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Even though interday trendlines are of little to no importance to the intraday trader, prior trading ranges can and should be. Here, for example, though one might be tempted to consider the influence of the June-July trading range to have expired, the October and December trading ranges revolved around the top of that earlier trading range like pigs on a spit. Given also that price could not hold above the 50% retracement of the last downmove (the green level) despite multiple attempts suggests further downside, and given that that June-July trading range appears still to be exerting an influence on present price movement (not unlike a moon), 2580 becomes a level of interest.
Sometimes, however, price will find support in unexpected places, as yesterday during the lunch hour. Interested students should study that plunge and recovery so that they might recognize it the next time it occurs.
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I'd like to hear more about Wyckoffs own work, but specifically I'd be interested to know about his work and how it would relate to day trading. In other words, how would one find a set-up and what would indicate the entry as well as exits?
When you say "modified materials" are you referring to the use of indicators or intrad-day trend lines?
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Can/would you elaborate on what you said about yesterdays plunge and recovery? I view recent activity as being in a trading range and price "springing" at support. It may have, but there was no follow through today and your mentioned level of 2580 is just about there.
Also, Can you explain how and why it appears that the June-July trading range is still influencing present price movement? Please.
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Not exactly a short-answer kind of question, but I don't want to be overwhelming either.
There are several of Wyckoff's books available as you know. They can be found on Amazon. Unfortunately, while they're long on philosophy, they're generally short on how-to. For that, you have to go to his course, a two-parter, one of which has specifically to do with daytrading, both of which come to about 500 pages.
If the course is too much to tackle, at least to start with, Wyckoff did write a book called Studies in Tape Reading (also called My Secrets of Day Trading in Stocks), which was later reformatted into The Day Trader's Bible. Yertle Turtle provided a link to this above. However, since W didn't use bars in his intraday trading (how could he?), this may not be quite what you're looking for, even though there's much of value in it with regard to the dynamics of demand and supply and how they affect price movement.
As I said several years ago in my introduction to the Wyckoff Forum at TradersLab,
Wyckoff sought to develop a comprehensive trading system which (a) focused on those markets and stocks that were “on the springboard” for significant moves, (b) initiated entries at those points which offered the highest probability of success, and (c) exited the positions at the most advantageous time, all with the least possible degree of risk*. His favorite metaphor for the markets and market action was water: waves, currents, eddies, rapids, ebb and flow. He did not view the market as a battlefield nor traders as combatants. He counseled the trader to analyze the waves, determine the current, “go with the flow”, much like a sailor. He thus encouraged the trader to find his entry using smaller “waves”, then, as the current picked him up, ride the current through the larger waves to the natural culmination of the move, even to the extent of pressing one’s advantage, or “pyramiding”, as opposed to cutting profits short, or “scalping”.
“Trading Wyckoff”, then, is more than just relating price and volume. It is a complete trading strategy, ranging from finding the most attractive opportunities through strategy development and trade management to the best moment to close the trade, all with the least possible degree of risk.
And while all of this may sound great, the student is still left with "what do I do?", and that needs specific examples, whether with or without charts. But, in a nutshell, which is already the size of a walnut, W looks to see whether whatever it is is trending or ranging. This is a relatively simple task for someone who's just starting, but the longer one has been at this, the more difficult it seems to become due to the amount of misinformation and wrong turns the beginning trader experiences. But if one can distinguish between the two and is looking at a trend, he looks for pullbacks and how many of these have occurred, the "stride" or angle of the trend, and where all this fits into the context provided by prior trading ranges. If price appears to be in a trading range, he locates the extremes of this range and looks for reversals when price approaches one or the other.
There's more to this, of course -- breakouts, retracements, supply and demand lines, climactic moves (with and without accompanying volume) -- but it's all based on demand and supply and imbalances between the two as determined by studying the continuous flow of price. If one gets that, W can be relatively simple. If he doesn't, it can be next to impossible.
Not exactly. Everything that's out there is "based on Wyckoff". As a result, there are many variations on W's own work, some of these variations being extraordinarily complicated, some of them requiring software, some of them involving taking courses and buying DVDs and hiring mentors and so forth. But W's work in the original is relatively simple: no indicators, no patterns, very little jargon (no "ice", no "creeks", no "springs", for example). What one might call "plain speaking". The Wyckoff geek can trace all of this back to the 30s with a little googling and decide for himself the motives behind the "complicating" (to coin a word). But once one peels the artichoke and gets to basic Wyckoff, he finds something very powerful and liberating, particularly if the trader has established a pattern of failure.
Hope that's not too much.
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