Trading The Wyckoff Way

[erierambler 10]

  mikew said:

 

 

 

Why wouldn't the price drop induce people to buy, when they see the lower prices as a bargain? How does this increase in volume differ from that of a selling climax? In both cases the price drops lower on large volume. But in a selling climax the recommendation is to go long. Where as in the paragraph above, it seems that Wyckoff is suggesting that prices will continue lower..

 

Mike, the drop in price will induce some people to buy, but the selling is overwhelming the demand. The increase in volume is just that , an increase. This could be a continuation down if price had stopped at the trading range. A selling climax is where such a volume represents "throwing in the towel". All those that would sell, have sold. Therefore with not many sellers left, the demand exceeds supply , and price rises. Although keep in mind that price can go lower yet, and test to see if there is any supply left. Then rise.

 

erie

[erierambler 10]

Here ya go Mike with the hard right edge...........

 

[mikew 10]

  erierambler said:

Here ya go Mike with the hard right edge...........

 

Thanks, I'm interpreting that chart as a breakdown of a trading range on higher volume, meaning that we can expect to go lower, as opposed to the selling climax previously discussed. This doesn't look like a selling climax to me, because, well, there hasn't really been an established downtrend to reach a 'climax'

[erierambler 10]

  mikew said:

Thanks, I'm interpreting that chart as a breakdown of a trading range on higher volume, meaning that we can expect to go lower, as opposed to the selling climax previously discussed. This doesn't look like a selling climax to me, because, well, there hasn't really been an established downtrend to reach a 'climax'

 

Very good.............on a initial slide , it could be just the start of a decline....

[mikew 10]

But then the FED comes out and essentially says that the dollar will continue to be crushed, so so much for that

[ACS 10]

  bamford said:

Attached is a PDF of the contents of an article on "The Technical Position" written by John T. Brand (writing as "B") and published in the Magazine of Wall Street in 1916. Brand was an old tape reader and his material is much like Wyckoff's. In this article he covers several items mentioned previously in this thread.

 

Are there more of Brand's articles available?

[gassah 10]

Try this: The business of trading in stocks - Google eBookstore

[sharehunter 10]

Dear Friends!

 

Point and Figure is an important part of my method. For stock trading I use an excellent software which named “Bull’s Eye Broker”. Unfortunaly, this software don’t support realtime data feed and only support EOD data in which I also begin to trading forex now.

 

If you know, please kindly introduce to me software which support Point&Figure, realtime data feed. It is more excellent if it also support Wyckoff Point& Figure chart

 

Many many thanks for your helps

[sharehunter 10]

the bellow is short desciption about Wyckoff Point&Figure

 

 

The Wyckoff method is a special type of point & figure chart. It uses a single box reversal instead of the more common three-point reversal. It also varies from the standard point & figure chart because it can contain both X’s and O’s in the same column. This will occur whenever there is only a single entry made in a column. For example if we had a single X in a column followed by 3 O’s, the O’s will be displayed in the same column as the X. In a Wyckoff chart there must always be more than one entry in a column.

Let's take an example. The box size for these values is $1.00. Note that a Wyckoff chart can also use high and low data, but for clarity we have selected closing price data only.

Date Day Close

10/02/98 Tue 55.00

11/02/98 Wed 57.00

12/02/98 Thu 56.00

13/02/98 Fri 57.00

16/02/98 Mon 58.00

17/02/98 Tue 59.00

18/02/98 Wed 56.00

19/02/98 Thu 57.00

20/02/98 Fri 56.00

23/02/98 Mon 57.00

24/02/98 Tue 56.00

On 11/02/98 the chart rose from $55 to $57. This resulted in 3 X’s being plotted in the first column. The very next day there was a pull back of one box to $56. Because we are using a one-point reversal, we move to the next column and plot the single O. The next day the price rises again to $57. This again is a reversal, however we do not move to the next column because we have only made one entry in the current column. The upward movement continues until the chart reaches $59 on 17/02/98. Continuing to plot the data in this fashion will produce the chart below:

$60.00

$59.00 X

$58.00 X O

$57.00 X X O X X

$56.00 X O O O O

$55.00 X

Other than the two requirements described above, the Wyckoff point & figure chart uses the same principals as a standard three-point reversal chart

[YertleTurtle 10]

The 1-box reversal graphs are available with tradestation. NinjaTrader also supports PnF charting but they don't correctly plot 1-box reversals as they won't let an X and an O occupy the same column. Tradestation does this correctly.

[PFtrader 10]

  sharehunter said:

Dear Friends!

 

Point and Figure is an important part of my method. For stock trading I use an excellent software which named “Bull’s Eye Broker”. Unfortunaly, this software don’t support realtime data feed and only support EOD data in which I also begin to trading forex now.

 

If you know, please kindly introduce to me software which support Point&Figure, realtime data feed. It is more excellent if it also support Wyckoff Point& Figure chart

 

Many many thanks for your helps

 

 

Hi Sharehunter

 

Did you know that Bull's-Eye Broker will release their new software during fall? It will have Real-Time charting, and they have Wyckoff charts. I have signed up for beta testing, and was told I could start testing in end of September.

[sharehunter 10]

  PFtrader said:

Hi Sharehunter

 

Did you know that Bull's-Eye Broker will release their new software during fall? It will have Real-Time charting, and they have Wyckoff charts. I have signed up for beta testing, and was told I could start testing in end of September.

 

Thanks PFtrader, it is real good news. could you please tell me how to join this test. I wanna to join this test

[Stock.Jock 10]

  PFtrader said:

Did you know that Bull's-Eye Broker will release their new software during fall? It will have Real-Time charting, and they have Wyckoff charts. I have signed up for beta testing, and was told I could start testing in end of September.

 

I'd be interested in beta testing too. How do I sign up? What brokers will they allow data to come from? I have TDA. NinjaTrader allows for real time charting, but it doesn't include the Wyckoff PnF like Bull's-Eye Broker does.

[sharehunter 10]

finally, I found out that Updata software can be a good candidate. it is realtime data feed, can supply P&F chart, it also can make P&F chart following Wyckoff way

[clmacdougall 11]

  sharehunter said:

finally, I found out that Updata software can be a good candidate. it is realtime data feed, can supply P&F chart, it also can make P&F chart following Wyckoff way

 

Does updata also give the ability to highlight the actual highs and lows outside of the box areas and does it do a number of boxes in a line count in each row?

[sharehunter 10]

  clmacdougall said:

Does updata also give the ability to highlight the actual highs and lows outside of the box areas and does it do a number of boxes in a line count in each row?

 

Updata dont supply number of box in a line count (you can count by yourself, it is easy, right?) it only supply the number of box and number of bar in any column.

 

for highligh high and low, i am not sure what you mean but seem not a important thing.

[YertleTurtle 10]

Tradestation will plot all types of PnF charts. They do allow for proper 1-box reversal charts (i.e an X and an O can exist in the same column). There is nothing to aid in box counts etc. You can also get their software for free if you trade 10 times a month. The sometimes have promotions for free lifetime data as well.

 

I've been using a 3 box and 1 box chart on their software and like it. You can also use their data feed to feed ninjatrader if you so choose.

[mikew 10]

Ok, back at it again.

 

I'm having trouble because I read something from the course, and I try to understand it. But when I try to see the flaws in the contrasting, devil's advocate position, I can't find them. Usually, both what Wyckoff says and the opposite of what he says both make sense.

 

From chapter 14M, page 7

 

  Quote

A small volume, that is, little activity in a stock, indicates that it is being neglected by traders and the public. When this small volume occurs at the bottom of a consider-able decline, or at the bottom of a reaction or small dip, it usually indicates a lack of pressure; a drying up of the selling (illustrated by Times Average, Sect. 7M, Pg. 33, Jan. 16th to 19th).

 

(corresponding chart from 7M Jan 16-19th is attached to this post)

 

Now what I want to discuss is the quote above. Wyckoff is saying that at the end of the attached chart, the small volume on the pullback indicates that selling pressure has dried up. I would then conclude that such a lack of selling pressure is a bullish sign, perhaps a time to take a long position.

 

However, when I play devil's advocate, it seems just as logical (to me) to say that the low volume on the pullback indicates that there is a lack of BUYING pressure. The fact that the price can drop on low volume means that there is no buyers preventing the drop. If there were buying pressure, then the price would not pull back, but rather it would be supported. So since the price can drop like that with no support stopping it, that would indicate a bearish future.

 

Does that make any sense? Where am I going wrong?

Edited October 9, 2011 by mikew

[ACS 10]

My understanding is that you must know what the background of the market is. Is there supply or demand? If there is a rally with demand in the background then a pullback on light volume means lack of supply on the dip. The buyers already have established that they control the market, it is up to the sellers to change the background by showing supply through range expansion, increased volume and follow through. The converse is true in a bear trend.

[ChartistLion 10]

Point and Figure is briallint in my opinion. TraderPro by Updata draws these beautifully along with adding the vertical targets and horizontal trend lines automatically. Not free but not too shabby hey

 

http://www.fxstreet.com/webinars/sessions/session.aspx?id=9e70e1f7-a8ba-4b9c-bae6-c914e94e9257

 

[lpbimo 10]

If I got it right, it's impotrant to notice the closing price relatively to opening price. It's relation will tell about result vs. effort indication, i.e. if downward movement is accelerating at high volume, it's just another sign of weakness, because more people are willing to sell which pushes prices down=>much effort(high volume) caused much result(price falling much) on the downside (sign of weakness)

 

On the other hand, if we got wide spread, high volume and closing price higher than the middle of the bar (if near to the open price or higher even better), market tells us that bears were willing to push prices down further but this met a strong support from bulls (whether it's temporary or not is a different question) who were buying on the low levels, pullingprices up=>much effort led to little result (which can be considered as a sign of strength), because asset was bought on the lows and closing price was near the tops

 

Is that reasonable?

[SunTrader 10]

Here is another way to look at it. First decline has increasing volume, second does not.

Selling is less intense therefore the decline slows and market begins to recover.

 

As Tom DeMark has said: markets top not because there is intense selling, just an absence of buying, and markets bottom because of an absence of selling not because of overwhelming buying. Now once the turn is for real then the selling at the top or buying at the bottom does become much greater and volume figures should confirm that.

[lpbimo 10]

Could anybody name the special features of unusual distribution/accumulation or place any graph to illustrate, please?

[wunderlich 10]

Accumulation / Distribution can also be tracked with the Wyckoff Waves

 

W

Edited March 8, 2013 by DbPhoenix

[lpbimo 10]

Thank You! but that's little bit different