Riding the Wyckoff Wave

[zeon]

	Quote:	DbPhoenix
	Hello, sulong. Yes, materials and energy have been doing well, and that would be the place to look for longs when we turn.

I hope you don't mind me picking up this post from earlier in this thread. But why materials and energy? I probably don't know enough about fundamentals...

[DbPhoenix]

Why it pays to be aware of hinges:

[BlowFish]

	Quote:	zeon
	I agree this sounds all very simple. But most books I read consider scaling out as a less profitable strategy in the long run. This strategy also assumes that you only take one trade a day and try and maximize it's potential. Which I fine I suppose as far as it goes. In trending days, this will keep you in the market with at least a small part of your position till the end. But in ranging days it might mean several stop outs at break-even. Perhaps it's just not possible to find a 'one size fits all' exit strategy.

On the whole that will be true, running analytics will show one exit strategy to be more effective from a pure profit point of view. However there are a couple of advantages to scaling out. Firstly psychological - a lot of people find it easier to manage a trade once it is 'paid for' by taking some of the position off (i.e. they can no longer lose). Secondly it will result in a smoother equity curve.

[Hlm]

	Quote:	zeon
	I agree this sounds all very simple. But most books I read consider scaling out as a less profitable strategy in the long run. This strategy also assumes that you only take one trade a day and try and maximize it's potential. Which I fine I suppose as far as it goes. In trending days, this will keep you in the market with at least a small part of your position till the end. But in ranging days it might mean several stop outs at break-even. Perhaps it's just not possible to find a 'one size fits all' exit strategy.

I know this is a little off topic so I will keep it short.

I believe that many of those who scale out do it incorrectly. The market is extremely dynamic so you must be as well. In order to know where to scale out you must understand the time frames, S/R, Supply/Demand, etc that are around you. By knowing and understanding these areas you can estimate rough probabilities of them getting hit during certain situations. This will allow you to keep more on for trending days and take most off during consolidation days. I believe that the concept itself is somewhat "one size fits all" but how you measure these levels and create probabilities can vary dramatically.

Of course this is a more advanced way of thinking and takes lots of studying and screen time. This is why you find many newer traders taking a large portion off quickly at a fixed amount and then trailing a smaller portion looking for the larger trend. It's kind of a quick fix to the problem.

I also agree with what BlowFish said.

[Tannism]

Tim Ord explains one of his charts on Decisionpoint. Advisors Corner.

http://www.decisionpoint.com/TAC/ORD.html

[gassah]

W stated:

"After you have bought, you sit through a number of small, medium and good-sized waves, until finally you observe that it is about flood tide in that stock. Then watch for an especially strong up-wave and give your broker an order to sell your stokc at the market.

The waves of the market furnish a clear insight into changes in supply and demand. By learning to judge all sizes of market waves, you will gradually learn to spot the time when a rising market or a rally, and the time when a declining market or a reaction, has halted and is about to reverse. These are the turning points."

When I read Barros' book and he mentioned that he calculated the percent moves of waves and used standard deviations to help determine when it was "flood tide" I recalled the above quotation.

The attached shows the weekly chart of EURUSD hitting the top of a channel. The AB wave happens to be far above the average wave for the past ten years. I have an Excel program that'll quickly measure these. AB is well beyond the the 3rd standard deviation at 37% and is at high risk of reversing. I mention all this because it's having trouble on the daily.

[Tannism]

I haven't read the book, but I do look at standard deviations. Allowing for stockcharts, does this illustrate the point?

The envelope is 3 standard deviations using 20 periods.

If this illustrates the point, I'll post one using % moves, standard deviation and PnF.

[DbPhoenix]

Speaking of broader markets, only three out of nine sectors continue to hold above their "breakout" points: energy, technology, and utilities. Anyone trading the NQ should keep this in mind.

[zeon]

I posted this a week or so ago. Bigger timeframe and all.

	Quote:	zeon
	Within the context of Tuesday's selling climax and re-test, I thought it might be interesting to discuss 'the big picture'. Mainly, because I seem to recognize the same concepts and as they apply on each timeframe,... From what I can see: (a) is a selling climax on huge volume, and demand overcomes supply because if you blend the bars, it's a hammer-like formation and price closes well off the lows (b) a break of the demandline (c) a higher low (d) a re-test of the low, and on lower volume (e) a shake-out and in effect another test, on higher volume but price closes off the lows (f) a higher high (g) and a higher low => confirmation of new uptrend (h) a new (cyan) demand line can be drawn Forget for a minute that everybody is saying that this is a bear trend and just look at the chart. Or for the sake of the exercise suppose that this is a intraday chart instead of a daily one, doesn't this validate taking a long position? What elements have I interpreted incorrectly?

Doesn't it look like we had a double bottom confirmed now?
I mean, this week the NQ broke much higher, the ES is back to 1400 and the DOW almost to 13000...

[DbPhoenix]