Yes, I also find it bizarre how it seems like everybody focuses on the intra-day. Also, the daily seems a much better choice to illustrate the principles of the SLA, since it can be updated a leisurely pace and trades can be posted in foresight. I posted this on Gringos thread yesterday but I´ll add it here. 1- Identify the range 2- Wait for price to reach the extremes 3- Trade what you see; - Reversal/Breakout DB, I do not know if there are others but personally I´d appreciate you sharing your views on the daily/hourly, and as I said, I believe this would illustrate the principles more effectively.
I don't know that "views" come in to it, at least now that the pdf is written. It's so obvious, it seems like a "duh". You have your lower high there. There's really nothing to discuss. Unless one is afraid to take it. Which is the chief problem across all methods and approaches and trading instruments. Fear. Doesn't matter if one has the best trading plan in the universe if one is afraid to take the trades. But as far as entry in the larger intervals, the procedure is the same as for the smaller. In this case, find the op in the daily and enter on the hourly, just as one might find an op with the 5m and enter on the 1m. Same thing. And on Friday, it didn't even take more time. As for the next op, assuming this one doesn't get stopped out, that won't come up until we approach the median of the channel, which could be tomorrow or the next day or much longer if we head back up to the upper limit again. But at least one needn't be sitting in front of his computer all day. OTOH, if someone is looking at something other than index futures, that could be interesting.
The glamor and the drama are in intraday. What I find interesting is that so few people are actually doing it. They check their computers during coffee breaks or between classes but that's not what I call daytrading. Friday, for example, practically everyone had left by the time the big trade came along. But now that my participation is minimal, it doesn't bother me so much. I do wonder, though, why people focus so intently on intervals and timeframes they can't possibly trade profitably. Automation, maybe, though one still has to characterize his market and come up with a trading plan in order to have something to code and automate. The chief advantage here is that no one bothers you in your threads, which makes them far easier to navigate and read.
Even though I wrote this back in '09, and even though it's not directly related to the SLA, I'm posting it here partly for insurance (it's posted at TL) and partly because it's related to work that gears and boru are involved in and I don't want to post it to their journals. The subject is continuity of price, which of course is important to the SLA, but continuity of price is as far as this goes. ----------------------------------- Quote: I’ve been following your advice and putting in screen time with my replays but after reading Wyckoff and then moving into real market action, I was very surprised as to how bad my analysis skills are. The books I have read make the market seem so readable (trend followed by consolidation and repeat) but real market action is just a chaotic mess and I have difficulty in deciphering price action!For example the attached shows my confusion and the result is that I have neither a long or short bias – I just don’t know what to think! So my question is, can you recommend any stages/steps that I can use to decipher price action in a logical way, or is simply a matter of putting in the screen time? Many thanks Given the lines you've drawn in an attempt to trace the "wave" movements and your comments regarding strength and weakness, you appear to be trying to apply the lessons taught in the first three stickies, and good for you: (1) assessing the continuing imbalances between supply and demand (or between buying and selling pressure, buying and selling power, buying and selling interest: whatever term you choose is immaterial), (2) judging the market by its own action (that is, its behavior, which is to say the behavior of those who are moving the price), (3) using the inherent wave structure to help you determine that strength and weakness. To begin at the beginning, then, and focus only on these three essential components of the Wyckoff Way, I suggest you get rid of all the clutter: the colors, the candles, even the bars, and look at the waveform itself. I've converted the time axis to New York time to put everybody on the same page. The particular line plotted in this chart is an average of the high to low in what had been each individual vertical bar. Therefore, the highs and lows of each individual bar are filtered out. One could show all those highs and lows by using a tick chart (that is, 1 tick) and avoiding the use of bars entirely, but that would mean a hell of a lot of charts, most of which would look like flies buzzing over poop rather than transactions to those who aren't used to following tick charts. But the point here is to illustrate an idea, not to provide a schematic. The "continuity of price" can be difficult -- sometimes overwhelmingly difficult -- for anyone who's learned to read charts via bars or candles, much less with indicators attached. But it is perhaps the most important element in applying the Wyckoff approach. This may be more easily understood if one remembers that all of Wyckoff is based on tape reading, that is, the continuous, uninterrupted flow of price movement. The vertical bar chart is used only to summarize each day's activity, and one must never forget that each individual bar represents many waves of buying and selling, each wave comprised of hundreds or thousands or hundreds of thousands of transactions. To attach any particular meaning to any particular bar, then, is misdirected unless one has clearly in mind all that was done during the trading day to create the bar in the first place. Backing away from bars, then, and looking at the underlying sentiment which propels the formation of the bars, I hope you can more easily see the durations and extents and angles (or "strides") of the waves. If you were to try plotting them again, you may wind up with something like this: Perhaps you can more easily see now that each buying (or up) wave is longer than each preceding selling (or down) wave. This tells you who's got the ball. But note also that the durations of each wave are getting shorter and the strides are becoming more vertical. These aspects tell you that, while bulls are still in charge, you are rapidly approaching a level of buying exhaustion. Not parabolic perhaps, but at least a level where demand and supply will come into balance and price will move sideways for a bit before a reversal or continuation. Just looking at this will not provide a revelation, but a line is a handy tool to get one back in synch with the underlying wave movement if he finds himself getting too entangled with the trees that bars can represent and the alleged "meaning" that they have. Once one feels that he grasps the idea behind the continuous line and the continuous waves, he can always put the bars back: He can also put back the candles and the colors, but it's unlikely that he'll want to since they turn the focus back to the bar and away from the continuous wave underneath. The bar alone will likely be sufficient to tell him not only what's going on with the underlying waves but also, through the highs and lows of the bars, tell him how far buyers and sellers are pushing up and down before pulling back into the wave. Now about the volume, which you don't address, but which you've plotted, and which can provide some additional and useful information to you. You've begun with the overnight, and volume is of course not what it will be when reports start coming in or the market "opens". And in real time, or in replay, you will see a very different volume pattern than you will if you log on shortly before the open and review what's been going on before you woke up. Note here, for example, what the volume looks like before the reports start rolling in: Keep in mind that volume represents transactions and that linking a particular volume "bar" with a particular price "bar" works counter to an effort to stay in synch with what's going on with the continuous movement of price. Therefore, rather than focus on the length of any particular volume bar, much less attempt to determine how much of it is "buying" and how much of it is "selling", think of it only as an increase in trading activity and focus on how that increase affects price movement. Here, for example, there are several instances of noticeable increases in trading activity. Noting what happens to price in each of these instances will tell you all you need to know about who's got the ball. The other thing to be wary of with regard to volume is to get too far ahead of yourself when reviewing the market prior to the time you revved up your charting program and logged in. Here, for example, the volume on the 08:30 report is so high that it dwarfs everything that came before, giving the impression that nothing important was going on prior to 08:30. But this was not the case (as seen in the preceding chart). And when the market opens for the regular trading day, even the significance of the volumes prior to 09:30 can be missed: And back to that portion of the day which you originally charted: And the "wave" for it: And even though you are not yet looking at support and resistance, or at least you didn't in your chart, it will help as soon as you're ready to incorporate that aspect into your analysis so that you have a better idea of why price does what it does where it does it. Here, for example, note the dip that price made overnight after having consolidated for several hours and where price found support after the open: That alone, of course, is not enough. But when combined with a wave plot and an assessment of what the "volume bars" are telling you about trading activity, you will be better able to take advantage of the trading opportunity in real time, not the least of which reason will be that you'll know where to expect it, if and when it presents itself. And, yes, it also takes a lot of screen time.
All I see here is rudimentary trendline analysis with the non-functional, non-applicable, useless volume statistics showing. There are some flaws in the drawing and representation of the trendlines and also not enough attention being paid to stop placement and prudent money management. Not certain how this changes the game.
That's because there is no import to volumes at that time of day or any other time for that matter. Volume is a statistic that is so subjective in nature that it is to considered "too much information" and as such, useless. Beginners think that volume should be part of the picture simply because they think it's exciting and will move price. Price can move either direction the same amount irrespective of whether volume is high or low. --Discard volume analysis.
Hello, I've been reading the .pdf associated with the SLA method but I don't understand something that is very basic. Could someone please unpack this for me: What does "when price takes off" mean? What is a /\ retracement? What does "your line is broken" mean? Thanks in advance
If you've downloaded the most recent edition, see Appendix F. And thank you for making the effort. There's just no point to my copying and pasting if your questions can be answered more completely otherwise.