Trading The Wyckoff Way

[DbPhoenix 42]

There really wasn't much on exact entry of hinges throughout this thread, nor much about it on your blog. I could have missed them.

 

 

May have been the chatroom. It's been a while.

 

The one thing that I'm confused on & you were going through this with Atto is:

 

1) how do you know which direction the trade is going? Or do you not, & is that why you said preferably both. It seems in one of the posts that you elluded to clues of which direction a chart he pulled up would go. Also, Atto mentioned hinges "tend" to be continuations.

 

You don't. Or at least I never assumed anything. Whether his comment was anecdotal or he really tested it, I don't know. Seems reasonable, but the market's always full of surprises.

 

 

In any case, if you plan for both, you needn't care. What's most important is not to be surprised and to plan ahead for all contingencies. Then emotions are less likely to screw you up.

 

 

It's important, though, to pair your entry stop with its cover stop. Otherwise, the program may think your cover stop is actually an entry stop and that can really ruin your day. If your program doesn't let you pair a cover stop with an entry stop so that they're linked at the time you transmit the order, get another program.

 

2) Are you referring to the hinge, or the WTF as for what only happens in the 1 minute or less interval?

 

My interest in hinges is to apply them to daily charts. The NQ example was just something I found after looking & looking at charts. It turned out nicely.

 

 

The WTF. The hinge can occur in any interval.

 

 

And yes, it did.

 

 

Db

 

Edit: These questions of yours rattled something loose and it eventually rose to the top. If you're really interested, there's a lengthy analysis of a hinge beginning here, though you may already have stumbled across it. This guy was sharp, but so were the others who participated. This was a particular kind of hinge and easier than usual to anticipate the outcome, but you never know. The observant trader can pick up all sorts of signals.

 

It is long. Almost 30 posts. But it's thorough. Yep, it's thorough.

 

Db

Edited April 26, 2012 by DbPhoenix

[gaelgss 10]

Why?

 

Because by day-trading I eliminate overnight risk exposure and I will find more trading opportunities. (I will also sleep much better)

 

Also the leverage will allow me to grow my account once I become consistent.

 

Again, why?

 

I am considering tradingthe NQ futures because it has good liquidity, volume and volatility but I could always trade other index futures.

 

The TickQ indicator seems like a logical approach that appeals to me.

 

Also your boxes seem to work well in this market in 2008

 

 

Not the best choice for a bread-and-butter setup. The Hinge is the cookie in the lunch box. You won't see it that often. Go for the sandwich.

 

Ok thanks for the advice, I will read on more setups, would you care to point me in the right direction? One setup that Ive been thinking about is the re-test of S/R on lower volume with a TickQ divergence, what do you think of this?

 

Maybe. Whether the trade works or not will depend in large part on how it's managed

 

I understand, but until I have an entry point theres nothing to manage...

 

 

 

Watching price move is always a good way to start. As for developing your edge, don't be concerned about that at the beginning. By determining so early what you're going to trade, when you're going to trade, what you're going to look for, etc., you've already cut yourself off from a number of options, which is why I asked my first two questions. Unless you have really good reasons for wanting to be a daytrader and trade the NQs, I suggest you rethink all of that. Trading futures intraday may seem like where all the action is, but it's also where a lot of people get chewed up.

 

Db

 

I am totally open to any form of trading and would be very interested in hearing your suggestions on wich market would be the most appropriate for my objectives, which are:

 

1- To make a decent living out of this, and save money for future projects.

2- To be in control of my time and spent most of my day doing the things I enjoy, instead of working.

 

I have seen you mentioned you trade for 90 minutes a day, this is obviously very appealing but I imagine getting to the 90 min trading-day has been hard work.

 

Is this a reasonable aspiration? (the 90 minute trading day) or is the reality of succesful day-trading very different from my expectations?

 

Thanks once again for your interest.

[YertleTurtle 10]

I don't know what DB considers the sandwich but in my trading I have found the [shakeout*]/upthrust to be high probability and regularly occurring. I only see hinges in retrospect.

 

[*I'll assume this is what was meant. (Db)]

Edited April 26, 2012 by DbPhoenix

[DbPhoenix 42]

Because by day-trading I eliminate overnight risk exposure and I will find more trading opportunities. (I will also sleep much better)

 

Also the leverage will allow me to grow my account once I become consistent.

 

I don't want to be directive . It's your life. But I do want to suggest alternatives. Trading EOD, for example has certain advantages, not the least of which is the ability to pyramid, if you're trending. And the sleeping issue isn't the problem it often is with stocks, though others may disagree.

 

I will read on more setups, would you care to point me in the right direction? One setup that Ive been thinking about is the re-test of S/R on lower volume with a TickQ divergence, what do you think of this?

 

Instruments are always in a state of trend or no-trend, or trading range. Each of these has its pluses and its minuses in terms of trading opportunities. Some learn how to do both. Some are better at one or the other. If you find that you're particularly good at playing off support or resistance, then look for trading ranges and relax and do something else when there aren't any. Ditto with trading the trend. If you haven't looked at the Trend thread, that may give you something to chew on.

 

I am totally open to any form of trading and would be very interested in hearing your suggestions on wich market would be the most appropriate for my objectives, which are:

 

1- To make a decent living out of this, and save money for future projects.

2- To be in control of my time and spent most of my day doing the things I enjoy, instead of working.

 

I have seen you mentioned you trade for 90 minutes a day, this is obviously very appealing but I imagine getting to the 90 min trading-day has been hard work.

 

Is this a reasonable aspiration? (the 90 minute trading day) or is the reality of succesful day-trading very different from my expectations?

 

Thanks once again for your interest.

 

The reality of daytrading is very different from everybody's expectations. However, few people prepare for it. If you understand that the preparation can take a great deal of time, you may find success before you become discouraged. But even if you don't find success, at least you won't be broke. Understand also that you must have or acquire certain personal attributes, such as patience, tolerance, calm. These may come with a thoroughly-tested strategy, but it helps if you possess these qualities to start with.

 

Db

[DbPhoenix 42]

I only see hinges in retrospect.

 

As soon as you have a lower high and a higher low, you have the beginnings of a possible hinge.

 

Db

Edited April 26, 2012 by DbPhoenix

[quark 10]

DB in regards to hinges your response was this.

 

Not the best choice for a bread-and-butter setup. The Hinge is the cookie in the lunch box. You won't see it that often. Go for the sandwich.

 

Can you give us a pointer on what the bread-and-butter Wyckoff setups are?

[gaelgss 10]

The reality of daytrading is very different from everybody's expectations. However, few people prepare for it. If you understand that the preparation can take a great deal of time, you may find success before you become discouraged. But even if you don't find success, at least you won't be broke. Understand also that you must have or acquire certain personal attributes, such as patience, tolerance, calm. These may come with a thoroughly-tested strategy, but it helps if you possess these qualities to start with.

 

Db

 

One question about your method of trading. without getting into specifics;

 

Do you still trade the first 90 minutes from the opening of the NQ futures?

How many trade setups do you normally find in a day?

Is it feassible for a newbie to try and trade in this period?

 

thanks a lot again.

[motorway 10]

I can not see your charts ?

 

In the Wyckoff's course there are sections where he moves between the 1 and 3 reversal charts taking note if there are any differences in column widths.

 

Now you have a formation on both the

1 point and the 3 point figure charts which looks like this:

IE: THE SAME !

 

( there is a good hint )

 

In general you look for the areas of congestion.

You derive upside counts from support ( the Lowest row even if it has more empty spaces )

You derive downside counts from Resistance ( the highest row even if it has more empty spaces )

 

You can also derive counts from the Line ( row ) with the most filled boxes.

 

You should scale a chart with the 1 box reversal and then consolidate that chart with the 3 reversal ( then x 3 makes sense because you are consolidating the horizontal and thereby consolidating the buying and selling waves )

 

If you start with the 3 reversal you will often have a BOX size to small.

The three box reversal is not doing it's job of consolidating the waves on the one box chart.it will tend to just reproduce them.

 

Again;

Now you have a formation on both the

1 point and the 3 point figure charts which looks like this:

IE: THE SAME !

 

 

Once you have your counts. You must place them in context of the other congestion zones.

 

Counts that are not fulfilled tell you just as much as having the count as a target.

 

Counts look forward to what might happen

But they look back and qualify what did happen.

 

We judge stocks just as much by what they do as what they DO NOT DO

 

Counts that do not get fulfilled or are quickly negated are telling you something !

 

A Study - CAUSE and EFFECT - THE COUNT

 

Motorway

Edited April 27, 2012 by motorway

[Niko 10]

Do you have a tested and profitable trading plan for all of this?

 

Db

 

I am curently working on building a trading system based on Wyckoff, I mainily trade trending markets with a proven system (at least proven by my standards) and applying Wyckoff principles about volume and price movement has helped me a lot, but it has always intrigued me how to make money in ranges and during the transicion from a range to a trend.

[DbPhoenix 42]

Can you give us a pointer on what the bread-and-butter Wyckoff setups are?

 

Re-read the course. And read Section 7 as often and as many times as it takes.

 

Db

Edited February 6, 2013 by DbPhoenix

[DbPhoenix 42]

One question about your method of trading. without getting into specifics;

 

Do you still trade the first 90 minutes from the opening of the NQ futures?

 

I bought a house and large lot last fall, both of which required/require/will require extensive renovation. Daytrading dropped to the bottom of my list of priorities. So I've rediscovered the pleasures of EOD trading. No idea what I'll do when I have more time.

 

How many trade setups do you normally find in a day?

 

Make that "found".

 

Depends on whether the day is trending or range-bound. If trending, generally one. If range-bound, maybe two. Often, none.

 

Is it feassible for a newbie to try and trade in this period?

 

I'm tempted to say no, but who am I to make those decisions. Whether or not a trader is going to be successful during this period depends as much on the kind of person he is as the strategy and tactics he employs. If you spend sufficient time in front of your screen, you'll quickly see when the market begins treading water. That's most often when amateur traders begin looking for trades that aren't there.

 

thanks a lot again.

 

You're welcome.

 

Db

[DbPhoenix 42]

I am curently working on building a trading system based on Wyckoff, I mainily trade trending markets with a proven system (at least proven by my standards) and applying Wyckoff principles about volume and price movement has helped me a lot, but it has always intrigued me how to make money in ranges and during the transicion from a range to a trend.

 

I don't want to be offensive, but if you have a proven system, I'm not sure why you asked the questions you asked in your last two posts. You should know on the basis of your testing where the best entries and stop placements are. If you don't, the system isn't proven. If it is proven, the answers are self-evident.

 

But let's say your system is proven at some level and you want to make it better, which entails a whole new course of proof. Where you intend to buy and sell is in concert with W's approach. And as to your initial stop, yes. But how you trail your stop depends only partly on what the approach would suggest. Much more than that are how familiar you are with the instrument and how its traders behave, what it's most likely to do, how it moves, whether it's calm or nervous. Your own risk tolerance and how you've dealt with your fear are also important components. The risk-averse and fearful tend to have stops that are far too tight. They can't give price room to breathe. So there is no right answer as to whether to move the stop up or not.

 

Db

[DbPhoenix 42]

Where We Are

 

 

 

 

[cowseathay 10]

Holy shit, you are still alive! Great news.

[DbPhoenix 42]

Holy shit, you are still alive! Great news.

 

Are you guys going to start drifting back?

 

Db

[Nemesis 10]

You forgot this one.

[thalestrader 14]

That's got to be the pot calling the kettle black. ... I was wondering if you'd slipped into another dimension. Welcome back DbPhoenix.

 

Welcome back, indeed! The quality of your posts played no small part in making TL a place where I chose to visit and contribute rather than just another search engine result from a long forgotten google search for who knows what I was looking for that day. I haven't visited TL in a while, and today would have been no different had the words "Hinges" and "DbPhoenix" not caught my eye in a TL email I was about to delete.

 

Best Wishes,

 

Thales

[DbPhoenix 42]

You forgot this one.

 

I didn't forget it. Just didn't think we'd get there during the coming week .

 

Db

[DbPhoenix 42]

Welcome back, indeed! The quality of your posts played no small part in making TL a place where I chose to visit and contribute rather than just another search engine result from a long forgotten google search for who knows what I was looking for that day. I haven't visited TL in a while, and today would have been no different had the words "Hinges" and "DbPhoenix" not caught my eye in a TL email I was about to delete.

 

Best Wishes,

 

Thales

 

Same here. I don't plan on being around that much. How much more is there to say (witness your own thread)? But the Forum was getting pretty ragged, esp with the sales pitches, so the sheriff came back to Dodge. I've also deleted a lot of bad links and expired posts, so going through the information should be a bit easier.

 

I hope people still visit your thread. It's the only one I know of that wasn't all hindsight crap (though there is one thread on the ES that appears to be run in real time, like a chatroom, which appears to be no longer here).

 

Db

Edited April 28, 2012 by DbPhoenix
Link added

[Nemesis 10]

I didn't forget it. Just didn't think we'd get there during the coming week .

 

Db

 

Same thing could be said about the 1175 you plotted

[DbPhoenix 42]

Note: Posts from this one through #184 ( 5/30/12) have been moved from the Trading in Foresight thread to this thread.

 

Where We Are

 

 

 

 

Edited May 30, 2012 by DbPhoenix

[gaelgss 10]

I

 

Hello Db,

 

In this chart you have identified 3 "cajas famosas".

 

Which of these levels would you identify as S/R for the next trading day?

 

Presumably you don't take the top/bottom and midpoint of each range as S/R as there would be way to many lines on the chart right?

[Nemesis 10]

Ya a level before the fact would be cool.

Edited April 29, 2012 by DbPhoenix
Subject of post moved

[DbPhoenix 42]

I

 

Hello Db,

 

In this chart you have identified 3 "cajas famosas".

 

Which of these levels would you identify as S/R for the next trading day?

 

Presumably you don't take the top/bottom and midpoint of each range as S/R as there would be way to many lines on the chart right?

I moved your post here since my post should have been here in the first place, as I explained above.

 

As for your question, the point of this thread is to trade "in foresight", i.e., use this display to create a trading plan for the following session. Since your question has been answered many times in this thread with many examples, I'm afraid you're just going to have to read it.

 

Sorry

 

Once you have your plan together, however, if you have a question that hasn't been asked already, feel free to post it.

 

Db

[gaelgss 10]

I moved your post here since my post should have been here in the first place, as I explained above.

 

As for your question, the point of this thread is to trade "in foresight", i.e., use this display to create a trading plan for the following session. Since your question has been answered many times in this thread with many examples, I'm afraid you're just going to have to read it.

 

Sorry

 

Once you have your plan together, however, if you have a question that hasn't been asked already, feel free to post it.

 

Db

 

I have read this thread entirely and I believe your answer to this has been. " You should only plot the S/R lines that are more likely to affect current price action, these are the lines that are closer to the current price"

 

I have added S/R lines to your chart, assuming the market opens close to the 2741. I would appreciate some feedback regarding my lines, are they enough or to many? Are they drawn in the correct area? (I am aware that this is not a pin pointing exercise)

 

Blue lines are support and red lines are resistance.

 

Cheers.

 

Edit= Do you consider 2650 as support simply because it acted as resistance on the 29th feb and on the 9th of March and resistance becomes support or other other reasons?

Edited April 29, 2012 by gaelgss