Wyckoff contradicting himself?

[spearchew]

Hi;

"The Richard Wyckoff Method of Trading and Investing in Stocks"
page 19 of my version:
"Supply and demand may be studied on the tape of the stock ticker, and to even better advantage from charts".

"The day traders bible"/"My secrets of day trading in stocks"
Page 80 of my version:
"I have yet to meet the man who has made money trading on any kind of chart over an extended period".
"The tape reader sees everything that goes on; chart players vision is limited. [Tape reading has clear advantages over charts]."

I sense I am not interpreting his words correctly, or taking them out of context.
Can someone set me straight on this?
Many thanks

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Do any among you trade without charts? (Yeah ive seen the threads on the topic, but perhaps some other members will reveal themselves or offer insight on the matter if i pose the question again here).

I came across the "No B.S. Daytrading" ebook - I havent read it nor do I have access to it, but from what I have gathered, I like the sentiment of it, which seems very much in tune with Wyckoff.
However, (no particular offence to the author SFLTrader intended), as alluded to by Wyckoff himself in one of his articles, I find it extremely difficult to reconcile the need to sell an ebook for c$40 if he indeed has the capacity to generate infinitely more using his claimed knowledge. This goes for Wyckoff too, who of course wrote books on trading which I assume were not handed out for free.

----

As an aside, I am in my early 20's, work in a front office role in the City of London. I'm not happy in life. Against the advice of various people around me, and against some of my own common sense, I have a constant urge to quit and throw myself fully into the study of day trading. The prospect of staring at the orderbook & T&S (modern day tape reading ?) so as to eventually develop a 'feel' for the actions of market moving players is fascinating to me. I came across Wyckoff a few days ago - enjoying his works so far.

 

[boozey]

Trade with instinct and flair. No need for knowledge when you have butterflies in your stomach.

 

[tomorton]

Tape reading involves different skills to TA, but tape reading involves knowledge of earlier bid/offer prices (i.e. a mental chart) even if only over a few hours, so they're not opposites. I suspect what he means is that the chart reader who doesn't have tape data is handicapped.

 

[timsk]

Hi spearchew,
I agree with Tom's conclusion about Wyckoff.
Whilst I'm loathed to direct you away from T2W, if you want to study Wyckoff in depth and hook up with other like minded traders, you will be interested in the observations of dbphoenix - a former member of T2W - who moderates the The Wycoff Forum over at Traders Laboratory. He's an expert on Wykoff and has written his own book based to a large extent on Wyckoffian principles. I bought a copy five years or so ago for about USD$30.00 and it's excellent value for money.

I also have the 'No BS Day Trading' e-book and that too is good value for money - although totally different. However, it's all about fast and furious scalping for just a few ticks here and there. If you want to play that game, then fair enough, charts probably won't be especially helpful to you - but then neither will Wyckoff, I suspect. After all, they didn't have computers in his day and the techniques that SFL Trader outlines in his e-book would not have applied then.

As to why traders write and sell e-books - I wouldn't worry about it. All that anyone needs to decide is whether or not it represents reasonable value for money in terms of providing ideas and information you wouldn't otherwise have access to. Certainly, Ive never seen the techniques that SFL Trader outlines in his book anywhere else. Whether or not you can understand them and implement them profitably is - of course - another matter entirely. I can't, but that doesn't mean to say that you wouldn't be able to either.

As for charts and their merit - or otherwise - the first thing to consider is why would you (or anyone come to that) want to be without them? Charts are merely a graphical representations of price movement and, as such, they are inert and harmless! So, I say, get some charts and get both e-books. If you're not prepared to risk less than USD$100 on two books from which you might profit immeasurably - then trading probably isn't the game for you!

Tim.

 

[spearchew]

Agree wrt charts - they are themselves surely harmless.
As to the issue of e-books... I weigh up the behaviour of forum members and vendors and everyone else in the world with the same logical approach I would take with charts - it does worry me why traders write and sell e-books. What reason could it be other than they have failed in the business of trading, and therefore resort to cobbling together educational material? Those who can't, teach.
Anyway, that's my view; the argument will not be resolved in this thread or any other.
I must confess I may yet make enquiries about the No BS Day Trading - if only to confirm to myself that there is no value to be found there.

Not to sound aggressive, but you mention excellent value for money via DB & SFL books. I'll safely assume though that you haven't made any real money out of it. Ah yes, you can say it doesn't suit your style, but if the opportunity were set before you to embark on the path to potentially massive profits, you would take it - your style or not.
Again, no offence intended - just trying to get my thoughts out.

 

[barjon]

spearchew

I think there's a big difference between those who write a book rather than trade and those who write a book with the background of being successful traders.

For example, you wouldn't discard a book on management technique written by someone who has proved themselves - John Harvey-Jones springs to mind - would you?

I suppose there are other motivations to writing books than making money by selling it.

jon

 

[spearchew]

That's a good point barjon.
Ben Grahams The Intelligent Investor... Warren celebrates as "the greatest book on investing ever written".
No doubting the calibre of either men.

 

[Shakone]

if the opportunity were set before you to embark on the path to potentially massive profits, you would take it - your style or not.

This is not quite correct. You would 'want' to take it, but that doesn't mean you would be able to. There is a long term (daily chart) system that can make money for me (in principle), but it requires me to hold trades for days, and suffer large retracements on winning positions. Unfortunantely, I have trouble - once I have a winner - watching 30-40-50 pips disappear out of my profits. So I developed another system with much smaller stops, and much smaller targets which I CAN trade, and suits me. It wasn't that it is impossible to make lots of money on the daily system, it is just that I personally, can't trade that system very well. If you do become a day trader, I think you will soon realise that. Then again, maybe I'm wrong and you will be able to trade any system on any timeframe you want.

Those who can't, teach.

Cliche, but then aren't you concluding the converse, i.e. that those who teach, can't. If true it would imply Isaac Newton can't do maths, because he taught it, or Einstein can't do physics because he taught.

There are many reasons for writing a book. Some do it for profit, some do it for ego or to leave some sort of legacy, and some even do it to crystalise their own thoughts on the subject.

 

[Shakone]

On the tape-reading...well in Wykoff's day, the charts were probably daily or weekly. So reading the tape would give you the signals early on in the move, just as intraday charts do now. Tape is very short-term, but I'm not sure what the difference between reading the tape, and looking at tick charts (for example) is.

 

[timsk]

Not to sound aggressive, but you mention excellent value for money via DB & SFL books. I'll safely assume though that you haven't made any real money out of it. Ah yes, you can say it doesn't suit your style, but if the opportunity were set before you to embark on the path to potentially massive profits, you would take it - your style or not.
Again, no offence intended - just trying to get my thoughts out.

Hi spearchew,
You're quite correct but, with respect, you're also rather missing the point which is that there is no book on the planet (about trading) that guarantees that everyone who reads it will make money. If you're only willing to buy books (or DVDs, seminars, webinars and courses etc.) on the basis of a guarantee of some sort that you'll make money, I'm afraid you're going to be very disappointed. And the ones that do offer such guarantees are the very ones you want to avoid like the plague!

To avoid such disappointment, you need to think of books in a different way. The 'No BS Day Trading' book was of value to me because I learnt something I didn't previously know and, more importantly, I was able to dismiss that style of trading as being unsuitable for me. That's real 'value' - even though, as you rightly say - I didn't make a single penny from reading it. Value means a lot more than just making money. Besides which, suppose - for the sake of argument - that I had made lots of money by utilising the techniques in it. Would you then buy it on that basis? And if you did and you failed to replicate my success, would you then conclude that the book was valueless and a waste of money? Books are exactly like charts in that it is down to each individual whether or not they find value in them and the nature of that value will vary from one trader to the next. (Granted, there are some books about which everyone agrees are just plain bad - but we're not discussing those.)

Whether I, you or anyone else makes money (or not) as a result of reading a book like the No BS Day Trading one, doesn't mean the next person will. As I said in my last post, you could read it and, as a result, you might well make pots of money. The value of any trading book is whether or not it informs your trading overall and helps you to evolve. And there are many aspects of trading - the majority even - which aren't directly about making money. As for the motives and credentials of the author - who cares? Some of the best ideas I've ever received have been from people who don't know their @rse from their elbow when it comes to trading!
Tim.

 

[spearchew]

Thanks for replies all - fair points that I am taking under consideration.

One final issue.
As I mentioned in my opening post, I am considering committing myself to mastering the art & science, as it were, of day trading. What bothers me though is that I have never personally met anyone who has made a real success of it. It would ease my mind to meet or hear conclusive evidence of someone who had become successful in this arena. And by success, (forgive me if this sounds immature) loosely speaking I am imagining a Ferrari in the driveway.

Of all the places I would hope to come across such characters, trading forums such as this would be a pretty safe bet, but no-one springs to my mind - maybe these users choose to hide it - or maybe no one out there qualifies?

Can anyone here claim to be, or have met, such a person that has transcended the mainstream rat race and profited with such consistency that luck cannot have been the determining factor?

 

[timsk]

Can anyone here claim to be, or have met, such a person that has transcended the mainstream rat race and profited with such consistency that luck cannot have been the determining factor?

Yes!


spearchew,
The same principles that apply to books apply here. Answer these questions if you will - (no need to actually post them if you don't want to):
1. If no one comes forward - will you then conclude that no one has made enough money from trading to buy a Ferrari and, therefore, you're unlikely to either and that the best thing to do is to abandon the whole idea?
2. If someone does come forward, are you going to want proof that the Ferrari is really theirs and that it was bought with money earned from trading? After all, any unemployed teenager can stick a picture of a Ferrari on an internet forum and claim it's theirs.
3. How will you satisfy yourself that the Ferrari owning trader(s) didn't just get lucky? After all, many fortunes were made at the tail end of the 90s and quickly lost when the dot com bubble burst in early 2000.
4. Which of these two traders impresses you the most:
Trader A who makes 2.5% p/a (i.e. roughly equal to a building society interest rate) on a £10 million account and buys a Ferrari with the £250k profits - or - trader B who doubles his £20k account and elects to spend half of the gains (£10k) on a second hand VW Golf?
5. Suppose you're flooded with replies from members all of whom have Ferraris in their driveways and are happy to prove to you that they were bought with trading profits. Will you then conclude that you will be able to replicate their success or that, by some weird twist of fate, all the successful traders just happen to be T2W members and decided to reply to your post!

The list goes on and on. The point is - as with the value of books - how I define success and what success means to me is likely to be very different to your definition of success. More importantly, my success - or lack thereof - has absolutely no bearing whatsoever on your chances of success. So, regardless of whether no one comes forward or lots of people come forward, either way, it's not going to help you make the decision about whether or not YOU could be a successful day trader. If you want to do it - then just do it and if you don't - then don't. It really is that simple!

Tim.

 

[spearchew]

1. I didn't expect anyone to come forward - I may yet abandon the whole idea as foolish. Is it so wrong of me to want to see that someone else has been successful doing what I am considering also doing?
2. It's easy enough to lie on an internet forum, true.
3. I will never be fully satisfied.
4. B. I hoped to hear from those who started with little capital.
5. If I see that it can be done, I will be encouraged that I too can do it.

I'm looking for some inspiration.

As I hinted at earlier, I work for a fairly prestigious company in the heart of London which I am intending to leave imminently - I am at a juncture in my life.

I realise this makes me something of a cliche; frustrated in my own work/life and turning my head towards what I perceive to be a route to freedom & independence; day trading.

Do I remain unhappy in the thick of the London rat race and slowly but surely claw my way up the corporate ladder? Or do I say "to hell with it" and throw myself fully into the day trading game? I have as few commitments today as I ever will, so it's now or never as far as I'm concerned.

 

[tomorton]

Keep at it spearchew, keep at it. Positive viualisation is used consciously or unconsciously by the winners in any given activity in life. Of course, 10 years ago I visualised mysdelf drving a Lexus by now, bought through trading profits. I have instead a second-hand Mondeo, paid for by inheritance and a 'real' job. Then again, these days, my Lexus isn't what it used to be.

 

[montmorencyt2w]

1. I didn't expect anyone to come forward - I may yet abandon the whole idea as foolish. Is it so wrong of me to want to see that someone else has been successful doing what I am considering also doing?
2. It's easy enough to lie on an internet forum, true.
3. I will never be fully satisfied.
4. B. I hoped to hear from those who started with little capital.
5. If I see that it can be done, I will be encouraged that I too can do it.

I'm looking for some inspiration.

As I hinted at earlier, I work for a fairly prestigious company in the heart of London which I am intending to leave imminently - I am at a juncture in my life.

I realise this makes me something of a cliche; frustrated in my own work/life and turning my head towards what I perceive to be a route to freedom & independence; day trading.

Do I remain unhappy in the thick of the London rat race and slowly but surely claw my way up the corporate ladder? Or do I say "to hell with it" and throw myself fully into the day trading game? I have as few commitments today as I ever will, so it's now or never as far as I'm concerned.

Well you might check out, for example, a guy with the forum name "Naz", who has posted here on a regular basis over a number of years. I am not sure if he is currently posting [I've just checked, and it seems he hasn't posted this year, which is a pity]. He has given a lot of free advice here and on his own blog, but he also sells trading education, which included (so I understand - I have not taken it ) actual live trading, so he is one example of someone who can teach and can do. I am sure there are others.

On a slightly different tack, and someone quite different: you may have heard of an e-book called "Bird Watching in Lion Country", by a South African called Dirk Du Toit. I have only read the first edition which I found free on 't'internet, but there is a second edition out now, which I have been umming-and-ah-ing about buying for a while (it's not expensive). Now he has been both wildly praised and criticised on the web, and I am not going to go into specifics. I do think the book is probably worth paying for if only for the insights into leverage which I am sure many beginner traders do not consider until it bites them. The relevant points here are I think that:

1) He also offers quite expensive online mentoring (over a long period I believe). So you could say the e-book is just a loss-leader into what he really wants to sell you. On the other hand, this seems to include ongoing "after-sales-service" over a long period, which some people might value.

2) He says that he is a successful trader, but he doesn't want to trade for the rest of his life. He would prefer to have people trade for him. I think this means in practice that he trains people up in his method and introduces them to a broker of his choosing, who then pays him a commission on their winnings. While I can see some practical problems with this, it seems to be a fair enough business model if a) his methods work and b) he can get his students to implement them successfully.

All I am saying really is that the reasons for writing books and e-books are probably many and varied. "e" for "ego" in some cases, no doubt.

 

[lbranjord]

I prefer those who can do, those who can't, 'go into management'.

 

[montmorencyt2w]

I prefer those who can do, those who can't, 'go into management'.

"....and those who really **** up go into management consultancy"

 

[SM_1]

Yes it can be done, yes I know traders who have done/are doing it, making crazy sums of money on a daily basis, I know because I have seen it, it helps a lot, gives me hope and confidence to stick at it, because clearly, it is possible. Whether you want to believe me on this or not, is your problem.

I'm not really sure what you are trying to get out of this? Are you expecting to just quit your job and suddenly be a success at day trading? It won't happen like that, I can guarantee it. More than likely you will give up because you will go back and forth between all the fancy packages different people sell(scams), end up wasting more money on that than anything, only to find out its just a typical lagging indicator system that only helps you empty your account.

YOU need to put in the hard work, YOU need to put in the time, YOU need to find out what YOU feel most comfortable doing, and most of all, if it feels right for you, then stick at it and ignore everyone else, a forum can be a dangerous place, so many egotistic opinions in the one place is rarely good, BUT if you look close enough, there are the gems.

As far as trading without charts, I'm all for it, but thats just my opinion, I personally can put too much weight on support and resistance and watching breakouts on the chart rather than watching what is really happening on the tape, making stupid decisions based off the chart basically. Thats what my downfall with charts are, that doesn't mean I don't have any up, I have a few, but I only glance at them every now and then, I put much more emphasis on the tape.

If you decide to pursue this career of trading, remember that when you get to the stage when you are feeling down and unmotivated and saying to yourself "Can this really be done? Is this actually possible?" just to keep at it, its at that point where most decide to give up. Its helped me anyway, also befriending traders who you KNOW are successful is another major plus if you can, it won't happen immediately, but if you stick around long enough, you usually end up meeting the right people, these are just a couple of things that have helped me and do help me, but we are all different, so find what suits you, because what works for me or the next guy, there is a high chance that it WON'T work for you in the exact same way.

Good Luck

 

[spearchew]

Thanks SM_1 for this inspirational post