Reading the Market Bar-By-Bar - Discount Investment and ... · PDF fileReading the Market Bar-By-Bar: ... and the position of the close. ... (1931-1933). A Course of Instruction in

Reading the Market Bar-By-Bar: Applying Classic Wyckoff Method Trading Tactics

Dr. Gary Dayton

Charts

All charts used in this presentation were created with TradeStation © TradeStation Technologies, Inc.

www.TradingPsychologyEdge.com

What We Will Cover

• A little background on Wyckoff • Basic Principles: What I look for in applying the

Wyckoff Method – Detailed applications

• Advanced methods – Detailed applications

• What it takes to get good • Resources


Richard D. Wyckoff


Basic Principles: What I Look For • Assess Supply & Demand and lack of Supply & lack of

Demand • Study the interactions of price and volume with trend lines,

especially horizontal lines of support and resistance • Look for stopping volume and climactic action • Compare the effort of buying or selling with the result • Watch for Ease of Movement & confirming retracements • Watch for a Shortening of the Trust • Look for failure to follow through • Each bar tells a story: Consider its range, whether it is an

up, down, or level bar, and the position of the close.


Overview

“The study of responses is one of the most

valuable in the Tape Reader’s education. It is an almost unerring guide to the technical position of the market.”

- Rollo Tape*

* Note: Rollo Tape was a pen name of Richard Wyckoff


Overview


Overview


Drawing Lines

“I am constantly drawing lines as the market

unfolds. They help tell the story of the chart.” - David Weis


Drawing Lines


Drawing Lines


Climactic Action

“Whenever you see high volume suddenly appear

on your chart, stick a wad of peanut butter on it and mark it. You may not know what it means right away, but that volume is important.”

- Robert G. Evans


Climactic Action


Climactic Action


Climactic Action


Shortening of the Thrust

• Indicates a change of behavior in the market • Less and less progress made in direction of

recent trend – Supply exerts itself in an up market – Demand comes in as market moves down

• Leads to a pullback or a change in trend










Failure to Follow-Through

“If you traded only springs and upthrusts you

could do well.” - David Weis


Failure to Follow-Through: UpThrust






UpThrust & Test


Failure to Follow-Through: Spring






Effort vs. Result

“A Bull Market occurs when there has been a substantial transfer of stock from Weak Holders to Strong Holders, generally at a loss to Weak Holders. A Bear Market occurs when there has been a substantial transfer of stock from Strong Holders to Weak Holders, generally at a profit to the Strong Holders.”

- Tom Williams


Effort vs. Result


Effort vs. Result


Effort vs. Result


Effort vs. Result


Effort vs. Result


Effort vs. Result


Effort vs. Result


Effort vs. Result


Advanced Methods

“Always think in waves.” - Richard D. Wyckoff


Advanced Methods

“The most important thing to know about the

market is the trend… But you must always be on the lookout for a change in this immediate trend … This is how you detect the change:

In an up trend, when the selling waves begin to increase in time and distance, or the buying waves shorten. Either or both will be an indication of a change in the immediate trend. Apply the same reasoning to a down trend.”

- Richard D. Wyckoff


Advanced Methods


Advanced Methods


Advanced Methods


Advanced Methods


Setups: Afternoon of Fed “Twist”


Anticipating the Downdraft


Longer-Term Anticipation


Developing Trading Skills: The Psychology of Expertise

• Deliberate Practice • Specific, measurable goals related to skill

development • Example: I will identify 70% of all springs occurring in

the last 12 months of 5-minute data for XYZ market.

• Do it mindfully • Track progress


Resources

• TradingPsychologyEdge.com – Chart Reading Mastery Video Course – Weis Wave – Deep Practice

• RichardWyckoff.org • Jack Hutson, Ed. (1998). Charting the Market: The Wyckoff Method. • Rollo Tape. (1910). Studies in Tape Reading. • David Weis. (In Press). Trades About to Happen: A Modern Adaptation of the

Wyckoff Method. • Richard Wyckoff. (1930). Wall Street Ventures & Adventures Through Forty Years. • Richard Wyckoff. (1931-1933). A Course of Instruction in Stock Market Science &

Technique. • Richard Wyckoff. (1932). A Course of Instruction in Tape Reading & Active Trading. • Tom Williams. (1993). The Undeclared Secrets that Drive the Stock Market.


Thank You!


Documents

Reading the Market Bar-By-Bar - Discount Investment and ... · PDF fileReading the Market Bar-By-Bar: ... and the position of the close. ... (1931-1933). A Course of Instruction in