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Wyckoff Trading Method
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Wyckoff Trading Method

  #471 (permalink)
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Gary Fullett View Post
You're correct about your short term versus long term assessment. The longer the time frame, the more accurate the trend.

Gary

Precisely what I've shifted my thought focus to. In fact, much of the last 2 months I've been focused primarily on 60min creek jumps. Anything less than that is just full of so much noise a lot of the time.

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  #472 (permalink)
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Also I was wondering how ranges are defined on PnF charts.

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  #473 (permalink)
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StockJock View Post
Also I was wondering how ranges are defined on PnF charts.



What software are you using?

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  #474 (permalink)
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OK, another chart .... SFLY. Would like to get your thoughts.

You'll have to bare with me guys because I'm normally a candlestick kind of trader, which is probably hindering how I see some of the principles of Wyckoff on a chart. Alas, I will post this one using bars.

- There have been three selling climaxes since the end of November as this stock has formed a point of control in the price range of 21.34 to 26.94
- It has made two higher lows since the bottom at 23.23 and 25.71
- The Creek jump was on breakout style volume and has since accumulated on mostly narrow spread bars and appears to be re-testing the Creek for support
- As far as background strength or weakness this stock on a weekly chart appears to still be in a down trend with the top trend line being in the neighborhood of 33.45

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Rock Sexton View Post
What software are you using?

NinjaTrader 7

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  #476 (permalink)
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Rock Sexton View Post
... I'm normally a candlestick kind of trader, which is probably hindering how I see some of the principles of Wyckoff on a chart.

Candlesticks are good. Although they were invented several hundred years before Wyckoff, he taught using bar charts and PnF charts. So most Wyckoff students use bar charts, but there are some who use candlesticks.

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  #477 (permalink)
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Here's a little bit of background on some Wyckoff terms.

Quoting 
The "Jump Across The Creek" Analogy
The term “jump” was first used by Robert G. Evans, who piloted the Wyckoff Associates educational enterprise for numerous years after the death of Richard D. Wyckoff. One of his more captivating analogies was the “jump across the creek” (JAC) story he used to explain how a market would break out of a trading range. In the story, the market is symbolised by a Boy Scout, and the trading range by a meandering creek, with its “upper resistance line” defined by the rally peaks within the range. After probing the edge of the creek and discovering that the flow of supply was starting to dry up, the Boy Scout would retreat in order to get a running start to “jump across the creek.” The power of the movement by the Boy Scout would be measured by price spread and volume.


Quoting 
“The Ice Story.”
We imagine the market in the person of a Boy Scout walking over a frozen river in the midst of winter. If support, the ice, is strong the river covered with ice has no difficulty in supporting the weight of the Boy Scout. That support is seen as a wiggly line connecting the lows, the supports, in a trading range.

A failure by the Boy Scout to reach the upper resistance level of the Trading Range would be a warning of potential weakness. Weakness of the ice would be signalled by the Boy Scout breaking support or falling through the ice. The Boy Scout has two chances to get back above the ice (i.e., creating a bullish “Spring” situation). On the first upward rally the Boy Scout may fail to regain a footing above the ice. If so, then he will sink lower into the river in order to gather strength to try and rally once and crack the ice. If on this second attempt, the Boy Scout again fails to penetrate above the ice, he would be most likely to sink downward and drown (i.e., a Bear Market/ Markdown phase would occur).

Reference:
Hank Pruden and Max von Lichtenstein, "Wyckoff Schematics: Visual templates for market timing decisions", MTA Journal, Issue 55, March 2006

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  #478 (permalink)
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StockJock View Post
Gary,

Starting with defining the range. After a range starts to develop there can be some shakeouts that breakout below the range; so what are the rules to set the support and resistance lines? I've attached a chart to use as an example for discussion. I sometimes see charts posted with the shakeout going below the support line; so the range must be defined at some other point.

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Learning to draw proper lines takes some experience. However, we draw the horizontal trading ranges in two ways. One, by vertical demand or supply bars and/or, two, clustered areas of support and resistance. In theory, these lines are really squiggly lines, but in practicality, we draw them as straight lines across these areas of support and resistance.

In your chart, I agree with the lines you drew. Good job!

Gary

There is a substantial risk of loss in trading commodity futures and options. Past performance is not indicative of future results. The opinions expressed here are those of Gary Fullett, and are not to be taken as a recommendation to buy or sell commodity futures or options. This is for educational purposes only.
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  #479 (permalink)
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Gary Fullett View Post
Learning to draw proper lines takes some experience.

Apparently it does take some practice, because some of the Wyckoff Phases on the chart can be easily mistaken as one of my previous attempts have shown. All charts have their own idiosyncrasies and need to be analyzed carefully. However, I don't seem many charts posted in forums identifying these points. Are they really necessary to identify? Is this over analyzing the chart? Is this type of analysis only for academic training and not used during live trades?

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Reference:
Hank Pruden and Max von Lichtenstein, "Wyckoff Schematics: Visual templates for market timing decisions", MTA Journal, Issue 55, March 2006

Attached Thumbnails
Wyckoff Trading Method-mt-wyckoff-schematics.pdf  

Last edited by StockJock; February 28th, 2012 at 09:38 PM.
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  #480 (permalink)
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I did mention that I have a collection of Wyckoff info that I'm studying and for those who are curious, here is one of Wyckoff's original charts displayed in Amibroker.

NY Times Average 50 Stocks (Dec1930-Nov1931)

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Also here is the PnF chart for the same data.

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Archived historical data for as far back as the year 1693 can be obtained from Global Financial Data.


Last edited by StockJock; February 29th, 2012 at 12:32 PM.
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