Wyckoff is one of those legendary trader in the past, also TA fathers with Dow, Gann, and Elliott. For those who ignores what's behind TA this is an example extracted from Futures magazines: "Wyckoff postulated the 'composite operator' theory, which stated that large pools work to manipulate the price of stocks, leaving definite footprints behind on the chart in patterns of accumulation and distribution. Wyckoff also believed in the theory of 'cause and effect' whereby the market would build up of supply or demand within a trading range." https://www.lbrgroup.com/index.asp?page=MagazineArchive_Futures_patter Gee I'm not alone with my manipulation theory
there is no "manipulation" in the composite operator. This is a way to read the whole market as a professional trader. If you are looking for manipulation approaches, look for Richard Ney books, not Wyckoff.
its the big players that move the market, whether its a conspiracy or not is beside the point. TA is a way to see where the supply and demand is in the market, which is essentially watching what the big players are doing.
I don't have to read I have my own equations to prove it if I wanted to whereas Traditional Analyst can't because it is purely qualitative based. I didn't read TA book to know that Pool manipulated the stock market, I have read an excellent book on 1929 from THOMAS Gordon & MORGAN WITTS which relates not through ideas but through people who lived at that period how these giant pools operated for Rockfeller and JP Morgan to cite just a few names . For example how RCA from 5$ reached 500$ doesn't this remind you something . Really the best book ever for me. I don't practice traditional TA it's not rationally based and too fuzzy. I prefer my model which says for example today rally on Dow at 7774 <IMG SRC=http://www.elitetrader.com/vb/attachment.php?s=&postid=209626>
Officially TA is not recognised because it implies that the market is biased and this is against efficiency of the market. A huge amounts of official research papers are just writtent to affirm that TA cannot be it's fascinating to see their effort to deny this and make the public believe in efficiency ! In fact it is understandable you just don't see the enormous impact that non inefficiency would imply politically, juridically, morally, etc. in fact that would just destroy the justification of market but I won't enter the debate since I think it's just over your head to foresee the consequences of inefficiency official recognition so I won't bother you moreover with that
I have an internet post I made in 1999 which contains an extract from the book about RCA manipulation pool example see http://www.elitetrader.com/vb/showthread.php?s=&threadid=14404 It can be that in 1929 Manipulation pool was considered as "current" practice whereas today it must be hidden because the public is more educated and would not tolerate that.
harry, I must say that the term technical analysis is very vague. Personally I wouldn't put wyckoff analysis at the same level because you have something based in principles not patterns (and this is one reason why TA is so popular, because most of us have been taught to learn by patterns, something that you call explicit learning in psychology). There are lots of differences between trading a "head and shoulders" pattern or trading a "effort without result" principle. And I did not said that there is no manipulation. Manipulation is the exception not the rule. I have 5 yrs experience in institutional brokerage in a less liquid european market, where is easy to "play" with the market. But we never fight the trend because the market always dictates the rules...If you are an old fashioned tape reader, you dont' need what you call TA for nothing... Just a couple of principles, the right stock and the right frequency data.
>I must say that the term technical analysis is very vague. >Personally I wouldn't put wyckoff analysis at the same level >because you have something based in principles not patterns I have something based in principles which are the same principles as Wyckoff, Dow etc.. that is to say the market movement is due to some initiates group that has big money to control the market and not by the other participant of the markets. The difference between Dow, Wickoff, others who would claim the same thing ... and me is that they just have a qualitative theory and so they cannot prove what they say whereas I have a set of mathematical equations that is to say a true model in physical sens of term a "causal" model, a white box model that doesn't try to fit market datas but depart from causes and see what the consequences are. And the consequences are that market are constrained by some paths imposed by this group and not by the other participants. So the so called "free" market is really a farce for me: it is as free as prisoner number 6 in a famous fiction film You belong to the other participants. The story of 1929 is just an example not a demonstration. But it is significant and since human nature doesn't change and since those who has the money power at that time doesn't change either and has even accumulated even more money power and even more sophitiscated tools, why should it be different today ? It is not because you didn't participate in manipulation, if manipulation there is, that you can affirm that it is rather the exception than the rule. I won't publish my equations since I did create them to make money and not to make public demonstration of manipulation, so I won't formely prove it more than Whickoff or Dow, but I say in the past manipulation pool was even known publicly and today there is no reason they disappeared because it is BIG MONEY INTEREST. I only believe in interest, moral cannot be sustainable in front of interest. All academic research based on agent theories will just be able to conclude to crash behavior of market but will never reach the cause because their premisces are false and as such they will encounter the kind of Heisenberg Uncertainty Principle and they will affirm yes the market is not predictable and is driven by crazy and irrational people. As I have already said even Heisenberg incertitude is not a sure thing and could be just an artificial barrier physicians have constructed because they couldn't find the language to express nature more precisely: "The theorems of Goedel, Turing, and Chaitin are limitations on our ability to know in the world of mathematics. The same limitation applies to statements such as the celebrated Heisenberg Uncertainty Principle in quantum theory, which at first glance appears to refer to an inherent limitation on our ability to measure certain quantities in the physical world. But a more careful examination shows that Heisenberg uncertainty is actually a limitation imposed by certain mathematical formulations of quantum theory, and may or may not be an intrinsic limitation in the structure of the real world itself." in "Would be worlds" http://www.amazon.com/exec/obidos/search-handle-form/102-2286954-1255355 John L. Casti member of the Faculty of the Santa Fe Institute