Trading The Wyckoff Way

[jcavalieri 10]

DB

 

i have read a few of your posts where you state that trading activity (vol) is most important to watch at S/R levels and i understand that perfectly. however, how am i to interpret bullish or bearish activity where vol. is expanding (up trending) w. a price up trend or vol. is expanding w. price in a down trend respectively? i understand, for example, w. price in an uptrend and vol. is also expanding that means that steadily increasing demand is overcoming steadily increasing supply. is there anything else to it?

[HAKUNA 10]

Db,

 

Have seen some of your charts from BIGCHARTS with CVB plot, how do you get that function to work,

I can load a bar chart with volume histogram at the bottom.

[Tannism 10]

Db,

 

Have seen some of your charts from BIGCHARTS with CVB plot, how do you get that function to work,

I can load a bar chart with volume histogram at the bottom.

Hi Kakuna,

Are you asking for volume on the sides? Look under "Upper Indicators". It is the "Volume by Price".

[HAKUNA 10]

Hi Kakuna,

Are you asking for volume on the sides? Look under "Upper Indicators". It is the "Volume by Price".

 

Have seen some charts by DB with Horizontal vol. bars on the left axis, guess he was showing ranges in which most trades occurred, however I have looked at bigchart website, can't seem to get that, can you bringup a chart say of ES or NQ to illustrate.

[DbPhoenix 42]

DB

 

i have read a few of your posts where you state that trading activity (vol) is most important to watch at S/R levels and i understand that perfectly. however, how am i to interpret bullish or bearish activity where vol. is expanding (up trending) w. a price up trend or vol. is expanding w. price in a down trend respectively? i understand, for example, w. price in an uptrend and vol. is also expanding that means that steadily increasing demand is overcoming steadily increasing supply. is there anything else to it?

 

If price rises, demand is overcoming supply. If price falls, supply is overcoming demand. Volume is simply the amount of trading activity.

[DbPhoenix 42]

Have seen some charts by DB with Horizontal vol. bars on the left axis, guess he was showing ranges in which most trades occurred, however I have looked at bigchart website, can't seem to get that, can you bringup a chart say of ES or NQ to illustrate.

 

Bigcharts does not plot futures. If you want Volume By Price, select Advanced Charting, then follow Tannis' instructions.

[imahippi 10]

Hi Db

I appreciate all your posts---everyone.

I would like to incorporate ticker divergence into my trading foutine and wondered if you use it with Sierra Charts?

I am using a 1 min chart with vol along the bottom---do you watch everything on one chart?

I am doing okay with just price and vol , S and D lines and trading off of sup and resistance. I love it.

I am trading the QQQQ. I wondered why you prefer the emini futures?

I know I may have asked this somewhere in the past but frankly I get lost in these boards.

thanks for your time

Jay

[HAKUNA 10]

Db

In your pdf file on support resistance and trend trading, the concept of failure to breach is explained. Also notice in many of your posts, you mention a number of times on the trader deciding in advance what he should look for and to know what he is looking at.

 

Do you therefore study Daily charts to identify such locations (FTB) to trade for the next day. Then go down to 60min charts to identify similar locations and so on to smaller timeframes, 5min, 1min, 5sec.

[Head2k 10]

To answer a question what time frames one should use to find potential S/R prior to open one must first answer a question what moves he is interested in. It is a problem of scale, and for me scale is really a problem which I am solving only slowly. Problem of scale does not regard only S/R, but also trend and therefore also reversals, breakouts and retracements.

 

Once I am in a trade (or about to take a trade) the business gets different. Then I use intervals down to 5 sec to judge where price finds support or resistance. But I am only beginning of my S/R exploration.

And by the way, FTB is an action, not a location.

Edited September 9, 2015 by DbPhoenix

[taq 10]

hi db,

 

i never undersatand the significance of using of point & figure charts in stop loss calculation by wyckoff can you through some light on that.

 

currently i m trading in nifty (INDIA) index futures.

these are some of the details for the same

52 Week High 6357.10

52 Week Low 2252.75

All-time High 6357.10

All-time Low 775.43

Last closing 2752.25

Daily Volatility 4.32

Annualised Volatality 82.58

 

what box size & reversal amount will wyckoff follower suggest for intraday trading?

or wht would he select if he has to trade in this market?

Edited November 27, 2008 by taq

[imahippi 10]

I'm hoping someone will look at my chart and let me know if I missed anything as far as s+r, vol and sup and dem lines

 

 

 

Bump: btw

Please dismiss the "db would do this" and "db would do that" as I often try to think of what he would do----:embarassed:

 

Bump: btw

Please dismiss the "db would do this" and "db would do that" as I often try to think of what he would do----:embarassed:

[taks1990 10]

Hi all

 

I am new to studying Wyckoff and have started reading Studies in Tape Reading.

 

My question is: are bar charts less effective than tape reading. From my (admitedly) limited study, one could gleen much more information from the tape than the bar and vol?

 

Please correct me if I am wrong.

 

Thanks

 

Mark

[steve46 12]

DB's comment is one that I agree with (defining a "setup").

 

I prefer to keep things simple (if possible). Price (for many reasons) tends to "test" other price points. Some of these price points happen to coincide with EMA's, with pivots, and with other specific price points that I identify as "value" (from Market Profile)

 

For me, I choose a long EMA (200), a shorter EMA (80), and Pivots as the basis for my big picture decision making.

 

I look for setups by scanning longer term charts (570 minute candles). The primary concept I look for is "test and retest", or "test and classic failure". "Test & Retest" is where price tests a specific point and takes off north (also known as a continuation trade), "Test & Failure" or "Classic Failure" is where price tests a point, and fails to take it out, or tests, takes it out briefly, and then fails (heading south).

 

Seeing one of these setups on the longer term charts, one can look for entry using shorter term charts. I like to take time out of the equation by changing to constant volume charts at this point..This means that I can look for entry at a specific price without regard to time. The advantage of this is that I can sometimes get a favorable entry in the premarket and enjoy a bit of breathing room when the US Market opens. If the day happens to be a trend day (and I am on the right side) I can simply watch and either scale out or hold to EOD.

 

If the day is does not trend, you may have to repeat the process several times. The benefit is that the trader learns to think conceptually (on a larger scale) and to have patience. It has worked well for a number of years.

 

I think this is a good starting point for traders who may be having trouble seeing the markets.

 

Best to all

Steve

[taq 10]

taks please elaborate the point

wht do u mean by tape reading?

[taks1990 10]

This was how Wyckoff started reading the market - by reading the ticker tape. It is explained in his book "Studies in Tape Reading".

 

I just wanted to know why Wyckoffians don't read the tape anymore and intead use bart charts?

 

Thanks

 

Mark

[BlowFish 10]

This was how Wyckoff started reading the market - by reading the ticker tape. It is explained in his book "Studies in Tape Reading".

 

I just wanted to know why Wyckoffians don't read the tape anymore and intead use bart charts?

 

Thanks

 

Mark

 

Maybe because on many instruments (ES for example) it moves too fast nowadays? Or perhaps W would have used real time charts if they had been available to him then.

[HAKUNA 10]

Db,

 

Further to my post 129, copied here:

 

"Db

In your pdf file on support resistance and trend trading, the concept of failure to breach is explained. Also notice in many of your posts, you mention a number of times on the trader deciding in advance what he should look for and to know what he is looking at.

 

Do you therefore study Daily charts to identify such locations (FTB) to trade for the next day. Then go down to 60min charts to identify similar locations and so on to smaller timeframes, 5min, 1min, 5sec."

 

Won't quibble over the wording, location pertained to any support/resistance identified.

 

Following that you also mention trading support and resistance, in which case you state that trend is irrelevant and hence also the timeframe.

Are these support/resistance zones then dependent on the timeframe.

 

Hope this time folks will let the wyckoff expert answer:)

[steve46 12]

Just a suggestion. In my thread "Ideas for Struggling Traders", the last several posts deal with identification of trading opportunities.

 

One of the problems with talking about trading, and posting "after-the-fact" charts, is that you really can't duplicate the experience of trading, nor can you duplicate the way it feels to see a chart and not know how to approach it in a constructive way...In these last several posts on my thread, I look at charts in the way a trader would have to....first looking at the premarket, developing a conceptual understanding of where price might go, and then waiting for price to prove itself based a few basic rules.

 

Perhaps those of you who are having problems will see it, understand it, and "run with it"....

 

Best Regards

Steve

[BlowFish 10]

 

One of the problems with talking about trading, and posting "after-the-fact" charts, is that you really can't duplicate the experience of trading, nor can you duplicate the way it feels to see a chart and not know how to approach it in a constructive way...I

 

This is very true, it seems clear to me that even the poster of the chart will often suffers perceptional biases. (not suggesting that is the case here) This probably comes out of an enthusiasm for their chosen methodology rather than any desire to fudge the results.

 

Even posting hind sight charts they tend to cherry pick (probably sub consciously) and post dis proportionate numbers of good 'setups'. This tends to foster unrealistic expectations in the observer and causes confusion at the hard right edge when all of a sudden they have 'failed setups' to deal with. quickly identifying what is happening now is more important than the (fairly trivial) task of spotting 'setups'. Maybe they have concerns that posting failures might put people off the method. Guess what, thats the nature of trading.

 

I think that many successful traders have a good read on price action so even if they are leaning against a line or demonstrating the latest wizzy oscillator they are still 'reading price' and so assimilating and evaluating information that they are not presenting. Hell they are often seem unaware exactly how they do it. I guess that is part of the 'experience of trading' you talk about above.

 

 

These are general observations. I only posted here in response to your post Steve. In fact, DB by largely presenting principles avoids some of these issues and is quite clear that, for example, you can not know whether a climax is a prelimanry climax or the climax at the hard right edge.

[Bearbull 10]

This is very much pertinent to the discussion. Am told by my trading friend it is again extracted from one of Db's file, hope Db has no objection, where he goes into details of Demand and Supply(deals with stocks but applies to any market) but without use of any charts and the reason..... Well read on.

 

REAL WISDOM OF TRADING

 

I'm sure it has occurred to at least some readers that if the accumulation-distribution pattern I've described here were dependable in all circumstances under all conditions, then all stocks would have a pattern of up, across, down, across, up, across, ad infinitum. This is clearly not the case. The markets are not represented by a straight and narrow highway. A far better metaphor would be a roiling sea of rallies, reactions, markups, markdowns, shakeouts, thrusts, buying and selling climaxes, turning points, all happening all at once in timeframes varying from minutes to years and with all the accompanying eddies, currents, inversions, and undertows. This is the primary reason why I haven't provided graphic examples here of the concepts I've presented. The point is not to find some stock somewhere that typifies accumulation or a shakeout and use it as a template for all future investigations of manifestations of changes in demand and supply, but to understand at a deeper level how the threads of demand and supply, accumulation and distribution, and the relationship between price and volume all intertwine. What I've provided here is only the beginning of an exploration, not an exhaustive treatment of the subject.

 

Each chart you look at, instead of being "typical", will instead be unique. Each movement of price and volume in a chart has meaning only within the context of what has gone before in that particular chart. Therefore, solving the puzzle of the dynamics of demand and supply will be a new challenge with each chart. Achieving mastery of this skill will take time, if mastery is ever achieved at all. But applying even the most basic of the principles outlined above will result in an almost immediate payback, if not in money gained, then in money saved.

Edited November 14, 2009 by DbPhoenix
posted twice

[DbPhoenix 42]

Db,

 

Further to my post 129, copied here:

 

.....

 

Hope this time folks will let the wyckoff expert answer:)

 

Head2K did a fine job of answering your question.

 

As for "how I trade" or "what I do", that is largely irrelevant to the thread and forum. I have, however, made many suggestions regarding how one might incorporate Wyckoff's approach into his own trading throughout the forum and in my blog. Anyone who wants to know exactly what it is he is to do in order to develop a trading strategy and trading plan -- both of which are required before he actually places a trade -- is going to have to study the material and go through an extensive period of testing in order to determine what is best for him.

Edited September 9, 2015 by DbPhoenix

[imahippi 10]

That's what I'm doing!!

I actually am trading though. I trade ten shares of qqqq at a time. I find the learning curve much faster and more efficient when I am really in versus going over possiblities out.

Jay

[steve46 12]

Well Blowfish, I think you are talking about "perceptual bias" and yes all humans are prone to it. In regards to trading as a pursuit, perceptual bias is the reason that I have suggested (many times) that traders learn to characterize markets, and to test the patterns and tools they use. I have already done this with my charts and that is why I use a long ema, a shorter ema and only a few other tools. Notice if you will, that no one ever asks "why the 200 period EMA? or "Why the 80 period EMA?" or "How did you decide which EMA to use?".....This is one of the problems that newbies and struggling traders face....often they don't have an interest in the details and in how things work...and believe me when I say this...sooner or later you have to know how and why things work (or don't work) in order to make it in this business. Also you don't see posts from newbies or struggling traders saying "hey I backtested your approach, or "I changed it this way or that way and it tests very nice", or "I did the basic test and am now doing the forward test"...One hopes that some few traders understand and do that very important "homework", but I fear that what really happens is that they just grab it and run, using it or some part of what I am proposing without really testing or understanding what is going on. As I hope you can understand, on a public Internet billboard one can only suggest and hope for the best.

 

Good luck to all,

Steve

[MidKnight 12]

Hi Steve,

 

In your struggling traders thread I saw you mention the idea of characterizing the market but then DB jumped in and squashed any further comment so I didn't post my questions. If you would be interested in discussing more about that then I'm sure I wouldn't be the only one interested.

 

My apologies for a brief distraction from the thread.

 

All my best,

MK

[DbPhoenix 42]

Hi Steve,

 

In your struggling traders thread I saw you mention the idea of characterizing the market but then DB jumped in and squashed any further comment so I didn't post my questions. If you would be interested in discussing more about that then I'm sure I wouldn't be the only one interested.

 

My apologies for a brief distraction from the thread.

 

All my best,

MK

 

I haven't posted to Steve's thread, much less squashed anything there. If you have questions for Steve, why not post them to Steve's thread? Monte Carlo simulations, pivots, and 200 and 80p EMAs and so forth just aren't relevant to this particular forum, but they may be of vital importance to Ideas for Struggling Traders.

 

Those who have something to post regarding Wyckoff's methodology are welcome to do so. Those who'd rather discuss some other methodology have dozens of other forums to choose from.

Edited December 4, 2008 by DbPhoenix