to much either way, but you have to take them as they come. Price could just as easily have rocketed up to 80, considering where it is.

Edited May 9, 2013 by DbPhoenix

[Niko 10]

Db, regarding this:

 

 

Interesting, I would have not taken that long at that level though , at least not based in EOD data because of the break of the previous swing low at 740. What am I missing, is it a Selling Climax or is a test that happened during a fakeout?

 

 

See posts 1559 and 1562 in the AMT thread.

Edited May 15, 2013 by DbPhoenix

[Gringo 10]

Hello,

 

Using the 'whatever' part of this thread I would like to post the below. Just an overview of where things are. The Q's seem to be chugging along their merry way without a hitch so far. Didn't look like it a few months back though. The signals were muddy and price unconvincing. This goes on to show that there comes a time where the resilience of a speculator is tested and market does what it can to confuse, dissuade, bore and distract.

 

The DL break closer to R at 70 hinted at the possibility of some change or a weakness of sorts. The resumption however and a new high above the swing high of 70 negated the DL break and gave a signal that perhaps the rockets were still firing. Until another DL break or price abruptly collapsing back below 70 up is the way. Learning to draw a straight line is the hardest part. But 'if you can draw a straight line', the world is your oyster!

 

 

Gringo

[Niko 10]

  Gringo said:

Hello,

 

Using the 'whatever' part of this thread I would like to post the below. Just an overview of where things are. The Q's seem to be chugging along their merry way without a hitch so far. Didn't look like it a few months back though. The signals were muddy and price unconvincing. This goes on to show that there comes a time where the resilience of a speculator is tested and market does what it can to confuse, dissuade, bore and distract.

 

The DL break closer to R at 70 hinted at the possibility of some change or a weakness of sorts. The resumption however and a new high above the swing high of 70 negated the DL break and gave a signal that perhaps the rockets were still firing. Until another DL break or price abruptly collapsing back below 70 up is the way. Learning to draw a straight line is the hardest part. But 'if you can draw a straight line', the world is your oyster!

 

 

Gringo

 

Great to hear from you G. The problem is that nobody remembers the tech bubble, just talking about it means that we are too old :haha:

 

Take care.

[Niko 10]

I am applying W principles to a local stock that is the market´s favorite. as expected W does not disappoint.

 

 

After a strong rally from the later part of 2011 (after a huge public offering) the market rallied to almost 70 and then stalled in what looks like distribution above the MP of the upswing until Feb this year were a DT marked the lack of following on the buyers side.

 

Now we are in a downtrend and after having some minor S at the top of the 2011-2012 TR we are approaching that TR MP, perhaps some S will be provided at 42, perhaps not.... We´ll see.

[Niko 10]

  Quote

 

See posts 1559 and 1562 in the AMT thread.

 

Thanks, I will give it a look.

[Toosday 10]

I have attached the following chart that highlights a few problem areas I had with today's trading. The 3rd circle from the left was my mistake as the demand line was not broken but 1 and 2 were problematic. Also the 4th I think it forgivable given the potential upthrust. I would appreciate any feedback on the logical errors I made.

 

Thanks and happy trading.

[Niko 10]

It all depends on your plan, what looks like a REV for someone looking a 1 min chart, does not really mean much for the 5 min chart player.

 

Two alternative (hindsight of course) views of your chart

 

1. 1 Min Surfing

 

 

2. 5 Min "Buy and Hold"

 

 

There are other thousand ways to play this market, just wanted to point out that it depends on what you have researched and tested.

Edited June 7, 2013 by Niko

[Gringo 10]

The weekly Q's haven't shown a sign of weakness so far. The trend is upwards, the demand line is intact, and the price is rising up after a retracement to 70. I consider these signs of strength and if a long is not desired at least reason enough not to go short at the moment.

 

 

 

Zooming in to daily price behaviour we see that the strength is there but there are certain aspects that show emergence of weakness as well. Notice the shorter term down trend. Now this could be temporary but something to be watchful off. Also notice the failure of price to continue upwards at 73.5 and a precipitous drop afterwards. The price did stabilize after that drop and has been rising. It's reached the top of the downward daily TL. Lets see how price behaves here. It's behaviour here will give us another clue as to the demand and supply dynamics of this rally.

 

 

We cannot predict what price will do but we can deduce that the longer term trends are intact and short term trend showed a bit of weakness. A re-emergence of strength in price here would negate the weakness.

 

So far as stated earlier I would avoid shorts until the demand line from 60.64 is intact. 70 seems to have gained in importance. Keeping an eye on price behaviour around it won't be a bad idea.

 

 

Gringo

[Gringo 10]

Today friends, lets have a look at GLD. There are speculations as to where the bottom for gold is. It is quite entertaining to listen to all the arguments and counter arguments for and against gold's bright future. Here though we go back to the basics. Just price, volume, supply/demand lines, and trend.

 

In a nutshell gold is still in a downtrend. Until that situation changes or it can show sustainable power to go above 130, I remain bearish. I do notice higher volume drops but price is weak and so far it hasn't shown much sign of strength. In the absence of this strength we assume weakness until of course strength manifests itself.

 

Most comments are in the attached charts and look at the weekly and daily charts.

 

 

 

The recent drop from around 175 is over 35%. It is quite a significant drop so sooner or later a rally is going to ensue. But so far there's silence.

 

Gringo

Edited July 19, 2013 by Gringo

[Niko 10]

Hey G,

 

I see you want to keep the thread alive so I will join you.

 

 

I agree that the weekly trend is still down, but the HL in the daily gives us an early warning, we are still under the 50% pullback level from last downswing so i guess selling pressure still rules, but for those short the sl will be under atack in the following days and then we will know.

[tradingwizzard 10]

  Gringo said:

Today friends, lets have a look at GLD. There are speculations as to where the bottom for gold is. It is quite entertaining to listen to all the arguments and counter arguments for and against gold's bright future. Here though we go back to the basics. Just price, volume, supply/demand lines, and trend.

 

In a nutshell gold is still in a downtrend. Until that situation changes or it can show sustainable power to go above 130, I remain bearish. I do notice higher volume drops but price is weak and so far it hasn't shown much sign of strength. In the absence of this strength we assume weakness until of course strength manifests itself.

 

Most comments are in the attached charts and look at the weekly and daily charts.

 

 

 

The recent drop from around 175 is over 35%. It is quite a significant drop so sooner or later a rally is going to ensue. But so far there's silence.

 

Gringo

 

the highlighted blue shape has two possibilities.......either it is a flat for a b wave (in terms of Elliott Waves Analysis) and the move to the downside that followed is the c part of the flat.......either it is a second wave and the move to the downside is a third wave.......both scenarios imply at least a retracement, so what I would do I would take a Fibo from the end of the blue shape and look for 31.8-50-61.8 retracement level........also try to see if he move down is extended more than 161.8% of the previous move (it seems so) and in this case we're looking for a possible fourth wave, which typically retrace 31.8% and rarely travel beyond 50%