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

moreina

Junior member
43 1
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

Junior member
43 1
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


 
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moreina

Junior member
43 1
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.
 
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moreina

Junior member
43 1
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.
 
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moreina

Junior member
43 1
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.
 
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moreina

Junior member
43 1
30 min chart shows a possible sign of strength as the last two bars have wide spread and volume has increased compared to the downward moves. Also, price has failed to follow through to the downside and support has risen.

The 15 min chart shows the ease of movement of the last 3 bars, taking out the progress of the down moves.


Entry: 11820

Update:

Price broke through, closed the position when it ran into heavy resistance.
 
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moreina

Junior member
43 1
30 min chart shows a change in momentum from down to up. Climax selling, accumulation, and a breaching of the upper edge of the trading range. It is now currently retracing and should offer a trading opportunity on the long side.

15 min shows a clearer picture of the bounce and retest of the low.

3 min chart is in the accumulation phase, though since the 15 min and 30 min chart are showing a bounce after accumulation and a breach of the upper edge of the trading range, we're confident that the 3 min chart will break through its own accumulation phase.

Entry: 11865
SL: 11779

Update:
Price just fell through the floor suddenly, taking out our stop.
 
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moreina

Junior member
43 1
Daily BTC bouncing off the range it created after a major sell-off a few days. Definitely possible change of trend so no long-term longs to be opened here and the faster charts are suggesting a possible short-term trade on the short side.


30 min shows a selling climax, followed by the strongest rally we've seen in a while, and a successful retest of the lows. Now rallying and encountering resistance.


3 min chart shows 2 subsequent sell-offs at resistance, and we're now at the bottom of the trading range. Price breaks through and restests, and we enter a short on the retest.
 

moreina

Junior member
43 1
Short term trade on the 3 min chart. Price goes through two high volume up thrusts yet fails to go lower immediately afterwards. Price reaches a top, breaks down, then fails to make a lower low. Underlying strength, so we take a short-term long position.


Update:

Price made a lower low on good volume and failed to rally. Exited the position.


Second Update:

Going long again after selling pressure has disappeared as evidenced by shorter reaction bars to the down side with less accompanying volume.


Third Update:

Price broke out of the trading range to the downside. Exited the longs before price hit the stops then went short on the retrace from the breakout.
 
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moreina

Junior member
43 1
4 hour shows price trying to rally up and having difficulty, leading us to believe that the line of least resistance for the moment is to the downside. Price is now at a previous resistance area, after having broken out of a hinge.



Because of the amount of struggle it took to get to this point, coupled with the fact that there has been no significant accumulation to justify a rally to the upside, our bias is down. The 30 min chart also shows the top being sold and price having a hard time rallying after these sell-offs.



Finally the 3 min chart shows the latest rally being sold off and renewed selling pressure close to the lower edge of the trading range. We enter here.



Entry: 11903

Update:

Price made a lower low then reversed and started making higher highs and higher lows, eventually breaking out of the range on the up side.

Stopped out.

 
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moreina

Junior member
43 1
Daily shows price is approaching the upper bounds of the trading range that was at the end of June by a massive supply bar.



The 30 min chart shows an upthrust forming at the resistance line where two previous attempts were strongly rejected, as evidenced by the price action and the volume at those levels.



We dropped down to the 3 min chart and entered a short after we saw price unable to rally, right after the massive down bar that negated the upward breach of the trading range.



Entry: 13140
SL: 13340

Update:
Closed the trade at the lower edge of the trading range.

 
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dbphoenix

Legendary member
6,952 1,251
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.

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.

As a prelude to responding to the questions you asked in your email, I'd like to explore what you've posted above.

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


I discourage beginners, or anyone who has a job or some other demanding commitment during market hours, to avoid trading during the day. If you're trading part-time, your focus should be daily and weekly charts, nothing faster. Daily and weekly charts are ideal for part-time traders.

Markets & Instruments
Focusing on the cryptocurrency called XRP.


Why this as opposed to stocks, commodities, or futures?

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


There's an inconsistency here. If you want to be a position trader, you may be looking at 2 or 3 trades a month, not per day. Unless your definition of "long-term" is a few hours. If so, I suggest you give this further consideration.

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


In Wyckoff World, there are no such things as 30m or 1-3m "timeframes". Price movement is continuous. Chopping it up into 1m or 30m or 5m or 17m intervals may serve some purpose, but those intervals exist solely in the minds of the trader and the software engineer; they have nothing to do with the market itself nor with how it moves. I'll grant that "everybody (appears) to do it this way", but this has been the case for only twenty years. In the pre-internet dark days, traders focused on daily, weekly, and monthly charts. If they used charts at all. Or they traded the ticker, which takes us back to intraday trading, which, as I said, is not recommended.

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


FWIW, retracements are easier to enter and manage than reversals, but this is covered at length in my book (the one you have). I suggest you focus on retracements that occur after reversals or wait for the test, which arguably is another form of retracement.

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.


See above regarding "30m" charts.

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.


You'll find that back-testing and forward-testing is never really done. No matter how robust and solid your trading strategy and tactics, markets change, at least in the details. The past two years, for example, markets have moved according to the contents of Trump's tweets. This has required some modifications in strategy, all of which have to be tested.

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.


If you're accustomed to P&F and you've had success with it, by all means use it. Consider, however, that in focusing on price movement Wyckoff relied on the dynamics of trader behavior and the auction market (see Section 7 in his course or my thread on Wyckoff's work).

Db
 

moreina

Junior member
43 1
Hey DB

Thanks again for taking the time to comment.

As a prelude to responding to the questions you asked in your email, I'd like to explore what you've posted above.

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


I discourage beginners, or anyone who has a job or some other demanding commitment during market hours, to avoid trading during the day. If you're trading part-time, your focus should be daily and weekly charts, nothing faster. Daily and weekly charts are ideal for part-time traders.

Understood. So should we derive all information for trading the daily/weekly from those charts without going into the smaller time frames?


Markets & Instruments
Focusing on the cryptocurrency called XRP.


Why this as opposed to stocks, commodities, or futures?

I live in the Philippines, I can't trade the US market and our own markets here are very thin with regards to trading volume. We're also not allowed to short the market, which limits us to waiting for long opportunities.

The other real reason is that I got into trading through cryptocurrency. After I did a "fundamental analysis" on bitcoin (my training is as a software engineer), I bought into it and proceeded to lose more than 60% of my equity. That's when I decided that it was probably a good idea to learn to read the charts before doing something like this.

After that I just got hooked.

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


There's an inconsistency here. If you want to be a position trader, you may be looking at 2 or 3 trades a month, not per day. Unless your definition of "long-term" is a few hours. If so, I suggest you give this further consideration.

Yeah I realized this after you pointed this out. Since I was limiting myself to one instrument until I doubled my equity, I think I was getting bored and started looking at swing opportunities. Will go back to the longer-term trades until I gain enough experience and proficiency.

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


In Wyckoff World, there are no such things as 30m or 1-3m "timeframes". Price movement is continuous. Chopping it up into 1m or 30m or 5m or 17m intervals may serve some purpose, but those intervals exist solely in the minds of the trader and the software engineer; they have nothing to do with the market itself nor with how it moves. I'll grant that "everybody (appears) to do it this way", but this has been the case for only twenty years. In the pre-internet dark days, traders focused on daily, weekly, and monthly charts. If they used charts at all. Or they traded the ticker, which takes us back to intraday trading, which, as I said, is not recommended.

So this is kind of related I guess to my answer above, if we trade based on the daily chart, are we looking solely at that information or do we go into faster charts to see the nuances of how price is acting at the edges, to time our entries and exits better?

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


FWIW, retracements are easier to enter and manage than reversals, but this is covered at length in my book (the one you have). I suggest you focus on retracements that occur after reversals or wait for the test, which arguably is another form of retracement.

Understood.

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.


See above regarding "30m" charts.

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.


You'll find that back-testing and forward-testing is never really done. No matter how robust and solid your trading strategy and tactics, markets change, at least in the details. The past two years, for example, markets have moved according to the contents of Trump's tweets. This has required some modifications in strategy, all of which have to be tested.

Are we testing entries and exits, or the general theory of Wyckoff's work?

I'm assuming that since this had been tested and has worked for over 100 years, and the fundamental basis is the root cause of how markets operate, not some mathematical formula that is used to describe how price is moving NOW, that the reasons for testing are:

a) testing our understanding and our analysis of W's work
b) entry and exit timing
c) which trading opportunities are better for the specific kind of instrument, e.g. reversals, retracements, etc.
d) trader confidence in his choices

Is this accurate?

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.


If you're accustomed to P&F and you've had success with it, by all means use it. Consider, however, that in focusing on price movement Wyckoff relied on the dynamics of trader behavior and the auction market (see Section 7 in his course or my thread on Wyckoff's work).

Db

Is defining targets based on the upper edges of the trading ranges a valid method?

My stop losses are based on that, not on the P&F structure but on the current trading range boundaries.
 

dbphoenix

Legendary member
6,952 1,251
Hey DB

Thanks again for taking the time to comment.



Understood. So should we derive all information for trading the daily/weekly from those charts without going into the smaller time frames?




I live in the Philippines, I can't trade the US market and our own markets here are very thin with regards to trading volume. We're also not allowed to short the market, which limits us to waiting for long opportunities.

The other real reason is that I got into trading through cryptocurrency. After I did a "fundamental analysis" on bitcoin (my training is as a software engineer), I bought into it and proceeded to lose more than 60% of my equity. That's when I decided that it was probably a good idea to learn to read the charts before doing something like this.

After that I just got hooked.



Yeah I realized this after you pointed this out. Since I was limiting myself to one instrument until I doubled my equity, I think I was getting bored and started looking at swing opportunities. Will go back to the longer-term trades until I gain enough experience and proficiency.



So this is kind of related I guess to my answer above, if we trade based on the daily chart, are we looking solely at that information or do we go into faster charts to see the nuances of how price is acting at the edges, to time our entries and exits better?



Understood.



Are we testing entries and exits, or the general theory of Wyckoff's work?

I'm assuming that since this had been tested and has worked for over 100 years, and the fundamental basis is the root cause of how markets operate, not some mathematical formula that is used to describe how price is moving NOW, that the reasons for testing are:

a) testing our understanding and our analysis of W's work
b) entry and exit timing
c) which trading opportunities are better for the specific kind of instrument, e.g. reversals, retracements, etc.
d) trader confidence in his choices

Is this accurate?



Is defining targets based on the upper edges of the trading ranges a valid method?

My stop losses are based on that, not on the P&F structure but on the current trading range boundaries.

So should we derive all information for trading the daily/weekly from those charts without going into the smaller time frames?

Correct.

I live in the Philippines, I can't trade the US market and our own markets here are very thin with regards to trading volume. We're also not allowed to short the market, which limits us to waiting for long opportunities.

There are other markets besides the US. But I'm not familiar with what is available to those living in the Philippines. Nonetheless, you needn't trade anything at all in order to learn how to trade. Your focus should be study and practice. And this will take far longer than you anticipate, particularly if you have a great deal to unlearn. Only after you are able to achieve consistent success in paper trading should you begin trading with real money on an extremely limited basis. Wyckoff offers the same advice.

...if we trade based on the daily chart, are we looking solely at that information or do we go into faster charts to see the nuances of how price is acting at the edges, to time our entries and exits better?

A smaller interval is not "faster". It just reveals what may not be clearly visible in a larger interval. IOW, if you watch the "tick" on the right side of your hourly bar, you'll see every trade that you'd see on a tick chart, but it will not likely provide you with any useful information. Nor will the "faster" chart, given that price movement is continuous. If you're position trading in a longer timeframe, then timing is not as important as the likelihood that your trade will be successful, the location of your entry, your stop, your trade management. If you don't know where to enter or how much room to give the trade or how to manage the trade after entry, then a "faster" chart isn't going to be of much help. I should also remind you that a trade using the daily chart is based on information provided by the weekly chart.

Are we testing entries and exits, or the general theory of Wyckoff's work?

The criteria for entry and exit are drawn from W's work. So, both.

I'm assuming that since this had been tested and has worked for over 100 years, and the fundamental basis is the root cause of how markets operate, not some mathematical formula that is used to describe how price is moving NOW, that the reasons for testing are:

a) testing our understanding and our analysis of W's work
b) entry and exit timing
c) which trading opportunities are better for the specific kind of instrument, e.g. reversals, retracements, etc.
d) trader confidence in his choices

Is this accurate?


As far as it goes, yes. I suggest you study carefully "Developing A Plan" in the SLAB, pp. 21-34.

Is defining targets based on the upper edges of the trading ranges a valid method?

My stop losses are based on that, not on the P&F structure but on the current trading range boundaries.


Targets are fine but are less important than price's behavior. Price behavior will tell you when the move is getting tired, pausing, reversing, regardless of the predetermined target. Price behavior will also tell you when the target is irrelevant and price wants to begin a continuation. Therefore, the chief objective is to understand price behavior, not to come up with more accurate targets.

................................

Trading Wyckoff is difficult for anyone whose exposure to trading is limited to the last twenty years: indicators, candles, color-coding, etc. When these traders look at charts, they see bars, or, more often candles. They see indicators. They see lots of colors and shadings. They may see oscillosopic displays. But what they don't see is movement. When a Wyckoff trader looks at a chart, he sees movement, just as a musician when looking at a score hears music. As Wyckoff points out, "the tape is like a moving picture film", but nearly all traders are looking a slideshows. Those who are unable to make this transition are unlikely to find any more success with Wyckoff than they have with any other approach.

Db
 

moreina

Junior member
43 1
Ah that's true, I can easily pick a US market to paper trade in.

So we're at:

1. Paper trade daily chart
2. Trade only retracements

Is there anything else I should be doing? Do I keep on watching replays of price moving? I was doing this with on a 3 minute chart, I guess the time frame for this doesn't matter?
 
 
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