Starting a trading journal based on my understanding of Wyckoff's work

[moreina]

• Objectives
Trading part-time, maybe a transition later on if the results are good.

• Markets & Instruments
Focusing on the cryptocurrency called XRP. Tracking the XRP/USD pairing on the bitfinex exchange but doing the actual trade on a local exchange called Coins Pro.

• Style
Position trader, going for the long-term holds. I try to limit my trading to 2 or 3 trades/day.

• Timeframes
Weekly, daily, 30-minute, and 1-3 minutes.

• Reversals, Breakouts or Retracements?
Reversals and retracements due to the low risk involved if the entry is timed right.

• Trade Set Up
If the daily is at a junction point, or possible bounce from a downtrend, determined when today's price rises to yesterday's closing price, I will look at the 30-minute chart. An example:

If the 30-minute chart shows seller exhaustion characterized by a selling climax, or a strong rally after which the price either doesn't reach it's previous low or it does but volume is low, then I use the 3-minute chart for timing the entry. The 30-minute chart of the previous daily chart:

In the 3-minute chart I look for a breakout from the last high determined by closing price, not the high and low of the bar chart. I typically use a line chart for this since it shows the closing prices and the peaks and valleys better in this situation. In the 3-minute chart of the previous chart, I can see that the downward movement is slowing down, from 71 ticks with strong downward volume, to 28 ticks on the next downward movement with almost no volume, signalling exhaustion. After price broke out from the last high I placed an entry:

Same chart but a bar chart, showing the entry I made after the breakout:

So the entry is made based on the price movement of the 3-minute chart, but only after the daily and 30-minute chart signaled a trading opportunity based on my criteria.

Once price starts a new uptrend on the 3-minute chart I monitor the trade on the 30-minute chart. If after entry price reverses and blows past the last swing-low on the 3-minute chart I'll exit and wait for another setup. This happened on the particular trade shown above. Right after entry the market went lower, yet didn't trigger my stop-loss so I just observed. In the end the drop was temporary and the market went higher as predicted.



• Testing
Back-testing and forward testing done though I need to redo testing with more stringent and defined variables, testing each component one by one then together as a whole.

• Entry, Stop Loss & Targets
Targets are defined using P&F vertical count, since it's the one I'm familiar with and has shown to be reliable if the count is not negated. It's also the one that Wyckoff allegedly used so it fits the overall theme.

 

[moreina]

30-minute is starting to show a possible reversal by creating a higher low, though the high remains a lower high. In this case, instead of waiting for a higher high which may bring us too close to a resistance point after the retracement, we will enter at the breakout of the lower high. Risk is still kept to a minimum because of the proximity of the lower low which we will use as the stop loss:

3-,minute chart showing a lot of whipsawing just below the resistance line:

The market broke out of the range a few hours later and dropped on the heaviest down volume in the past 6 hours, but failed to breach the swing low on the 30-minute chart and closed slightly higher than the close of the swing low. Since the swing low was not breached the setup is still in play, we're just waiting for a breakout at the 0.40784 level to confirm the end of the downward move:

I missed the break out entry since I was driving so I waited from the retracement and price to start going up again, confirming the trend reversal, before entering. 1 minute line chart:

bar chart:

Entry: 0.40955
Stop Loss: 0.40352
Target: 0.43327
RR ratio:3.92

UPDATE:

Price moved lower to test the previous high that was broken but nowhere near the stop loss, rose a bit, then started moving in a very tight range.There was massive volume on the downward move within the range, indicating that any subsequent break from the range had the chance of being explosive. Price eventually breaks the downward in a strong move so I exit even though the stop loss wasn't triggered since it's become obvious that the momentum has shifted to the downside:

 

[moreina]

Yesterday's down move seems to have hit a temporary stop. Daily shows today's prices at yesterday's closing.

Since this is seems to be the bottom of a trading range, there is a possibility of a bounce here.

The 30-minute chart also shows a bounce at the same price level as a previous low, also a possible trading range.

Because of these two possible bounces showing up on two different time frames, the risk of a long trade going well seems to be elevated. Also the distance between the hypothetical high and low of the trading range is about 1 cent, enough space to assess if the bounce will be successful or not and get out if not.

Entry: 0.38443
Stop Loss:0.38207

UPDATE:
Market dropped the second I entered, hit the stop, then blasted past in the opposite direction. Tsk tsk. Waited for it to come back down and it just kept going up so I re-entered on the breakout of the range on the 30-minute chart.

30-minute chart:

Second Update:
Market continued to move higher, and I pyramided up by doubling my positions. The last one, being so near the resistance zone, was clearly a mistake, one I make very frequently. Price has started ranging and there are indications of a continuation of the move but since I already have positions in various price levels I'll wait until price breaks out of the range and retraces before putting in another trade:

Third Update:
Price is showing a very possible return to the upward move.
30 min chart shows price breaking the bottom line of the channel but refusing to go further, if it re-enters instead of testing the trend line and bouncing off lower then it signifies oversold conditions. Volume is higher on the last downward move but price fails to make a new low or close below the previous low's close, making it more likely that we are oversold.

3 min chart shows a clear turning point, marked by a break of the downward stride and entering a range. High volume and a failure to for a lower low or close below the previous low's close also signals an imminent turn.

Entered with 50% of my usual position with a tight stop slightly below the swing low. If prices breaks out of the range, I'll pyramid up and add the remaining 50%.

Final Update:
Price broke out, hit the trend line on the 30 minute, then bounced back down. Exiting the trade since momentum has shifted to the downside.

 

[moreina]

Last trade for today.

Price is still ranging on the 30 min and has reached the bottom of the range. Previous low had good volume and now it is struggling to make close lower as well as make a lower low. It has also broken out of the short-term down channel. These all signal a possible turn.

On the 3 min price has broken above the last high. That's my entry signal.

Entry: 0.39445
Stop Loss: 0.39262

Update:

Price dropped and hit my stop, then violently reversed and headed in the opposite direction. I think the mistake was jumping the gun on the entry instead of waiting for a higher low to form, which maybe would have caused a higher entry but it would have been a surer thing and I wouldhn't have stopped out. Will wait for that next time.

 

[moreina]

An analysis of the daily chart shows a change in momentum favoring the up side since the 11th of May, where an upward move was accompanied by strong volume and the subsequent reactions to the downside had strong volume but were unable to push price back down to previous lows.

The 11th of June saw the weakest downward move with only 20 million trades and a downward advance of only 844 points.

Now we need confirmation of a complete momentum change which would be an increased volume on the upside with a good advance, followed by weak volume on the downside. Since we are close to the previous turning points, with the weakest volume to date in a month, even without confirmation to the upside I will be looking for a trading opportunity since the risk is quite low.

30 min chart shows a down move after some absorption, yet the volume on the down side is still quite low. This is followed by an ongoing rally that is closing near the top. This can signal absorption of traders that got stuck in the upper levels unloading their coins and short covering rather than distribution.

3 min chart shows climactic volume on the last down move, this is the largest amount of volume on a breakdown since yesterday, roughly 12 hours ago. The reaction after the rally retraced less than 50%, I was expecting more but it seems like that's it. Entered once I confirmed low volume on the last down move and price started to turn.

Entry: 0.4085
Stop Loss: 0.40228

Update:

Price went back to the upper bounds of the range, dropped slightly below the previous low on the same amount of volume as the previous downward move, then rebounded strongly on strong volume. Since I was watching this in real-time I managed to catch it as it passed the previous low and added to my position:

Second Update:
Market pushed up, then dropped on down on climactic volume (on the 3 min). Hit my stop but due to the extremely high down volume, highest in 2 days, i re-entered the market with a stop just below the swing low.


Entry: 0.4020
Stop loss: 0.399

 

[Pat494]

Showing your P&L would be interesting.

 

[moreina]

Showing your P&L would be interesting.

Hah that's true. Will start showing that. Thanks.

 

[moreina]

So quick and dirty P&L:

I accumulated exactly 0.5 bitcoin at an average of $6,450. I scaled out of my position at $8,540, $8,250, $8157, and $8,103. Average selling price $8,228.
Profit: $889
27% gain

I accumulated 10,000 XRP at an average of 27 cents and closed the position in one move at 42 cents.
Profit: $1500
55% gain

These decisions weren't made on any detailed analysis though. I was using a P&F chart and just bought on the breakouts when the target was high enough to be interesting. Later I realized that I would need a much better understanding if I wanted to do this seriously and just gamble. These trades were successful more from luck since I seem to be positioned by accident at key turning points in the market without realizing it.

I've since started paper trading and only just recently tried trading for real again.

I've since accumulated another 45,000 XRP at an average of 39.5 cents and am carefully watching the daily charts. Unfortunately I don't have a record of what I saw when I made those trades since I wasn't keeping a journal back then. The trades here are all losses so far or early close outs at a small gain but still a loss in my mind since the analysis was faulty. Total loss from these smaller grades is $166.

 

[moreina]

This is a paper trade I made based on the short time frame, without consulting the daily.

30 min chart establishes support at 8,627 before retracing from the run up. Price tests the support but is unable to rally much since selling pressure enters almost right away. Volume diminishes, then there is a major test of that support level. Price closes above the support level indicating a possible spring. When volume diminishes indicating that selling pressure has withdrawn I put the trade in. Entry at 8,649.

Price rallies on expanding volume then is violently rejected at 8720. Possible change of character. The reason I held onto the long was the very gentle angle of descent, plus a new higher support line was established which was not breached. This made me suspect absorption. Price rallied again on expanding volume and breached resistance.

I didn't expect it to make it this far, but will let it run and will scale out once it breaks the orange "trend" lines.

Update:
Seems like there's been a change of character, accompanied by massive volume and a lackadaisical attempt to rally. Expecting things to decline from here on out.

Second Update.

Literally seconds after I wrote this there was a massive dump.

 

[moreina]

Today on the 3 min chart.

Price peaks after a run up then retraces, establishing a support line. Price rallies immediately, esablishes another support line and hits the resistance area. Retracement is on the newer support line.

At this point I looked at the volume of both resistance areas and the retracements and noticed that there was more volume present in the resistance areas than the support areas, indicating that the market seemed to want to go up. The fact that the higher support area was respected seemed to support that.

Price then tries to rally on diminished volume, then attempts to fall back with even less volume. Right after that a newer support line was established on higher volume.

The slow raising of the support lines suggested another absorption, so as soon as volume started diminishing on the downside I took a position.

Market then turns down almost immediately on increasing volume, testing and breaking the first two support areas. At this point I was having doubts on my analysis but held on because of the angle of descent, again very gentle with increasing volume until the first support line is tested on increased volume and holds.

So we know that the market is supported there. Price slowly starts to grind up but on almost no volume, then suddenly re-establishes the highest support line on good volume. After that it starts to run up.

The mistake here was the early close because I saw diminishing volume on the rallies. I hadn't drawn in the trendline and just closed the position. I also ignored the previous background of always higher support lines coming in, instead reacting purely on what I saw on those few bars.

Price proceeds to shoot up.

This would've been a painful failure.

 

[4xis2ez]

Showing your P&L would be interesting.

It's awful that others want you to post your trading account statements for all to see.

 

[Pat494]

If you find a winning formula then stick with it imho
One can over do the analysis and get paralysis.

 

[moreina]

BTC/USD daily chart seems to be in an absorption area.

30 min chart showing a retest of the previous resistance level

3 min chart shows a clear decline in volume on the reaction to the rally.

Going long on the daily chart

SL: 8700
Entry: 9308

 

[moreina]

Entered a long trade on the daily earlier, now it seems that the 30 min chart is also lining up for a possible intermediate-term trade on the long side.

The correction that was probably initiated by the first down bar on high volume, indicated by the leftmost red vertical line, seems to have run its course. As you can see the last two reactions after rallies have not made any progress towards the downside, with the last reaction having almost no volume. Since price has not retested the last major support area, maintaining a retracement of less than 50%, the uptrend is intact.
15 min chart shows an increasing downward pressure, with no loss in price. The total of this downward volume is also less than that of the last downward reaction, which resulted in a support area, hinting that it was climactic selling.

Entry: 9228
Stop Loss: 9130

UPDATE:
Green dot is my entry point. Price rallied all the way up to 9600. It's now facing some heavy selling, as indicated by the biggest selling volume we've seen in 4 days (marked by the second to the last red vertical line). As soon as it crossed the orange trendline, a line that I keep for profit taking, I sold 25% of my position. If it drops to 9500 I"ll sell another 25%. For now I'll wait until for a successful retest of a lower level, probably in the 9386 area, before adding to my position.

Second Update:

Price rallied higher and entered another congestion zone. This area also seems to be another absorption zone, as evidenced by the rising support with increased volume, and the diminishing volume of the reactions to the rallies. We'll add to our position here.

Although we're trading the 30 min chart, this clearer on the 15 min chart.

30 min:

Entry: 9674
SL: 9630

Last Update:
Price broke slightly higher, some absorption happened, then had a massive breakout at the 10000 level. I think a period of either consolidation or distribution will happen when this dies down so now it's just a question of profit taking if the price breaks the trend line.

 

[moreina]

XRP on the 30 min. Broke its downward stride, successful retest of the lows, and is now making higher highs.

Entry: 0.44024
SL: 0.4284

Update:
Price continued to rally higher after a quick rejection of the highs and might be in an absorption area judging by the volume and the failure to sell off after testing an important high. If support volume continues to increase while reactions remain temporary and shallow we will add to the position.

 

[moreina]

Reviewing the daily XRP chart shows that we could be in the beginning stages of a major run up. The accumulation range is well-defined, as is the area where the market has made an aggressive move up with no signs of supply entering on the reaction.

The 30 min chart shows a good entry as it had entered a possible distribution phase which has since been negated when it failed to follow through on the downside and demand has just re-entered, signalling that the trading range was probably accumulation instead and that the market is ready to move higher.

SL: 0.4509
Entry: 0.4682

 

[moreina]

BTC/USD is bouncing around the daily resistance area, showing signs of selling absorption.
We can derive this because of the selling bar present two bars back, followed immediately by support.

15 min shows this in a clearer manner.

A long here here is low risk since we are close to the danger point with no significant resistance on the daily chart.

Entry: 12892
SL: 12595

Update:

Price broke clean through. Closed the long since I need to go to bed and can't babysit this.
Exit: 13452

 

[moreina]

15 min shows a possible shorting opportunity. Price bounced twice after a selling climax and has been rising since, however since there has been no major sign of strength and the spread of the bars is consistent it seems like vertical absorption or short covering.

3 min chart also fails to show any major upside event:

Stop:11988
Entry:11366

Update:

Price reversed mid range so I moved the SL to 11190, which promptly got hit. Not massive gains, but no loss.

 

[moreina]

30 min chart showing a 60% retracement from the high to the low, followed by an expected downwards movement and un UNEXPECTED strong meeting of supply by demand.

15 min shows a rally in progress

Switching to the 3 min chart.
3 min shows a drying up the volume to the downside, signalling a turn.

Entry: 11675
SL: 11426

Update:

Price breaks through the trading range and continues its downward move. Stopped out.

 

[moreina]

The rally on the 30 min chart broke down and is now retesting the 50% retracement from high to low. No cause for sustained rally since the intermediate trend is down, so this is a shorting opportunity.

15 min chart shows a faltering in the retest of the 50% retracement, with lower volume.

3 min chart shows a sell-off at the top of the trading range

Entry: 11764
SL: 11953

Update:
Price found strong support shortly thereafter while the reaction to the rally showed depleted selling pressure. Price proceeded to move upwards on increasing volume.
Stopped out.