The Wit and Wisdom of Richard Wyckoff

[dbphoenix]

Figuratively speaking, the small trader should imagine himself as a hitch-hiker in the market. For the ordinary hitch-hiker, someone else supplies the car, chauffeur, oil and gas. When he thinks the car is about to go in his direction, he jumps aboard and rides as far as he thinks the car will go. When he notices the machine has been stopped by a red light, or is about to turn a corner and go in some other direction, or that the car is running out of gas, or the brakes failing to work properly, he steps off and figures he has secured about as long a ride as he may expect. All he has supplied in this transaction is a modest commission and whatever brains were necessary to observe and recognize the opportunity when to get on and off.

RW

See also The Wit and Wisdom of Justin Mamis

 

[dbphoenix]

The experience of the past few years has emphasized the value of disregarding all considerations except those which relate to price movement, volume and time. If one is endeavoring to realize profits from the principal swings in prices of stocks, it is my opinion that he should disregard fundamental as well as corporate statistics relating to the stocks in which he is trading, stick closely to a study of the action of the market and become deaf and blind to everything else.

RW

 

[dbphoenix]

You must always be on the lookout for a change in the immediate trend. It is likely to change its direction from one to three times in a single session. This is how you detect the change: In an up trend, when the selling waves begin to increase in time and distances 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. Watch closely for these changes for they tell you when to buy and sell; when to get long or short; when to close your present trade and reverse your position.

RW

 

[daytradingUK]

dbphoenix I know you are probably a lot more experienced than me (only been trading a few years) but do you use any indicators for your trend analysis such as Aroon or ADX or just simply watching support and resistance / trend plots?

 

[dbphoenix]

At one time or another, I've played with just about everything, but none of it ever tested out. But one benefit of my experimentation was that it prompted me to read the original works on MACD, stochastics, etc, in order to find out how they were calculated and why they were calculated that way. That enhanced my ability to interpret price movement. Plus it enabled me to "see" the indicator without plotting it.

The end result is the same as being taken by the hand and building a car from raw materials to finished product as opposed to being presented with the finished product as is.

I do use the TICKQ in order to see what's happening with advancing and declining issues, but the TICKQ is not an indicator (as distinct from something like TRIN).

 

[daytradingUK]

Thanks for the response I was just curious, I am still using a mix of price action with some TA - such as Bolly band pinches, etc... I try and use candles although my understanding of price action is probably still developing

 

[dbphoenix]

Thanks for the response I was just curious, I am still using a mix of price action with some TA - such as Bolly band pinches, etc... I try and use candles although my understanding of price action is probably still developing

I also went through bands, envelopes, channels, but they never told me anything that price didn't. In fact, they can often persuade one into doing the opposite of what he ought to be doing.

 

[peto]

This Wyckoff chap seems to have some good quotes, thanks. Of the 4 titles at Amazon do you rec any particular one?

 

[dbphoenix]

This Wyckoff chap seems to have some good quotes, thanks. Of the 4 titles at Amazon do you rec any particular one?

As far as I know, the pdf below is a giveaway. You may also want to look at Charting the Stock Market: the Wyckoff Method by Hutson, though it's easy to get tangled up in details and lose sight of basic principles.

Another recommended book is Tape Reading and Market Tactics by Humphrey Neill.

But none of these books are going to put a bib on the newcomer and cut his meat for him. Their business is to explain the nuts and bolts so that the trader understands rather than mimics.

 

[rols]

I also went through bands, envelopes, channels, but they never told me anything that price didn't. In fact, they can often persuade one into doing the opposite of what he ought to be doing.

This is absolutely true and what you say about learning all the TA stuff before discarding it(old Ludwig's ladder again) is also true. But it's all bloody hard work and if anybody wants an easy life then I suggest they stay away from financial trading!

 

[Charlton]

Wyckoff reading material

This Wyckoff chap seems to have some good quotes, thanks. Of the 4 titles at Amazon do you rec any particular one?

Peto

Besides the information that Db provided, if you are interested in further free stuff, there is a Wyckoff Yahoo group
http://finance.groups.yahoo.com/group/Wyckoff-SMI/

This is run by the Stock Market Institute. There is a files section with downloadable material. They also still run the original Wyckoff course - comprehensive but expensive

Charlton

 

[dbphoenix]

Peto

Besides the information that Db provided, if you are interested in further free stuff, there is a Wyckoff Yahoo group
http://finance.groups.yahoo.com/group/Wyckoff-SMI/

This is run by the Stock Market Institute. There is a files section with downloadable material. They also still run the original Wyckoff course - comprehensive but expensive

Charlton

Unfortunately, the abovementioned material is not so much Wyckoff as SMI's (and others') interpretations of Wyckoff, which is not the same thing.

As I said, it's easy to get lost in details and lose sight of the principles. For that, I'd stick to Wyckoff himself.

 

[peto]

dbp and Charlton - many thanks esp for the freebies

My highly tuned and secret systems for losing money require that I keep a tight rein on expenditure.

 

[dbphoenix]

No one but a floor trader should always be in the market. Those who trade from the tape in an office should assume a neutral position frequently. They should not delude themselves that they can anticipate everything that happens in their favorite stocks. They should take vacations from the tape varying from a walk around the block to a trip into the country for a week or two.

A neutral position clarifies the mind.

Trading should never become a habit (like smoking cigarettes) so that you've simply got to satisfy that craving to jump in and out. Such a practice warps the judgment; eagerness to trade supplants deliberation.

RW

 

[ammo]

Thanks for the response I was just curious, I am still using a mix of price action with some TA - such as Bolly band pinches, etc... I try and use candles although my understanding of price action is probably still developing

there is a lot of useful info on candles,charts,etc... at maclean report free

 

[SOCRATES]

Wit and Wisdom...very apt.

Wit because of the way he says things which are entertaining and Wisdom because of what he leaves unsaid.

Nearly everyone looks over the first and overlooks the second.

 

[dbphoenix]

The action of the whole market tells you when the selling is better than the buying and vice versa. You do not care why insiders are buying or selling, but you should care a lot about the action of their stock on the tape, for that is what tells you the truth.

RW

 

[ammo]

Wit and Wisdom...very apt.

Wit because of the way he says things which are entertaining and Wisdom because of what he leaves unsaid.

Nearly everyone looks over the first and overlooks the second.

Don't be so humble,you're not that great. Golda Meir 1898-1978

 

[dbphoenix]

How are we to know in advance why and to what extent someone else is prompted to buy or sell? We cannot know; it is impossible for us to foretell what actuates all of those whose orders are poured into the vast intake of the Stock Exchange machinery during the day's session.

But if we study the action of prices; the responses; the speed of the ticker, indicating urgency or the contrary; the intensity of the buying or selling, as indicated by the volumes; and the intervals when the volume is heavy or light -- all these in relation to each other -- then we gain insight or the design and the purposes of those who are dominant in the market situation for the time being.

All the varying phases of stock market technique may thus be studied and interpreted from the buying and selling waves as they appear on the tape. From these we form a conclusion as to the balance of the probabilities. On this we base our commitments.

RW

 

[ljyoung]

In my wanderings through the netherworld of cyberspace, I chanced upon this Wyckoffian nugget - an advertisement for one of his proprietary products, "The Trend Barometer". Although the piece does not give the precise methodology for his calculations, there is enough information to provide the reader with some insight into the valuable insights this master of the market has left us. Enjoy.

ljey