I have been trading now for 4 years. But don't let that fool you, I haven't been actively trading for those 4 years. Actively I'll say about 1 and a half years. The other times in-between has been more of learning.
I want to start actively trading from Jan 2014, so I decided this is going to be part of my preparatory process, as I have seen the positive effect starting a journal has had for lots of futures.io (formerly BMT) members.
My trading style/attempt/method, came from my earlier encounter with VSA, David weis, Wychoff and Finally Gary Fulliet (whose free webinars I still find invaluable). So you might be hearing lots of 'Smart money' , Demand, Supply, Support, Resistance (Jumping over creek, and the opposite, breaking of the ice- don't really think in these words though)etc.
Like many journals before me, Ill attempt to gradually describe what determines my trades etc.
Basically I try to observe the three things that wychoff teaches to look out for.
1. Demand and Supply
2. Effort and Result
3. Cause and Effect.
As these concepts are vast and take time to explain especially in writing, I will direct any readers attention to helpful books and resources.
1. The Richard D. Wyckoff Method of Trading and Investing in Stocks: A Course of Instruction in Stock Market Science and Technique
This was the most difficult book to read for me, even though I had a little idea of some concepts since I had read the books by Tom williams and Gavin holmes of VSA. But it forms the bedrock of most of what I know about wychoff trading concepts.
To sum it up, A huddle to go through but thoroughly rewarding once the concepts start to sink in.
2. Trades about to happen. Ill say this is a must read after you have gotten some basic understanding from the first book as it expantiates some concepts not clearly explained in wychoffs book. After reading this The first book becomes easier.
So Number 1 is a good foundation, while number 2 is an aid to understanding number 1.
3. The website of Gary fulliet, LTG trading, you can google it. His webinnars were most helpful in getting an in-dept/practical understanding of wychoff concepts.
4. Teach Teach Teach. This is perhaps the greatest resource for me. I can't tell you how many times I learnt something new, or that an understanding that failed to register rightly, clicked into place, just as I was teaching or trying to explain a chart or describe some wychoff concepts.
Finally this method of analyses really takes time to master, even if it is as an analyzer of charts (and this is the easiest) and not a real time trader. It could take years, but the best period as a wychoff trader or wychoffian as my friends call me is when you start to develop intuition (Wychoff mentions this in book 1).
I am years away from all that, so I hope with this journal and possibly lots of contributions from the great traders on futures.io (formerly BMT) I achieve that status.
The following 7 users say Thank You to metobi1 for this post:
Hi， Metobi, I appreciate your sharing wyckoff experiences to us, from your chart analysis in other thread, I believe you have thorough understanding of wyckoff trading methods. I am looking forward to your post. thanks
The following user says Thank You to supermht for this post:
One of the concepts from wychoff that I plan to you as a trading edge is "comparative strength and weakness", it can give a very powerful insight to what security to short or buy, if these differences are available and one is aware. The concept is used when you are trading securities in the same general market, for example all currencies trading against the dollar are in the same general market and they form the dollar index.
I have attached a chart and I will make a short comparison between EURUSD and GBPUSD.
In the attached chart is is clearly evident that EURUSD had been in a range while GBPUSD had been trending down. But if you take a look at GBP from Dec10-03:00 and compare with EUR10-04:00, one can see that while EUR continued to make new highs at 16:00 and Dec11-18:00, GBP's last high was at Dec10-03:00, at 16:00 it closed near the low of the range, and at Dec 11-18:00, it already broke support and was down.
At Dec12-08:00 when EUR was retesting its old highs GBP was testing its broken support. This with other bar and volume considerations could have been a sweet place to place a sell trade with stops above the bar that broke support.
This observation would have learnt further assurance to that sell trade because from the actions of both charts GBP had shown itself weaker than EUR in the USD market. It is good to note though that all other normal demand/supply observations were in place for the trade. I have marked the more recent actions so that any person new to this concept can try it.
Sometimes you look at the market in the morning and you just can't make head or tails of it, not because it is choppy or anything like that, but you can't put together the necessary thought process, needed to analyze. This is how my morning had been.
Call it the result of 3 hours less sleep than I am used to and a thousand and one excuses, but I honestly just think some days are like that. So I have to decide on my best course of action. That means one or two things for me.
1. Perform some good old physical activity. Less energy on my limbs etc less focus on whatever else is taking stealing my understanding.
2. Getting back to the basics.
Or I can just do the two if circumstances allows it.
Attached is me getting back to my basic chart analysis
More of the same. Chart strength and weakness comparisons. Of the four pairs only gold is showing a willingness to react and continue on its path. The only doubt/drawback is the volume that lifted it to its current resistance area.
Gold should be ripe for a sell. Best scenario here for less aggresive people would be 2-3 bars back up, shrinking in range and volume.
Two reasons to scalp AUDUSD right now. The first is comparative strength and weakness. The second is the fact that AUDUSD going down has died out and it has the possibility then to retrace to the upthrust that first made it go down.
But if I take this trade what will weigh in heavily on my mind is the comparative strength it is showing.
This trade may not be the best to take considering its risk to reward possibility, and the fact that it also easily went down in comparison.