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Is The Wyckoff Method or Volume Spread Analysis Legit?
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Is The Wyckoff Method or Volume Spread Analysis Legit?

  #11 (permalink)
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mattz View Post
@DbPhoenix, I can tell from your posts that you a genuinely polite person, so my post is not meant to be a confrontational. Please consider another view on "success"

Those who influence you and teach you early your career, have a tremendous effect on the way of thinking for many years. If one is led in the wrong direction, he may have losses for years, and at times would need to "reprogram" itself, in order to get the trading game right.

In the early stages of trading (where most are fascinated withe reward and under-appreciate the risk) is when the traders are most influenced. They buy courses, methods and indicators that will match their worldview. Sadly, what sounds "super intelligent" to them at the time, is nothing bit nonsense and regret in the years to come.

On the other hand, those who were successful traders, or are successful, approach this business in a pragmatic way.
What they teach is practical, and does not constitute a methodology rather a good foundation to develop a successful methodology.

It takes years to recognize the difference between the ones who sound intelligent and those who really make it.

Matt
Optimus Futures

There is a risk of loss in futures trading. Past performance is not indicative of future results.

All of which I agree with, which is why I encourage beginners first to study the market and learn how it works, then develop a thoroughly-tested and consistently-profitable trading plan (what the pdf mentioned above is all about) before spending a dime on books, courses, dvds, or software, much less brokers, platforms, data feeds. Whether somebody begins with Wyckoff or O'Neil or whoever is less important than following some path other than just throwing money at the market and hoping it all works out.

The market doesn't lie. Nor does it try to sell you anything. But in order to profit from it, one must understand it. And the road to understanding lies in observation and study and practice, not in finding someone to follow.

Addendum: the OP's question was "Is The Wyckoff Method or Volume Spread Analysis Legit?" I provided him with links to Wyckoff's original course as well as Wyckoff's tape reading book as well as Williams' original "book" on VSA. It's up to him whether he reads the material or not and, if so, works with it to see whether or not it has any value for him. Therefore, there's no reason for me to post any further to this thread.

Best of luck to everybody concerned.


Last edited by DbPhoenix; August 12th, 2015 at 11:16 PM.
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  #12 (permalink)
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DbPhoenix View Post
First, whether or not anyone else is successful isn't pertinent to your eventual success or failure. I could tell you I'm successful but you'd have no way of knowing that unless I provided you with my tax returns for the last 40 years. Same thing goes for anyone else who claims to be successful. In other words, whether or not you are successful is entirely up to you. Studying Wyckoff's course -- the original course -- is a good start. If you think it's "too old", read How To Make Money In Stocks (after the first edition, the books became more and more of a sales pitch for "Investor's Business Daily").

Second, the 90% thing isn't true, but I don't argue about it anymore, nor is the meme that becoming a competent trader requires 10,000 hours. But people want to believe it, so there you are.

Third, if you "know" you "might" fail before you've even begun, then you most likely will. You can't fall out of bed if you sleep on the floor. If, however, you are interested in succeeding, there are ways of finding out whether or not you're suited for it without spending any money, though you will be spending a considerable amount of time. The pdf attached to this post may be of interest to you.

Believe in yourself, but remain tethered to reality.

Thank you. I'll read the trading plan pdf and buy that cheap book by O'neil, i'll also search google for Wyckoff's original book.

I hope i understand them and though the book says stocks it will work with futures and forex, right?

Thank you for your words of kindness, i appreciate it.

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  #13 (permalink)
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Big Mike View Post
It is highly subjective which means the success or failure has nothing to do with the method and everything to do with the individual trader.

In other words, don't waste your time learning something that has no edge.

Sent from my phone

As always I appreciate and value your honesty, but I have to ask the following question - Does trading success not always depend on the individual trader?

For instance, the Turtles had a fixed system and yet their performance differed greatly. If everyone applied the same method, should their performance not have been in line with each other?

Also, there is plenty of evidence that CANSLIM works, yet I don't think there is any successful CANSLIM fund. I can't say how many traders quit using CANSLIM because they were not successful, but those that use it successfully all use different variations of it. For instance, I expected David Ryan to be the classical CANSLIM-trader, but he once spoke of a rule that he designed while at O'Neil & Co (not in the book) which made a lot of sense to me, but could cut profits a little short. On one podcast, William O'Neil completely dismissed that rule and mentioned he does not think it adds merit. Listening to David Ryan speak he has completely different strengths than O'Neil, but both of them know their strengths and weakness and adjust their methods for that.

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  #14 (permalink)
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DbPhoenix View Post
First, whether or not anyone else is successful isn't pertinent to your eventual success or failure. I could tell you I'm successful but you'd have no way of knowing that unless I provided you with my tax returns for the last 40 years. Same thing goes for anyone else who claims to be successful. In other words, whether or not you are successful is entirely up to you. Studying Wyckoff's course -- the original course -- is a good start. If you think it's "too old", read How To Make Money In Stocks (after the first edition, the books became more and more of a sales pitch for "Investor's Business Daily").

Second, the 90% thing isn't true, but I don't argue about it anymore, nor is the meme that becoming a competent trader requires 10,000 hours. But people want to believe it, so there you are.

Third, if you "know" you "might" fail before you've even begun, then you most likely will. You can't fall out of bed if you sleep on the floor. If, however, you are interested in succeeding, there are ways of finding out whether or not you're suited for it without spending any money, though you will be spending a considerable amount of time. The pdf attached to this post may be of interest to you.

Believe in yourself, but remain tethered to reality.

Thank you for the link to the book. I have ordered it "new" although I don't quite believe it can still be that way. I have read the third edition at least 10 times and still use it as a reference.

One thing I should mention though is that the third edition has 100 of the greatest winning stocks with mark-ups as an introduction. These mark-ups show the ideal entry point, as well as exit point, and I believe they do provide some additional commentary. Of course, their is a huge survivorship bias present, but I do think there is some value in seeing how these trades could have been managed.


Last edited by grausch; August 13th, 2015 at 05:24 AM. Reason: fixed silly spelling errors
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  #15 (permalink)
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grausch View Post
As always I appreciate and value your honesty, but I have to ask the following question - Does trading success not always depend on the individual trader?

The question was basically should someone learn this method. My answer is no.

Should someone learn to count sand on the beach to learn how to trade ES? I would think not. Maybe someone can count sand and still make money trading ES, but reality is they are not correlated.

It would be better to spend time learning something of actual value that is related to how markets operate.

Mike

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  #16 (permalink)
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Big Mike View Post
The question was basically should someone learn this method. My answer is no.

Should someone learn to count sand on the beach to learn how to trade ES? I would think not. Maybe someone can count sand and still make money trading ES, but reality is they are not correlated.

It would be better to spend time learning something of actual value that is related to how markets operate.

Mike

Based on your response i'm guessing you know what is of value because your successful?

What would be of value and could you point me in the right direction?

I'm still going to start with reading Richard Wyckoff's work, but maybe after i'm done with that i will take up your suggestion.

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  #17 (permalink)
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wallo101 View Post
Based on your response i'm guessing you know what is of value because your successful?

What would be of value and could you point me in the right direction?

I'm still going to start with reading Richard Wyckoff's work, but maybe after i'm done with that i will take up your suggestion.

wallo101,

Just a gentle reminder to read the following thread: https://futures.io/psychology-money-management/26691-time-give-up.html before you ignore the well-meant advice you have been given. Read it in its entirety, as there are quite a few different things to learn from there. Unless you are one of the extremely lucky few, you will at some point reach that crossroad. After a long period of breaking even, I reached that point, quit for a while, saved up sufficient capital, developed a much better plan / method and am seeing much better results.

I am no expert on Wyckoff, thus I may be missing other important items. Quoting Wyckoff's original course section "How a campaign is conducted Individual Chart Studies - Part I": "After we have determined the position and probable trend of the general market and have examined the action of the various groups to see which are most likely to go with and to lead the market as a whole, we must single out those individual stocks which are in the best position for our purpose; which is to operate in harmony, with the indicated trend."

If you are able to identify the leading stocks in a bull market, you can do very well with a wide variety of methods. If you are not able to identify those stocks, then even with great methods you may be struggling to break even. An oft overlooked aspect of trading is market selection, i.e. which markets / stocks to trade. This is probably the most important part of trading stocks and yet most people give very little attention to that. Trade the right instrument with the right method, you may make money. Trade the right instrument with the wrong method, or the wrong instrument with the right method and you will lose money. If you are trading stocks, having one or two of the big winners in your portfolio (unless you are overly diversified) may be enough for you to have a great year.

Is Wyckoff's method still applicable today? I don't know, but I would bet that if I used his SLA method to enter into a low volatility base of stocks having the best CANSLIM criteria (market selection), exited those trades if they did not work and held those that worked as long as possible (looking for gains in excess of 50%-100%), I would make money. If I daytrade futures using his method, then I probably won't be profitable. Will someone else be profitable? I have no clue.

If you really wish to test Wyckoff's method, you can perhaps start backtesting it or forward-testing it with a small amount of capital and draw your own conclusions.

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  #18 (permalink)
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Big Mike View Post
The question was basically should someone learn this method. My answer is no.

Should someone learn to count sand on the beach to learn how to trade ES? I would think not. Maybe someone can count sand and still make money trading ES, but reality is they are not correlated.

It would be better to spend time learning something of actual value that is related to how markets operate.

Mike


Mike, out of interest, is your response targetted at DBPhoenix's method or at Wyckoff's body of work?

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Wyckoff

wallo, If you think that the process of educating yourself consists of reading a broad range of materials and then forming a consilience out of the common principles, then it could be worth the time. I thought this webinar was interesting.

For example, Wyckoff's "spring" / "upthrust" is a simple stand-alone concept that is observable, repeats and lends itself to the easy creation of risk/reward based plans. Simply re-stated, the concept is: A market that is in a tight flat range will exhibit failed attempts to break out / break down. there's nothing special associated with the Wyckoff name or the larger method. A lot of respected traders trade the same phenomena. An example plan (to fade a potential break down failure) would be: buy with a stop as price is re-entering the range. risk is a tick or 2 below the breakdown attempt, target 1 is 50% of the range and should be at least equal to risk, target 2 is the top of the range, target 3 is at a symmetrical breakout price (a breakout range that equals the range of the failed breakdown). imo, the same principles can be applied to trading a megaphone pattern. These are counter-intuitive tactics, so having read about them from a broader sample of sources could lend a little psychological support.

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Big Mike View Post

Should someone learn to count sand on the beach to learn how to trade ES? I would think not. Maybe someone can count sand and still make money trading ES, but reality is they are not correlated.

It would be better to spend time learning something of actual value that is related to how markets operate.

Maybe i'm too naive but the wyckoff teachings would not relies on that? The accumulation/distribution it's not an explanation about how markest operate? Whithout that interpretation it would seem just a random up and down

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