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Wyckoff Trading Method
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Wyckoff Trading Method

  #541 (permalink)
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StockJock View Post
Gary,

Even with the use of the parallel reverse trend line, do these lines need to be replotted whenever there is larger retracement or slight change of slope in the trend. Or do these lines stay the same whereas the larger retracements and slope changes are then considered overbought or oversold conditions?


Lines are always done to tell you the "story" of the market. When there is a change in the "story", the lines need to change as well. The "story" is price, action, and volume.


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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  #542 (permalink)
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StockJock View Post
Gary,

If I'm to watch the chart for the E-Mini NASDAQ 100 Futures, then what do I look for if its not patterns? Aren't up trends, down trends and ranges patterns? Is Price/Volume divergence considered a pattern? The Wyckoff training teaches divergences between the Optimism/Pessimism Index and the Wyckoff Wave, but those indicators aren't available on most trading platforms. Do you use them?

There are also the Trend Barometer, Technometer, Force and Momentum indicators which also are not available in most trading platforms. I never see these discussed in forums with Wyckoff as a topic. I get the impression that they are not necessary.

Anyway, what do I look for in the NASDAQ 100 and what does "leadership" for the S&P 500 spread mean? Should I watch at the 60 and daily S&P 500 or the E-Mini S&P 500 Futures? Do I focus on the Indicies or the Futures? For that matter, in what context are you using the word "spread" for the S&P? I'm familiar with the spread as the difference between the high and low of a price bar. Sometimes "spread" is used when speaking of option trading.

The Trend Barometer, Technometer, Force and Momentum and Optimism/Pessimism, I do not use as they are stock indicators and I don't trade stocks for the most part. These indicators are in the Wyckoff course, and SMI teaches it, but it doesn't really pertain to commodities.

Regarding patterns, what I am referring to is patterns like head-and-shoulders and the various patterns that are taught as classical patterns. So I don't look at head-and-shoulders as a pattern, but I look at it as the testing and retesting process of supply and demand. When you look at a pattern, many times you lose focus of what the market is trying to say. Many times, head-and-shoulders become a self fulfilling prophecy for traders. Like all patterns, sometimes they work and sometimes they don't. Wyckoff's desire was to be more accurate than a pattern.

I look for Nasdaq to be stronger or weaker than the S&P (this is either the emini or S&P 500). The reasoning is two fold. One, the Nasdaq is a broader index than the S&P, and two, it is more speculative in nature. So when traders are more aggressive in the Nasdaq, it will show more leadership.

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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  #543 (permalink)
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StockJock View Post
Gary,

Is there any similarity in purpose to the Optimism/Pessimism Index and the Commitments of Traders (COT) Report? I know that they are calculated differently and they are from different sources, but the concept of optimism seems like it would encourage traders to be committed and vice versa.


The Optimism/Pessimism wave is a proprietary SMI tool. I don't know how it relates to COT. Please remember that the COT reports are lagging indicators and not always so accurate.

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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supermht View Post
I am reading the pattern, is this a retest?



Both are retests. What is key about retests is how the market acts and reacts at these levels. Because a market is at support or resistance, it does not mean buy or sell respectively. You must judge the volume and price as we approach these areas. Trend plays a major role because you are looking to buy supports and not necessarily sell resistance (unless to take profits). If a market does not behave the way you expect it to behave, this, in your mind, should create a red flag. One should have his own set of rules in how he wants to trade market behavior. We can all look at Wyckoff and have different parameters in how we execute trades.

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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  #545 (permalink)
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Just a couple of trades in EU and some reasoning.

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Gary Fullett View Post
Please remember that the COT reports are lagging indicators and not always so accurate.

I don't know if its possible to have a leading indicator that takes data from a chart, unless you know of them. It seems that the O.P. Index is a lagging indicator too just like the COT report. What do you think? There's a lot of government money used to compile the data for the COT report and a lot of traders use it. It unfortunate that it's not accurate, but then what indicator is accurate? Only price and volume are the most accurate indicators. Its hard to find accuracy in trading. I heard or read somewhere that successful trading is finding the most probable opportunities almost like the skills developed by successful card players. I'm not sure if that's an accurate comparison.

Quoting 
Calculating an Optimism/Pessimism Index is extremely simple. The volume traded during intra-day up waves is added to the index and the volume traded during the intra-day down waves is subtracted from the index. A sample day is divided into intra-day waves where every reversal of five minutes or more is a wave.

The other SMI indicators are based on similar concepts. There's no trading platform that I know of that can perform these calculations, so I think that makes them proprietary.


Gary Fullett View Post
The Trend Barometer, Technometer, Force and Momentum and Optimism/Pessimism, I do not use as they are stock indicators and I don't trade stocks for the most part. These indicators are in the Wyckoff course, and SMI teaches it, but it doesn't really pertain to commodities.

Apparently, all of the SMI indicators are derived from waves of volume. So you're saying that trading commodities doesn't involve volume? Apparently, the forex market doesn't have actual volume either. Traders use a synthetic type of volume calculated from the properties of the price bars. Possibly, Wyckoff's method doesn't apply to forex either?


Last edited by StockJock; March 10th, 2012 at 12:44 PM.
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Ranges

Just going over some charts... establishing clues for moves out of Trading Ranges. This is my mission for the next little while- Practice Practice Practice.

So here is a recent one for EU- Pretty straight forward if you can establish what you are looking for and plenty of time to do it with multiple safe entry points. Most on the right hand side of the range.

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StockJock View Post
I don't know if its possible to have a leading indicator that takes data from a chart, unless you know of them. It seems that the O.P. Index is a lagging indicator too just like the COT report. What do you think? There's a lot of government money used to compile the data for the COT report and a lot of traders use it. It unfortunate that it's not accurate, but then what indicator is accurate? Only price and volume are the most accurate indicators. Its hard to find accuracy in trading. I heard or read somewhere that successful trading is finding the most probable opportunities almost like the skills developed by successful card players. I'm not sure if that's an accurate comparison.

There are companies in the past who have manipulated and been fined for misrepresenting COT reporting. Price, action and volume are the only indicators that are live and not lagging. Everything else takes market behavior and is in hindsight.




Quoting 
Apparently, all of the SMI indicators are derived from waves of volume. So you're saying that trading commodities doesn't involve volume? Apparently, the forex market doesn't have actual volume either. Traders use a synthetic type of volume calculated from the properties of the price bars. Possibly, Wyckoff's method doesn't apply to forex either?

Volume is difficult in the forex market but can be calculated. Since forex is an intra-bank market, there is much volume that can't be determined. So there lies the problem.


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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Gary,

Can the Wyckoff method be used for trading US Treasury Bonds? I can't find charts for bonds, where do you get them? Do their charts have volume or are they like forex and commodities which don't have volume? Is your chart here showing bond trading or the trading of bond futures?

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Last edited by StockJock; March 12th, 2012 at 10:18 AM.
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StockJock View Post
Gary,

Can the Wyckoff method be used for trading US Treasury Bonds?

Yes


Quoting 
I can't find charts for bonds, where do you get them?

I use CQG, but you can get bond charts from any data provider. They have both futures and the cash markets.


Quoting 
Do their charts have volume or are they like forex and commodities which don't have volume?

Commodities have volume, and bond futures have volume. The 30 year bond is no longer the standard trade any more. The volume and open interest has switched to the 10 year note due to the smaller duration.


Quoting 
Is your chart here showing bond trading or the trading of bond futures?

Bond futures.


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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