Trading The Wyckoff Way

[DbPhoenix 42]

I don't trade forex, but perhaps nic can help you.

[DbPhoenix 42]

A re-post of the macro above, with the demand line extended:

 

[gassah 10]

I only trade FX EOD and it doesn't use volume so I don't think it fits the "tape reading" definition. I'm comfortable with EOD and the tic counts but my track record is only a few months old.

[erierambler 10]

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

 

Like shooting fish in a barrel

 

 

Again, I'm surprised there is not more participation here. For today price opened within yesterday's range on the ES, at potential support. My figures were 1370 and 1386. Price took off out of the gate and up to 1388.50 . Couldn't be easier.......... I know you like the NQ , but the drill seems to work on the ES as well.

erie

[DbPhoenix 42]

Yes, it does. I suspect most people look for S/R elsewhere.

[Kiwi 16]

Yquem,

 

Never forget that the next timezone's futures markets and stock markets will be available when you get home from work. So in the US you can trade asia (spi, nk, kospi, stw, hsi).

[Yquem 10]

Hey Kiwi, u're right there.

 

I'm in Asia though, so will have to trade the US instead.

 

home market registered only 1.2bn in trading volume yest., so i guess its pretty tame as compared to the US.

 

thanks DbPheonix. You trade stocks? With Kiwi's suggestion, perhaps will just focus on one thing at a time.

 

ok gassah. the platform i'm using does not have time and sales data, not even for stocks. thanks for sharing, am pretty new too. =D

Edited June 5, 2008 by Yquem
to not have another post for couple of add-on lines

[Kiwi 16]

If you find the US too late (i'm in Aus) then you might also look at europe.

 

The bund (gbl) and eurostoxx (estx50 a dji equivalent) are nicely behaved futures contracts. The dax is bigger and more volatile.

[DbPhoenix 42]

 

thanks DbPheonix. You trade stocks?

 

I switched from stocks to futures in 2000. However, lest this discussion get too far afield (i.e., the subject of the thread), I'll point out that Wyckoff's chief consideration was minimizing risk. If your work prevents you from trading stocks intraday, you certainly have no business trading futures intraday. In fact, you should avoid futures entirely. If trading stocks EOD also takes too much time (the research and so forth), consider trading ETFs. The last may not seem "Wyckoffian" since ETFs were not traded a hundred years ago. However, Wyckoff's approach found the strongest stocks by first finding the strongest markets, then the strongest groups. With ETFs, you can stop there and trade the group itself (you can even stop earlier and trade the market itself). If you then want to go on from there and trade a basket of selected stocks at some point, that's your choice.

[Yquem 10]

ok, will go look it up.

 

cheers!

[DbPhoenix 42]

ok, will go look it up.

 

cheers!

 

If by "it" you mean ETFs, here's a link: http://www.nasdaq.com/asp/investmentproducts.asp

 

You can buy an entire market, such as the S&P; a sector, such as financials or industrials; or something more specific, such as semiconductors or biotechnology.

 

Again, these were not available during Wyckoff's time, but I think he would have been enthusiastic about them.

[MRW 10]

Not sure if this is the right place, but wanted to post some thoughts about combining price, volume, support, and resistance. The last few trading days have not gone as I would've liked, and a review seems to bring up some things I'm missing.

 

I use price and volume alone - no indicators - but have had some problems with entry at times. I now see that combining price/volume action, and evaluating these at important support/resistance levels will fine-tune my enrties and exits.

 

For example, on 1 min charts today of Citigroup, price made an early high of 21.32 on robust volume, from which it feel back sharply. I thought shuold it rise to this level again I'd be a seller, so put in a limt order on ARCA to sell at 21.29. Upon rising to 21.29 on lower volume , I was filled, but price continues up to 21.32, and then tries for a new high by a tick or two, with volume still well below the earlier high. Since my exit, shuold I be wrong, was 21.32 bid, I got out, and of course, 21.33 proved to be the high of the move.

 

I now see that had my order been right at the old high of 21.32, this wouldn't have happened. I'll usually allow a few cents of adversity in a postion, but always have an "out point" picked in advance, and always honor this (holding onto losers is one of the few problems I don't have). One 1 min charts, 5 cents is my maximum risk, and I prefer 2-3 cents. so must be right on my entries.

 

I may have mentioned that I'm new to trading equities from the screen, so at this point, learning cheaply by not losing much is my goal.

 

Any ideas are welcome and appeciated!

[DbPhoenix 42]

Not sure if this is the right place, but wanted to post some thoughts about combining price, volume, support, and resistance. The last few trading days have not gone as I would've liked, and a review seems to bring up some things I'm missing.

 

I use price and volume alone - no indicators - but have had some problems with entry at times. I now see that combining price/volume action, and evaluating these at important support/resistance levels will fine-tune my enrties and exits.

 

For example, on 1 min charts today of Citigroup, price made an early high of 21.32 on robust volume, from which it feel back sharply. I thought shuold it rise to this level again I'd be a seller, so put in a limt order on ARCA to sell at 21.29. Upon rising to 21.29 on lower volume , I was filled, but price continues up to 21.32, and then tries for a new high by a tick or two, with volume still well below the earlier high. Since my exit, shuold I be wrong, was 21.32 bid, I got out, and of course, 21.33 proved to be the high of the move.

 

I now see that had my order been right at the old high of 21.32, this wouldn't have happened. I'll usually allow a few cents of adversity in a postion, but always have an "out point" picked in advance, and always honor this (holding onto losers is one of the few problems I don't have). One 1 min charts, 5 cents is my maximum risk, and I prefer 2-3 cents. so must be right on my entries.

 

I may have mentioned that I'm new to trading equities from the screen, so at this point, learning cheaply by not losing much is my goal.

 

Any ideas are welcome and appeciated!

 

No, it's not the right place, but there is no right place in the forum for this sort of question, at least currently. When it comes to the where-did-I-go-wrong type of question, a thread which deals with specifics, particularly as they relate to a given individual, is necessary. Otherwise, the more general application thread balloons to hundreds of posts and nobody reads it anymore.

 

Since we don't know why you're trading this group, much less this stock, and since we don't know why you entered where you did, there's not much to offer other than the usual boiler-plate advice. Therefore, I suggest you repost the above to a new thread (call it what you like) and explain in more detail why you did what you did when you did it. The comments you receive might then be considerably more pertinent.

[DbPhoenix 42]

Re the NQ, the somewhat lengthy moves beginning on 5/29, with few if any consolidations along the way, appeared to have resolved themselves into a kind of "mega-box" stretching from 1980 to 2040. Whether or not 2040 to 2060 becomes a new value area remains to be seen, but it has to be considered.

 

Since the weekend is only a day away, I'll wait till then to post a chart. I mention this only because several MP charts have been posted here and there showing the same thing, and yesterday's break above 2040 may be important to today's trading.

[gassah 10]

A count for the SP500 taken along the 1400 line = 140 points (14 boxes X 10 pts per box). The aggressive count projects from this line, the count line. The conservative count projects from the high of the range for a count range of 1260-1300.

[DbPhoenix 42]

The macros provided the better guidance this week.

 

NQ. Support and resistance were determined by the boxes drawn the previous two weeks, support at the top of the previous week's box at 1980 and resistance at the top of the box before that 2030-2040. The only unusual occurrence was the break above 2040 on Thursday, followed by a test and a move upward to 2060. This might have become the beginning of a new trading range, but price dropped below 2040 on Friday, tested it, then sank to 1990. 2000, then, appears to continue to act as the midpoint for May's activity.

 

 

ES. Nothing out of the ordinary here beyond the upthrust to 1410.

 

[gassah 10]

Attached is the 20pt chart for the NDX. The earliest place to begin taking counts is at a spring and if it's tested then at the test. A spring is a minor penetration of a trading range. It doesn't need to take out the lows of the entire range though in this case it did. A spring can also breach minor support above the bottom of the entire range.

 

Counting back from the test of the spring the base can be divided into two phases. The phases are demarcated by price reacting to the count line with relatively heavy volume. The idea behind creating phases is that not all of a trading range is accumulation or distribution. It might not be anything. If the range breaks out to the upside we initially use the right most phase for the projection, "B" in this situation, and assume only B was accumulation. If phase "A" is also accumulation then another minor base will usually form at the "B" target that will often equal the size of phase "A". In other words, if "A" is nine boxes then the re-accumulation base, or stepping-stone count at the "B" target will often get to nine boxes also before it moves higher to the combined target of "A" plus "B". If A was not accumulation then the phase B target might be the end of the move.

 

We cannot conclude "A" is also accumulation until the stepping-stone count base actually breaks out and moves higher. At that point we can add phase A's projection. The price/volume chart is needed to make this determination of strength.

 

The NDX reached the first target and is basing between 1960 and 2040 but it's too early to tell if phase A will be fulfilled.

 

Counts from higher levels within the Jan-April base can also be taken. The reaction lows of 3/28 and 4/15 are good places and they can be extended back with their own phases. The counts can be used to confirm the lower spring test count if they match up, or to project much higher potential counts. It's best to take it phase by phase, level by level, conservatively, taking note of confirmations and waiting until each phase proves itself.

[DbPhoenix 42]

NQ traders will note that price rejected 2000 (see above) within a tick one minute after the open.

[Tannism 10]

What do you have for the bottom of the box?

[DbPhoenix 42]

For the time being, 1950. But, as I've posted, I manage the trade according to trendlines and swing points rather than targets. 67-69 has been a consistent S/R level since the beginning of May, but I wouldn't exit simply because price arrived there (which it did at 0952).

 

If there were a reversal signal at an S/R level like 67-69 (i.e., one which occurs just short of a more obvious support level), one could cash in one contract there. In this case, there was such a reversal signal if one incorporates the TICKQ, which bottomed at 0948, then diverged with price, which bottomed at 0952.

[BigKahuna 10]

Hello there, this is my maiden post. Would like to first thank the moderators et. al. for sharing. Found this website when I was trying to look up materials on tape reading.

 

Would like to ask a question on Wyckoff too - Wyckoff and Livermore are both great masters of the tape. Is it possible to trade "on the tape" in the forex markets?

 

I'm asking this because I have no exposure to forex at all, and can't trade stocks due to work commitment (I'm not a professional trader). Was thinking about the difference in methodology/strategy between the 2.

 

Would appreciate any comment. Thanks!

 

While I am certainly not an expert on Wyckoff's methodologies, I have studied Gann, Andrews, and a number of others over a twenty something career as a trader. When trading spot forex, you need to use the US Marine mentality:improvise, adapt, overcome.

 

I trade forex exclusively, now. And while some of the "masters of old" are still applicable to equities and futures with DOM, volume, et al, you have to take the time to study charts to sort out the workable strategies for forex. The cloak and dagger of over the counter markets makes it necessary for such work.

 

Some may point you to the ecn type of brokers sometimes advertised as "no dealing desk," just know, this is not a true representation of the market at large, just that particular brokers clientèle. If you must use volume related methods, you can use the futures contracts as a reasonable representation, but pricing is different because of the interest swap.

 

Good luck on our journey.

 

BK

 

BTW-dpPhoenix, always enjoyed reading your perspective in another place(forum) and time.

[firewalker 10]

For the time being, 1950. But, as I've posted, I manage the trade according to trendlines and swing points rather than targets. 67-69 has been a consistent S/R level since the beginning of May, but I wouldn't exit simply because price arrived there (which it did at 0952).

 

If there were a reversal signal at an S/R level like 67-69 (i.e., one which occurs just short of a more obvious support level), one could cash in one contract there. In this case, there was such a reversal signal if one incorporates the TICKQ, which bottomed at 0948, then diverged with price, which bottomed at 0952.

 

And if there had not been support at 67-69, would the break of the supplyline be sufficient reason to cash in a portion of your position?

 

Am I right in saying that the high volume, 30 min after the open, is more or less insignificant for you because it didn't occur at any important price level (and the high volume is probably a function of the pending home sales report)?

[DbPhoenix 42]

Yes to both..........

Edited September 5, 2015 by DbPhoenix

[DbPhoenix 42]

Referencing the macro posted Friday (post #60), and my earlier post today (#61), here's how today's low -- so far -- relates to the midpoint of the most recent trading range:

 

[zdo 20]

bump #34...

Did Wyckoff talk any about the 'auction' dynamics inside chop?

ie Did he discussed what's going on inside your 'zones', db.

 

Thanks.