Richard Wycoff's Method why it works, and why it doesn't...


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I just want to know people's thoughts in the forum on why they believe Wycoff's technical analysis works and others on why it doesn't. Below is a short bio on who he was and what he did...

Richard D. Wyckoff
Richard Demille Wyckoff (1873–1934) was an early 20th-century pioneer in the technical approach to studying the stock market. He is considered one of the five “titans” of technical analysis, along with Dow, Gann, Elliott, and Merrill. At age 15 he took a job as a stock runner for a New York brokerage, then he became the head of his own firm while still in his 20s. He also founded and for nearly two decades wrote and edited “The Magazine of Wall Street,” which at one point had more than 200,000 subscribers. Wyckoff was an avid student of the markets and an active tape reader and trader. He observed the market activities and campaigns of the legendary stock operators of his time, including JP Morgan and Jesse Livermore. From his observations and interviews with those big-time traders, Wyckoff codified the best practices of Livermore and others into laws, principles, and techniques of trading methodology, money management, and mental discipline.

Mr. Wyckoff saw retail investors getting fleeced repeatedly, and dedicated himself to instructing the public about “the real rules of the game” as played by the large interests, or “smart money,” behind the scenes. In the 1930s he founded a school, which later became the Stock Market Institute. The school's central offering was a course integrating the concepts that Wyckoff had learned about how to identify large operators' accumulation and distribution of stock, and how to take positions in harmony with these big players. His time-tested insights are as valid today as when they were first articulated.

Jamal D

Junior member
12 4
I am currently working on this approach to the market through DbPhoenix (forum member)e-book and now also the newly discovered and excellent book "Trades-about-to-happen" David H. Weis (highly recommended)

For me, the most eye-opening thing about the Wyckoff method is that it is not imposing it`s will on the market, but is all about observation and interpretation. I find that too many systems are interested in telling what the market will do next, while Wyckoff reacts to what the market does. I also like the approach of thinking more in waves rather than micro-structural patterns through candlesticks patterns. (I actually traded purely on breaks of trendlines when I started out...until I made every simple concept under the sun very complicated :) )

Personally I think many people would benefit from cleaning up their charts and get rid of the thought of double-triple confirmation from MAs and MACDs. That is just what makes a come to the party when all the ladies (or gentlemen, for those who prefer this) has gone home and there is no vodka left.

Now I am in the early stages of my studies, but I have found something I can understand/that makes assignment is clear. Of course, trading is still a mystery unsolved on my part, but at the very least I can focus on limited factors and try to become a specialist at that.

I assume you are new to Wyckoff yourself, no? If so, check out the material mentioned earlier and if I might suggest one thing...don`t overload your charts with indicators if you are just starting out. Unlearning is incredibly difficult and I wish I knew this when I started out myself. It took me 3 years to strip every single indicator off my charts, and it is only just recently I finally feel I am a student of the market again...

PS. It has come to my attention some information in regards to mr. Weiss. This has been mentioned already on this forum...

I despise all snakeoily behavior as trading is hard enough as it is. I will add, after getting on with later chapters I got slightly underwhelmed by it, because it is just repeating hindsight about charts and does not put anything into context. So I would take down my praise for his book a notch and blame it on the excitement of finding an approach through Wyckoff that I can rationally believe and understand.
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