A Wyckoff Student Notebook

I recently pissed away a 70% gain on it not once, but TWICE.

I won't touch it again until Bitcoin finds its way back to 8k (based on volume profile analysis, nothing Wyckoff-related)

 

For the record I liquidated all positions yesterday - with the exception of SBUX, which I'm dangerously close to closing out as well. Sometimes it's just best to move into cash and re-evaluate.

There's an element of greed that keeps rearing its ugly head when I'm in these Wyckoff PnF positions given their lofty price targets. But I've had a really nice run up in my portfolio ripped from me a couple times this year by Trump Tweets, escalating Trump/China trade war, and the inverted yield curve. At this point it's best to get back to basics. Moving forward I will focus again on compound gains taking profits on short/medium term swings. I'm not hedged in ways one needs to be if they intend on holding positions for long-term PnF targets.

 

@Onepoint272 wasn't wrong to think it was possibly a flying pig. Jesus that thing fell apart.

 

Sage advice for any burgeoning speculators out there who read these boards.

 

Point & figure targets, the way i understand them go something like this

The CM uses volitility to accumulate or distribute the floating supply of shares without putting pressure on price movement.... a standard bar or candlestick chart only displays time and price movement, but a point and figure chart takes time out of the equasion and replaces it with volitility

By measuring the extent of volitility (cause), one can gain reference to the amount of supply absorbed from or dumped onto the market and theorize an equal reaction in price movement (effect)

To my knowledge, Wyckoff had no rule stating that more supply could not be dumped on the market after a TR is broken out of, nor that excessive demand could not push price up past an objective without accumulating more cause

So its kinda like most things marketwise.. it always works, except when it doesn't

 

Good idea. I had a bad experience about 6 years ago messing around with thinly traded stocks and never went back. It's just not worth the hassle.

 

Now more than ever you have to be in lockstep with the general market given the widespread influence of algos and ETF's.

 

Very well spoken. Gonna use that the next time someone on my Facebook asks me about the PnF charts in my stock ramblings.

You get my point though about a carrying a long term position in an attempt to maximize a PnF target right? It's too easy to look at these charts in hindsight and think "Man I should've held that one and I'd be up 200% in 3 years!" The reality of it is it's very low probability the position is going to buck the market during turbulence and volatility like we're seeing right now. The algos that dominate this market can wreak havoc on a perfectly sound position.

Without a hedge or protection, it becomes a lot more complicated to exercise the zen of patience. It also boils down to goals. I'm still trying to prove my own skill/methodology and the year-end is more of my focus. I've kind of been losing sight of that lately.

 

I totally get it!... that's why lately ive been more focused on names that i wouldnt mind holding for a few years.. i just look at my current gains as a cushion instead of a profit.. i got really good entries on DG and CTAS, the market could plunge pretty deep into the red and ill still be green

 

Reading this thread, I do not get the impression Wyckoff techniques are an easy way to make money. It appears there are a lot of near wins and people who feel they are on the verge of something great.

Have any of you considered the idea that it might be a good thing to understand companies and evaluate market valuations based on real world data?

Have any of you compared your annual gains, minus contributions, and compared that to the returns of the S&P 500? Has anyone outperformed the S&P for a period of say, 5 years?

Is anyone outperforming the S&P 500 right now, as opposed to trying to learn Wyckoff techniques to outperform the S&P 500 in the future?

I'm sincerely interested.

 

I say this sincerely, but I don't think you've actually read thru this thread. I think what is going on is you're rushing to judgment based on recent posts - namely from me. I've beaten the S&P for the last four years using a combination of Wyckoff and my own take on Auction Market Theory (with volume profile). As for this year I am not currently beating the S&P, but still up.

I'm relentless in my pursuit of trading zen. I like to think out loud when troubleshooting and very transparent about my thoughts. I switched up my focus midstream - you see I used to maintain positions that were only a couple of weeks to a couple of months (in-between earnings reports) and lately have been attempting more long term focus. It's hard to do that when you're not hedged or consistently applying top-down methodologies to confirm the mood of the market. It commonly comes into conflict with my prior focus on year-end results. You can't be both at the same time in the same account IMO. I'm inevitably going to open up an additional account for my long term positions.

As far as "real world data" - most people attempting it suffer from hubris. There is an endless amount of fundamental pricing models out there running on past-dated information/financials. As regular people we don't have access to information real-time like the big boys do. Hence we use Wyckoff's teaching to allow us to ride the big boys coattails.

At its core, this is a game that centers around supply and demand of shares ....... more-so the control of the "float". The rest is all "stock theater" and I really don't care to concern myself with it.

 

Lets suppose that I am a cabinet maker and that I have all sorts of tools, hammers and tape measures and saws and drill and so forth, and I'm pretty good at what I do. I build with pine boards, I'm very familiar with pine and its characteristics and how easy it is to work with. The fly in the ointment is that cabinets built of pine don't fetch top dollar like those built of oak or cherry or even walnut.

My trouble is that I'm not familiar with those hardwoods like I am with the pine, those hardwoods cost more per board foot and if a mistake is made it could be costly to me, also I will need to upgrade my tools to work with the harder woods, and finally I will need to learn how to work with the new materials and tools.

So, me being a practical man I have to weigh the value of myself learning and upgrading verses potential profitability in the future.

The decision is a no brainer, I continue as is with the pine and at the same time I slowly retool and learn new techniques using the aforementioned hardwoods, in the long run it is win-win, I increase my knowledge base while at the same time I potentially increase my profits.

 

I started as a futures daytrader 8 years ago, blew a couple accounts before I started backtesting mechanical strategies by hand on the ES. Ended up trading two strategies that were profitable but the problem with mechanical daytrading strategies are, if you're a human it's extremely boring and tedious to be glued to the market waiting for the right conditions to occur for a trade and at the end my edge wasn't that high I had a winrate of 60% and I was paying my broker at least 1000 dollars a year for 5 dollar round trip futures trades. In the end it was worth it since I grew a tiny 1 contract account into 2 contracts. The account I was trading didn't have enough to be able to swing any of the trades I make now.

Since 2017 I've switched over to longer holds, using a combination of Volume Profile Analysis, Wykoff, and Jesse Livermore's ideas. Beat the SnP in 2017 getting lucky hitting a couple homeruns. Ended 2018 slightly positive which I believe is a beat since SnP annual was negative and I'm currently losing to the SnP this year as of yet, I win less trades percentage wise compared to daytrading futures, sitting around a 40% winrate but when I was daytrading futures I felt anxiety almost everyday, even though I would just set my orders and my stops just hearing the sound of an order getting filled was like a nightmare to me. I don't see Wykoff as the verge of something great but I do find it helpful for seeing when the energy of a market is moving or has the potential to be in harmony over a longer period of time. Compared to most of you I'm definitely one of the younger traders here, and I've only started trading longer term for the last two and a half years, so take any advice I give with a grain of salt. In fact don't take my advice I'm not here to mentor or be a teacher to anyone, for me it's nice to be able to talk about trading with others without having to deal with annoying questions.

 

Are you a full time trader? I get the impression, this is how you earn your living. Is this the case?

 

That smoke you seem to think is a smoking gun came from your ears. Wyckoff does appear to be an easy technique but not an easy way to make money.

It's great to hear some folks are having some success with techniques that include Wyckoff ideas