Part One - Grinding
Oh my god (in the voice of Janice from friends) ICT still going at it with the dam Robins which between you and me is like the most shady competition ever ever! oh no but Larry did 1100% or whatever that was.... lmao...oh my god!!! oh my god!!! oh my god!!! What does all this have to do with VSA? It doesn't! But I can tell you that if ICT would learn how to read the volume his win ratio on those OTEs would be sky rocketing so let us begin...
First let me tell you that I don;t really have a template or a script for this so hopefully it is not all over the place; I want to talk mainly about VSA and effort vs result and hopefully I will be able to demystify some of the mistery surrounding this type of tape reading, because after all is it tape reading. You are looking at a visual representation of the tape and what you use in your decision making process is the same information Wyckoff would have seen on his tape, namely open, close, high, low and volume traded. I know lame, huh? Wyckoff was a tape reader, period. He would have loved the tick chart I am sure, but he would have found a way to trade it just the same. And the reason is that he was looking for certain things to happen on the tape that would indicate to him who was in control of price, the smart money or the dumb money, and he would fade their moves accordingly. The reason this is important is because it helps you understand that ultimately you are looking at the same thing he was, namely price action on the volume traded. And that is all you need to do, find out who is in control of price at any given time and make your decisions accordingly.
The first thing we need to understand about VSA is that there are certain things that happen on the tape that are to be considered either bullish or bearish depending on the context in which they occur. A lot of people tend to over complicate things and try to find patterns and all sorts of things on the chart that are not really there, or that are not really relevant. The truth is that there are only a few things you need to look for in order to get a good understanding of what is happening on the tape.
The first thing is to look for is what is called "the test" or "the shakeout". This is when price tests a certain level and then shakes out the weak hands before continuing in the direction of the trend. This is a very important move because it shows you who is in control of price. If the test is followed by a strong move in the same direction, then it is most likely the smart money that is in control. However, if the test is followed by a move in the opposite direction, then it is most likely the dumb money that is in control.
The second thing you need to look for is what is called "the climax". This is when price makes a final push in the direction of the trend before reversing. This is also a very important move because it shows you who is in control of price. If the climax is followed by a strong move in the same direction, then it is most likely the smart money that is in control. However, if the climax is followed by a move in the opposite direction, then it is most likely the dumb money that is in control.
The third thing you need to look for is what is called "the buying climax". This is when price makes a final push up before reversing. This is a very important move because it shows you who is in control of price. If the buying climax is followed by a strong move in the same direction, then it is most likely the smart money that is in control. However, if the buying climax is followed by a move in the opposite direction, then it is most likely the dumb money that is in control.
The fourth thing you need to look for is what is called "the selling climax". This is when price makes a final push down before reversing. This is a very important move because it shows you who is in control of price. If the selling climax is followed by a strong move in the same direction, then it is most likely the smart money that is in control. However, if the selling climax is followed by as move in the opposite direction, then it is most likely the dumb money that is in control.
These are the four most important moves you need to look for in order to get a good understanding of what is happening on the tape. There are other moves you can look for, but these are the four most important ones.
Part Two - Brewing
Tape reading is the art of reading the order flow in the market. It is a skill that takes time to develop, but it is well worth the effort. The reason tape reading is so important is because it allows you to see who is in control of price at any given time. This is a very important piece of information because it allows you to make better decisions about your trades.
The first thing you need to understand about tape reading is that there is a difference between the effort you put into it and the results you get from it. The results you get from tape reading are directly proportional to the amount of effort you put into it. The more effort you put into it, the better the results you will get.
The second thing you need to understand about tape reading is that it is not an exact science. There is no one perfect way to read the tape. You will need to develop your own methods and techniques. The goal is to develop a system that works for you.
The third thing you need to understand about tape reading is that it is a skill that takes time to develop. You will not become a master tape reader overnight. It will take months, or even years, of practice before you become good at it.
The fourth point I want to make is that tape reading is that it is not for everyone. Some people are just not cut out for it. If you are not willing to put in the time and effort required to master the skill, then it is probably not for you.
The fifth and final thing you need to understand about tape reading is that it is not always accurate. There will be times when the market does not move the way you expect it to. This is just part of the business. You need to be prepared for it and accept it. Once you have a good understanding of these five things, you are ready to start learning how to read the tape. The first thing you need to do is to find a good source of information. There are many books and articles written on the subject. You can also find a lot of good information online. Once you have a good understanding of the basics, you are ready to start putting it into practice. The best way to do this is to find a good trading simulator. This will allow you to practice your skills without risking any real money. A trading simulator is a great way to get started, but it is not a substitute for real-world experience. You will need to put in the time and effort to master the skill.
Part Three - Enjoying the ycoffee.
Now that we have covered the basics of volume and volume spread analysis, it is time to put it into practice. The first thing we need to do is to find a good source of information. There are many books and articles written on the subject. You can also find a lot of good information online. Once you have a good understanding of the basics, you are ready to start putting it into practice. The best way to do this is to find a good trading simulator. This will allow you to practice your skills without risking any real money. A trading simulator is a great way to get started, but it is not a substitute for real-world experience. You will need to put in the time and effort to master the skill. Once you have mastered the skill, you can start to apply it to your real-world trading. The first thing you need to do is to find a good source of information. There are many books and articles written on the subject. You can also find a lot of good information online. Once you have a good understanding of the basics, you are ready to start putting it into practice. The best way to do this is to find a good trading simulator. This will allow you to practice your skills without risking any real money.
let me know on our discord how you liked this article ;)
Thursday, August 11, 2022
Saturday, July 9, 2022
A Coffee with Wyckoff
First Cup - Intro
*following dialog with the OpenAi gpt3 , davinci-002 model; bold itallics text is generated by gpt3
Hello, I have a problem I was hoping you can help me with. I would like to have a conversation with Richard Wyckoff but as we both know he is dead. I heard you are very familiar with his works so I was wondering if you could do me a favor and pretend to be Wyckoff and have a conversation with me.
There is no reason why I cannot have a conversation as Richard Wyckoff. He was a great thinker and had a lot of interesting things to say. I am familiar with his works, and I think it would be a great idea to chat with him.
Will you pretend to be him ?
Yes, I can pretend to be Richard Wyckoff for you.
Ok. Great! Let us begin. First, let me tell you, you my friend, are very famous nowadays which is 100 years later for you. 2022.What a pleasure to be able to sit down and have a conversation with you. What do you think about this, that 100 later your work is being studied by so many and it is seen as fundamental to technical analysis?
It is quite gratifying, to know that my work is still being studied and used 100 years after I first published it. It is a testament to the lasting value of my ideas and methods. I am happy to know that my work is still helping people to better understand the markets and to make money.
That is wonderful. I would like to start our conversation by talking about a concept rather you put forward, the composite man and the nature of the composite man or composite operator. Maybe talk a little about how you arrived at this concept and what it actually is in your own words.
The composite man is a concept that I arrived at after years of studying the markets and observing the behavior of successful traders. I noticed that the most successful traders all seemed to share certain qualities and characteristics. I compiled a list of these qualities and created what I called the composite man.
Which famous traders have you studied and interviewed? I heard about JP Morgan. Who were some of the other ones?
Some of the other successful traders that I studied and interviewed included Jesse Livermore, Bernard Baruch, and James D. Logan. These were all men who had made a great deal of money in the markets, and who had a deep understanding of market behavior.
Is it safe to say that these gentlemen when operating in the market place were part of the composite operator or they were the composite operator themselves?
Yes, I believe that is safe to say. The composite operator is a trader who possesses all of the qualities and characteristics of the composite man. These traders are few and far between, but they are the ones who consistently make money in the markets.
Which are some of those qualities that in your view a successful trader should possess or cultivate?
Some of the qualities that a successful trader should cultivate include patience, discipline, an understanding of market behavior, and a willingness to take risks. I believe that it is necessary to have all of these qualities to be a successful operator. However, I also believe that it is possible to learn and develop these qualities over time.
I want to talk more about the 3 Wyckoff laws but first before we go there I want to ask you about Mr. Livermore. How was he during his interviews and how was he as a man. If you please in a few sentences. please.
Jesse Livermore was a man who was very passionate about the markets. He was always eager to share his ideas and insights with me. He was a great thinker and had a deep understanding of market behavior. I believe that he was a great trader and a great man.
Thank you for that. and now if you please, can talk more about the 3 Wyckoff laws ?
The three laws are: 1) the law of supply and demand; 2) the law of cause and effect, and 3) the law of effort and reward. These laws are based on my observations of market behavior and my understanding of how the markets work. I believe that these laws are the key to success in the markets.
Effort versus Result to me seems fundamental and has become the foundation of my trading, I love it so much.
I believe that the law of effort and reward is one of the most important laws in trading. I believe that this law is the key to success in the markets. This law states that the amount of effort that a trader puts into their trading should be proportional to the results that they achieve. I believe that this law is the key to success in the markets. Discipline is also another key concept for success not only in trading but in life in general.
How do you develop discipline?
I believe that discipline is something that can be learned and developed over time. I believe that it is important to have a clear and defined trading plan and to stick to that plan. I believe that it is also important to keep a trading journal and to review your trades on a regular basis. I believe that these things will help you to develop discipline over time.
Thank you for all your teachings. Before we finish this first dialog, because I really hope to have more in the future, I want to tell you that I will post this in my trading group and people can't wait to see it. What would your advice be to a young trader or somebody who is just starting or at the beginning of the road?
My advice to a young trader would be to study the markets and to learn as much as possible about market behavior. I believe that it is possible to learn and develop the qualities of a successful trader over time. I also believe that it is important to have patience and to be willing to take risks. I believe that patience also is one of the most important qualities for a successful trader. I believe that it is important to wait for the right opportunity to enter the market, and to be patient when waiting for the market to move in your favor. I believe that patience is the key to success in the markets.
Great. Thank you so much for your time. It has been a pleasure chatting with you.
It has been my pleasure as well. Thank you for your time.
Saturday, June 25, 2022
Better know a Wyckoff event - ChoCh
It is a break of structure, no; It's an internal break of structure, it's the inside bar that produced the break of structure, oh I got it: it is a rally that occurs on a full moon... Hopefully, in this little article, I will be able to demystify this event for you and bring some clarity. The Change of Character or ChoCh refers to the trading environment and this event marks the transition from one environment to another. I found this picture on the internet shared by Wyckoff Analytics which is a perfect example and also this is a great opportunity, for me to mention these guys because I can't recommend them enough if Wyckoff is what interests you. Also, I bet you did not know that the Wyckoff article from schoolstockcharts was put together by Roman & Bruce from Wyckoff Analytics and some charts were edited by Hank.; just saying...
* this cycle is another one of these things too simple that we overlook but this cycle occurs on all time frames from the daily candle to the 1 min and lower.
As we can see from the first image in each schematic we have 2 Changes of Character; there will always be one in Phase A when we experience the stopping of the trend and we enter a non-trending environment and the second one after Phase C where we enter a trending environment once again and we can see the new trend emerging. The first ChoCh is represented by the rally/reaction from SC to AR or BC to AR and it will be the most significant rally/reaction against the trend. We confirm this and the stopping action with the next event, the secondary test which may come as an HL or LL test but it confirms the stopping action. The price might or might not deliver multiple PS/PSY points before the real Change of Character occurs; The Choch can also retrace 100% back to the PS/PSY or even more.
As we can see above, all these rallies from Sc to Ar represent a ChoCh regardless of how much it retraced or how many PS points we have; even in the last scenario where the PS is missing completely we can observe a clear ChoCh; we have a rally which is the most significant rally and the secondary test confirms the stopping of the trend and concludes Phase A. While the bulk of the volume will be found around the PS and SC the rally itself in general should be done with an increase in volume and spread.
I want you to think about how can you implement this in your trading and think about how useful would be to know when you enter a TR or you are about to get out of one. In other words, the first ChoCh will deliver the stopping action and set the range of your schematic and the second ChoCh serves as a timing tool for our entries where we can note that absorption has occurred and now we can see once again a new trend emerging. A very simple and yet very powerful concept. The PS/PSY ( preliminary support, and supply) are previous attempts to stop the trend which always fail.
The second ChoCh is characterized by an increase in spread increase result and demand emerging; we should start seeing an increase in volume in rallies which produce internal breaks of structure which will deliver HH and HL with a diminishing volume signature. It will be the most significant rally since the stopping action has occurred in Phase A .
keynotes :
* ChoCh is the transition from one environment to another and back ( trending->consolidation- >trending )
I want you to think about how can you implement this in your trading and think about how useful would be to know when you enter a TR or you are about to get out of one. In other words, the first ChoCh will deliver the stopping action and set the range of your schematic and the second ChoCh serves as a timing tool for our entries where we can note that absorption has occurred and now we can see once again a new trend emerging. A very simple and yet very powerful concept. The PS/PSY ( preliminary support, and supply) are previous attempts to stop the trend which always fail.
The second ChoCh is characterized by an increase in spread increase result and demand emerging; we should start seeing an increase in volume in rallies which produce internal breaks of structure which will deliver HH and HL with a diminishing volume signature. It will be the most significant rally since the stopping action has occurred in Phase A .
keynotes :
* ChoCh is the transition from one environment to another and back ( trending->consolidation- >trending )
* ChoCh is represented on our chart by the rally from SC to AR or from BC to AR.
* the secondary test confirms the change of character and the stopping action and concludes phase A.
* Phase A always STOPS the trend.
I feel we covered the whole Phase A with this second article since we also talked about the AR and ST and the whole phase. The Automatic Response ( AR), Rally for an accumulation and Reaction when we talk about distribution, occurs after the BC or SC and will set the maximum or minimum of the schematic. As an exercise one can go into the charts and find as many phase A as possible and study each one of them by observing the relationship between these events and volume. If you have any questions, that's what the comments are for; you can also join our Discord. (link in sidebar).
* the secondary test confirms the change of character and the stopping action and concludes phase A.
* Phase A always STOPS the trend.
I feel we covered the whole Phase A with this second article since we also talked about the AR and ST and the whole phase. The Automatic Response ( AR), Rally for an accumulation and Reaction when we talk about distribution, occurs after the BC or SC and will set the maximum or minimum of the schematic. As an exercise one can go into the charts and find as many phase A as possible and study each one of them by observing the relationship between these events and volume. If you have any questions, that's what the comments are for; you can also join our Discord. (link in sidebar).
I think that's all for now, I'm me - you're you, see you around!
Arigato!
Arigato!
Wednesday, June 22, 2022
VSA *case study* NAS100
We were looking in our group after that rally entered the green trading range at the fact that on this rally demand is exhausted and the whole move including the internal BOS ( break of structure) was done with diminishing demand signature. The Bias from there was a lower low and was confirmed by the supply showing up and increasing at the end of the trading range confirming the distribution at the top of the rally. Right now we are targeting the monthly vwap, the drop in supply, and LTF structure suggest accumulation for now.
Better know a Wyckoff event - BC/SC
Buying Climax
A simple definition for the buying climax would be a climactic action that stops the previous uptrend. All previous attempts to stop the trend have failed ( psy -preliminary supply ) and the market delivered higher prices. This one is a stopping action and we can confirm this when it produces a ChoCh a Change of Character, an AR (automatic reaction), and ST (secondary tests) which concludes phase A. I will say this a lot so please get used to it :
A simple definition for the buying climax would be a climactic action that stops the previous uptrend. All previous attempts to stop the trend have failed ( psy -preliminary supply ) and the market delivered higher prices. This one is a stopping action and we can confirm this when it produces a ChoCh a Change of Character, an AR (automatic reaction), and ST (secondary tests) which concludes phase A. I will say this a lot so please get used to it :
The goal of phase A is to STOP the trend.
Phase A always stops the trend!
Phase A always stops the trend!
Please note that no matter what type of schematic we are looking at be it accumulation, re-accumulation, distribution, or redistribution phase A it is always the same. Starts with a stopping Action aka Buying Climax or Selling Climax. Followed by the Automatic Reaction ( or Response) and a Secondary Test which confirms the stopping action.
The weak hands become so excited and create such an opportunity and value for the CM/CO , in other words, a proposition "He" can't refuse, that "He" must act and "He" must act now, therefore the automatic response. The market will deliver lower prices looking for buyers and higher prices looking for sellers. In a true Zen fashion, I should just come, make that statement, snap my hand fan or clap, with one hand mind you, and then leave. But I feel since you are here you are looking for something more than that. But in the same Zen fashion, I would like to remember you of another saying. They say that when you don't know Zen, clouds are just clouds and mountains are mountains; when you start to learn zen and you start to realize certain things clouds are not just clouds anymore and mountains are not mountains, but in the end when you truly understand Zen clouds are clouds again and mountains are mountains :)
Indeed it does not need to be complicated. Hey, some of us enjoy the journey, right? Not all that wander are lost ,I get it... ;)
Back to Wyckoff schematics, they can take any shape or form. Many textbook schematics are unfolding every day in the marketplace but many will look very different than your textbook type 1 or type 2 schematic. I think the most important thing is understanding the events and the anatomy of the trading range (hint hint - Jim Forte - see the library in the group) rather than memorizing schematics or in other words a pattern. Wyckoff is not a pattern although most patterns are a Wyckoff schematic. If you can do that you will never have to memorize a schematic in your life. "If"... of course, you can, the question is will you do it?
To summarize, the BC is a climatic run into a wall, always a stopping action that stops the previous move. This stopping action is confirmed by the following events namely, AR and ST, and will be done with decreasing volume signature. The psy and bc in most cases will have the highest volume but should be noted that a trend doesn't necessarily have to end with a climax. An uptrend could end with a SOT (shortening of the thrust), where instead of a climax we can see exhausting of the demand, decreased spread and volume, and less progress on each rally until the supply emerges producing a change of character. More about volume analysis at a later date but as an exercise one could go and look in the charts for these types of climactic actions that resulted in a trading range. any time frame, any asset. Here are a few examples :
The weak hands become so excited and create such an opportunity and value for the CM/CO , in other words, a proposition "He" can't refuse, that "He" must act and "He" must act now, therefore the automatic response. The market will deliver lower prices looking for buyers and higher prices looking for sellers. In a true Zen fashion, I should just come, make that statement, snap my hand fan or clap, with one hand mind you, and then leave. But I feel since you are here you are looking for something more than that. But in the same Zen fashion, I would like to remember you of another saying. They say that when you don't know Zen, clouds are just clouds and mountains are mountains; when you start to learn zen and you start to realize certain things clouds are not just clouds anymore and mountains are not mountains, but in the end when you truly understand Zen clouds are clouds again and mountains are mountains :)
Indeed it does not need to be complicated. Hey, some of us enjoy the journey, right? Not all that wander are lost ,I get it... ;)
Back to Wyckoff schematics, they can take any shape or form. Many textbook schematics are unfolding every day in the marketplace but many will look very different than your textbook type 1 or type 2 schematic. I think the most important thing is understanding the events and the anatomy of the trading range (hint hint - Jim Forte - see the library in the group) rather than memorizing schematics or in other words a pattern. Wyckoff is not a pattern although most patterns are a Wyckoff schematic. If you can do that you will never have to memorize a schematic in your life. "If"... of course, you can, the question is will you do it?
To summarize, the BC is a climatic run into a wall, always a stopping action that stops the previous move. This stopping action is confirmed by the following events namely, AR and ST, and will be done with decreasing volume signature. The psy and bc in most cases will have the highest volume but should be noted that a trend doesn't necessarily have to end with a climax. An uptrend could end with a SOT (shortening of the thrust), where instead of a climax we can see exhausting of the demand, decreased spread and volume, and less progress on each rally until the supply emerges producing a change of character. More about volume analysis at a later date but as an exercise one could go and look in the charts for these types of climactic actions that resulted in a trading range. any time frame, any asset. Here are a few examples :
Naturally, the opposite is true for the SC (Selling Climax)
We can also note the unusually high volume at the end of the run; a stopping action will always have that x2-x3 or more volume compared to the previous local average volume. that type of candle with that type of signature will always result in a stopping action if not reversal. We'll talk a lot more volume later.
I think this is a good start for now; I think next We'll talk about the ChoCh which is part of phase A and continue with AR and ST. Would really like to know if you have something to add about the Buying Climax or Something that you look for, let me know in the comments.
I'm me, you're you, see you around.
I think this is a good start for now; I think next We'll talk about the ChoCh which is part of phase A and continue with AR and ST. Would really like to know if you have something to add about the Buying Climax or Something that you look for, let me know in the comments.
I'm me, you're you, see you around.
Monday, June 20, 2022
Nothing that needs to be said
I have nothing to sell you.
I have nothing to teach you.
….trading and investing is like any other pursuit—the longer you stay at it the more technique you acquire, and anybody who thinks he knows of a shortcut that will not involve “sweat of the brow” is sadly mistaken” - Richard Wyckoff
had to make this post as well in case one was wondering...
be like the Tao which does nothing yet leaves nothing undone. :)
Ultimately is not that complicated; if everything you did so far was wrong the opposite must be right!
A Wyckoff journey or something...
It was the best of times, it was the worst of times...
Bitcoin was hitting 600$ and I was just discovering crypto and trading; soon after the BTC run to 20K I was the greatest trader ever to walk on the face of the earth; at that time I was thinking it was all skill although what really got me into trading was this YouTuber I found, trading Ichimoku. Come to find he was Josh Olszewicz and at that time he was writing for Bitcoin Magazine, I think he still does, actually. Not that I know the guy or anything but I really enjoyed at the time his Ichimoku weekly analysis and educational videos. Ichimoku was my first love and this indicator still holds a special place in my heart.
I know, I know not a word about wyckoff... well I really love wyckoff and we will talk about it a lot,,,
I truly hate these opening posts, so: I am me, you're you - welcome and see you around!
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