Riding the Wyckoff Wave

[zeon]

	Quote:	BlowFish
	I have been in that position before (a couple of times) I can certainly empathise. Are you absolutely sure you are doing the same thing? The psyche can play some pretty mean tricks on us. Have you tested (back forward sideways it doesn't matter really) to establish your old method really doesn't work any more? Why? Btw was it a completely different approach or similar to what you are doing now? Could it work with some minor adjustment or do you think there is a fundamental flaw in what you where doing? The reason I ask is it may be easier to get back to where you were rather than to some place new. BTW I am not saying abandon your education in Whycoff PA volume etc. Not knowing what you where doing before I can't really comment if that would be a viable course of action. As I said I have been there before so I am speaking about my experience when I say that it is tempting to want to change the wrong things rather than dealing with the root causes. That quote was as applicable to me as much as anyone. In the past I have probably spent tens of thousands of hours doing 'work' that, while it contributed to my trading 'education', it did nothing to advance my actual trading.

The main thing I noticed is that while the market had a nice steady trend to it last year, it's been up one day and down the next since the beginning of this year. I took a whole lot of losses on shorts in the last couple of months, because I believed that trading with the trend was the safest thing to do. Now I'm not so sure anymore.

I posted my basics of what I do some time ago, but to cut to the chase, I basically was buying hammers at support areas and selling shooting stars at resistance lines. The change in volatility probably has affected what I was doing to a certain extent.

The suggestions I've received tell me to go back from square zero basically and forget about trading and focus on the chart. That's the kind of thing you'd tell to a person who looks at a chart for the first time imo. I can't help feeling that perhaps systems run out at a certain moment in time.

Could you really find a method that works and then trade it for the rest of your life? Sounds nice in theory...

[DbPhoenix]

While I don't want to short-circuit genuine discussion, I don't want this to become yet another shared misery thread, either. Those of you who are interested in trading by price and are further interested in the application in addition to -- or instead of -- the theory should open and maintain blogs. And by "maintain" I mean every day that you trade. Otherwise it all becomes "woe is me".

If you have no idea where to start, see The Trading Journal and The Trading Log, including the linked articles. A community of bloggers, even if there are only three or four, will be able to help each other advance, even if they do no more than keep each other honest.

[brownsfan019]

	Quote:	zeon
	The main thing I noticed is that while the market had a nice steady trend to it last year, it's been up one day and down the next since the beginning of this year. I took a whole lot of losses on shorts in the last couple of months, because I believed that trading with the trend was the safest thing to do. Now I'm not so sure anymore. I posted my basics of what I do some time ago, but to cut to the chase, I basically was buying hammers at support areas and selling shooting stars at resistance lines. The change in volatility probably has affected what I was doing to a certain extent. The suggestions I've received tell me to go back from square zero basically and forget about trading and focus on the chart. That's the kind of thing you'd tell to a person who looks at a chart for the first time imo. I can't help feeling that perhaps systems run out at a certain moment in time. Could you really find a method that works and then trade it for the rest of your life? Sounds nice in theory...

zeon,

A few observations if I may:

1) The markets change, we know this. You do have to adapt whether that's an overhaul or minor changes. Personally, I am always tweaking something, no matter how minute.

2) With regards to the candle plays at S/R, they still work (and well) but ultimately it depends on how you define your S/R. As you know well, what you see as a level, others may not.

3) I agree that finding one way of trading and doing it the rest of your life would be very hard b/c, as stated above, markets change. They change and will continue to change.

So the question is - do I revamp when I hit a drawdown or do I work with that I have? If you made money with your method, I would try to figure WHY you made money when you DID and what CHANGED. Did YOU change or did the MARKETS? And how did either/both change? It's not as easy as saying the volatility changed. The markets are volatile at different times for different reasons in differing degrees.

My view would be if you were making money on your hammer/inv hammer method, work with that. Of course, you know I am biased towards candlestick analysis. But you proved that it could make money. You just needed to work with it and tweak it.

There's so many questions I could ask about your previous system...
How did you define S/R?
What timeframe(s) were you trading on?
What other confirmations, if any, did you receive before entering?
Why just hammers/shooting stars?
How long did you trade it live?
How long did you backtest it?
Where did your S/R come from? why?
etc
etc
etc

Just changing a few item(s) could turn that into a profitable system.

Forgive my saying so - but changing 100% when you hit a drawdown is a very amateur move. I did not mean for that to be degrading, so please do not interrupt that way. My point is that every trader goes through drawdowns, even the guys referenced in this very thread. Even DB. We all have drawdowns and rough times. The key is whether you work with what you have or jump ship trying to find the next grail.

Maybe you found a system that works in a certain market environment and only that environment. Once you can diagnose what that environment is and how to spot it going forward, you have system A ready to go.

Now it's work on system B.

There's no rule that says you can ONLY have 1 system to trade from and ONLY that system. For example, I have two systems that I rely on currently - one for a trending market and one for a range-bound market. Once the type of market is identified, I switch on the appropriate system. Of course, there are plenty of times when I am wrong in my initial diagnosis of the market movement. But I also know that over time, I will be right approx 80% of the time and when I am, I capitalize on it.

Good luck zeon and feel free to stop back over in the CC and we can discuss candlesticks.

[DbPhoenix]

An update on the NDX channel:

And a longer-term view:

[DbPhoenix]

And the SPX:

[Tannism]

I am still studying "on the springboard".

The first chart snippet is from Wyckoff's "Determining the Trend" as discussed on page 3. He writes that he is illustrating "on the springboard".

Is the area marked 2 (for 2nd best place to buy) on the CAT chart an example of on the springboard?

I am thinking both charts show a period of preparation, then little variation in closes for a few days.


Thanks,
TannisM

[DbPhoenix]

Given the fact that 60 represented important S/R dating back to '05, yes.

[Upthrust86]

	Quote:	DbPhoenix
	And the SPX:

What is the significance of this and the NDX charts? Can you say what a Wyckoff analysis is saying here?

[zeon]

	Quote:	zeon
	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...

I posted this a week ago, without little response. I take it most people probably thought I was talking rubbish, because I'm inexperienced or so.

Dbphoenix replied to this post with a chart showing a red down trendline. In the meantime we are above that and we are above the 200-moving-day average, the Nasdaq is close to 2000.

In other post dbphoenix mentioned the small caps aren't participating in this move.

Ok, so here's my thing -and I'm trying to be neutral here- it looks like traders on this thread or looking for elements that support their "bear case", but it's just not happening.

We are moving higher, the DOW Transports is almost making new highs, all major US indices have gone up significantly yesterday. And when the DOW made a test of the March low, the Transports made a Higher Low! If all of this isn't important, well than I'm screwed.

I have to understand why I am having so much trouble trading lately, I've been on the wrong side all of the time. Been focused on shorts heavily. When everybody is talking about how bad the economy is and how deep a recession where going to get, it's all been priced into the market. All the bad news hasn't had ANY effect on the markets lately.

Someone posted 'the sentiment cycle' here. I think it's clear that we are near the end, and not in the denial phase.

With sellers gone, the market even goes up on bad news. Rallies are labeled as ‘technical bounces’ or are written off as ‘short
covering’. Short positions add more on every bounce, confident that lower prices are around the corner. When good news trickles in, it is summarily dismissed as aberrations, subject to revision next month.

Despite all the wise and knowledgeable people out here, frankly, I'm surprised why everybody is denying to see what's staring at them in the chart. Perhaps everybody was thinking we were going to have a bear market like 2000-2002 but as far as I can see it, there was a much bigger distribution pattern than the one we had at the end of last year.
___

[gassah]

Zeon,

Do you have a strategy for when markets are in a trading range?