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1. Jesse Livermores Secret To Success

2. Home page investor image explanation

3. The great crash 1929

4. Dear NewBie Investor

5. How Wall Street works

6. How to win in the stock market

7. Commandments to follow

8. 10 Rules for Investing

9. How to survive a stock market crash

10. William J ONeil, CANSLIM

11. Barry Ritholtz keep it simple stupid

12. Gerald Loeb how to win

13. Paul Tudor Jones II

14. Felix Zulauf

15. Sir John Templton

16. Warren Buffett

17. Reading the tape

18. Indicators Introduction

19. Richard Ney method

20. Richard Wyckoff method

21. Richard Wyckoff Waves of Price and Volume

22. Richard Wyckoff is a success story

23. Richard Wyckoff logic not working, this maybe why?

24. Richard Wyckoff studied Jesse Livermore

25. Bob Evans, renowned Wyckoff teacher

26. Tim Ord, Secret Science of Price and Volume

27. William Gann method

28. William Gann life story

29. William Gann Law of Vibration

30. Jim Hurst method

31. Wyckoff method improved1

32. Wyckoff method improved2

33. Original Wyckoff and Wyckoff 2.0

34. Wyckoff 2.0 vs Others

35. Wyckoff 2.0 and Volume Spread Analysis

36. Powerful Patterns

37. Elliot Waves

38. Price Action

39. Market Statistics

40. Cycles for short term speculation

41. Stop Loss methods

42. Alpha Stock Scanner

43. Swing Scanner

44. Flash Charts

45. RTT Market Timer

46. RTT Wyckoff Short Term model

47. Chart Drawing Tools

48. Standard Indicators

49. Proprietary Indicators (PI)

50. Multi Time Frame (PI)

51. PI: RTT TrendStatus

52. PI: RTT Squeeze

53. PI: RTT TrendPower OBV

54. PI: RTT On Balance Volume

55. PI: RTT VolumeWave

56. PI: RTT Rainbow Bands

57. PI: RTT Volume

58. PI: RTT MarketPulse

59. PI: RTT Steps of Cause and Effect

60. PI: RTT Wyckoff Strength Weakness

61. PI: RTT Wyckoff Price Waves

62. PI: Proprietary Indicators Caution

63. What we do - 1st

64. What we do - 2nd



         



Indicator Library
Wyckoff method improved1

An extract from the site page called 'Richard Wyckoff method'

 .."Wyckoff wished only to invest in the markup (or down) phase of the stock price cycle, he also new determining the change over from accumulation (or distribution) to mark up (or down) phase was tricky and the risk of loss was at this time highly probable"...


The Richard Wyckoff method has 5 phases (A, B, C, D, E) to determine if the (re) accumulation or (re) distribution pattern is about to break out into a price mark up or down phase. You can refresh yourself on the detail of these phases via our ‘Richard Wyckoff Method’ page. We have marked on the chart below the 5 phases next to each price reversal action. Once the 5 phases have been confirmed and price breaks through the ice (support) or the creek (resistance) the Wyckoff trader must then draw a trading channel to navigate the price mark up or down. Wyckoff would execute positions in the market after reference points 1, 2 and 3 on the chart subject to favorable price and volume action.

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UUP Wyckoff Channels

The Richard Wyckoff method is a solid technique but in our view could use a little adjustment when the trader is working through phase D and E. We wish to highlight some minor issues that require a little tweaking:

1) The Wyckoff trader must determine in phases D and E through price and volume action that either demand has over come supply (bull case) or supply has overcome demand (bear case). When the chart allows this to be clear this process is easily done, however sometimes the price and volume patterns are not so clear and confusion and fear as to a false breakout will plague the Wyckoff trader mind.


2) After determining that a mark up or mark down period is about breakout with a good 3 to 1 profit ratio the Wyckoff trader doesn’t know if the profits will be made within 10 days or 10 weeks. Time is money and the application of price channels to the price action is not a true measure of time to price as the slope of the channel is not a factor in the Wyckoff method.


3) The Wyckoff channel is not a definitive tool to determine whether price action will maintain a status of mark up or down. For example, if the slope of the channel is relatively flat then the price action may be just moving into a new trading range and thus be more accumulation or distribution.


4) The construction of the Wyckoff channel requires three pivot points (as shown by the three solid dots on the chart). Sometimes there is no correlation between the price mark up or down to the channel and constant redrawing of the channel (or trend lines is required).


The above issues are not major and if the reader wishes they can be ignored to maintain the purist view of Wyckoff trading style. If the reader is open to a possible fix, then consider the following.

Gann Angles
Gann angles drawn on an equal time (x-axis) to price (y-axis) scale are a true measure of price appreciation or depreciation of time. You can refresh yourself on the detail of Gann Angles via our ‘William Gann Method’ page. Let’s review.

Bullish Angles: When the price is above a positive sloping Gann Angle it is in a corridor of price appreciation.
Bearish Angles: When the price is below a negatively sloping Gann Angle it is a corridor of price depreciation.

Our discussion will cover the bullish Gann Angles, the inverse is true for bearish Gann Angles.

Gann Angle Corridor



Black Corridor When price is over of the black line it is appreciating at better than 12 units of price for 1 unit in time (1x12).
Gray Corridor When price is over of the gray line it is appreciating at better than 8 units of price for 1 unit in time (1x8).
Green Corridor When price is over of the green line it is appreciating at better than 4 units of price for 1 unit of time (1x4).
Blue Corridor When price is over of the blue line it is appreciating at better than 2 units of price for 1 unit in time (1x2).
Red Corridor When price is over of the red line it is appreciating at better than 1 unit of price for 1 unit of time (1x1).


Quickly the reader will realize that price action in the steeper corridors will generate quicker profits that when it is not.

When price action is within a mark up or down phase it can consolidate into different degrees of re accumulation or redistribution. The generic patterns the chartist sees are patterns like flags, symmetrical triangles and small rectangles. These continuation patterns can be a few days or several weeks in time. The time span of the continuation pattern is the ‘degree’ of concern, the longer in time the continuation pattern is, the greater the risk the reaccumulation pattern morphs into a full distribution pattern and price reverses ( likewise for redistribution patterns).

Please refresh yourself with the Wyckoff Phase chart. Re accumulation patterns begin their life with minor distribution (as some players take profits), but as time goes on the reaccumulation pattern breaks into a further mark up of prices. Time may or may not be the friend of the reaccumulation phase as fundamentals can change for better or for worse (likewise for redistribution patterns).

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Wyckoff Phases


Let us review the floating variables within the Wyckoff channel tool to monitor price mark up or down.


1) Price can be marked up or down at any pace (as the slope of the Wyckoff Channel can be very different degrees of pace)


2) Price may suffer during the mark up or down phases, re accumulation or re distribution phases of different time spans.


You can conclude that the Wyckoff Channel is not definitive when price action is within its boundaries will be a pure mark up or down phase, as the markup process can be troubled with an unknown degree of re accumulation or redistribution. It is important for the investor knows for sure when the price is in a pure mark up or down phase as this has direct implications for capital allocation and or portfolio profitability (Alpha or relative strength to return).

Therefore the investor requires a tool to identify pure price markup (or down). The tool is required to be 80% plus accurate for when the price stays within its boundaries price would continue to be in a markup (or down) phase with only minor periods of re accumulation (or redistribution).

Our Response
If price stays above the Blue corridor (including the Green, Gray and Black corridors) then the price is appreciating at better than 2 units of price for every 1 unit in time, then it is very unlikely that prices will suffer any serious re accumulation until the blue corridor is broken (or 1x2 Gann Angle). A lesser test, but by no means poor, if the price stays above the Red corridor (1x1 Gann Angle) then the price mark up phase may suffer a moderate re accumulation before continuing on. Price breaching of the Blue or Red corridor will require a reevaluation of price action as prices may be just shifted sideways and not breaking down. Each case must be judge of its merits.

The $64000 question has just been answered: If you have a robust test to determine the pure mark up or down phase then everything else on the chart not identified is by process of elimination is either accumulation or distribution.

That’s it then. We have our tool so let’s go hunting for pure mark up or down phases on the SP500 ETF or SPY. We will swing back later on how to see how the Blue and Red corridor work within the Wyckoff method.

NOTE: To use Gann Angles within readtheticker.com the chart must set up with a 1x1 price to the time axis. See red box under the symbol name of the chart.

SPY Bear


By placing the bearish Gann Angles on major pivot highs we can see how period1 and period2 performed as a pure mark down phase with only few minor redistribution phases. Both period1 and period2 were under the blue corridor (or the 1x2 Gann Angle). There was a minor price test, when price challenged the blue corridor (see yellow circles). The pink zone with the X is where the trend changed. The down trend from 10/09/2007 was under the red 1x1 corridor and as we stated above you can expect the redistribution phases to be more serious than those under the blue 1x2 corridor.

SPY BULL


By placing the bullish Gann Angles on major pivot lows we can see how period3 and period4 performed as a pure mark up phase with only few minor re accumulation phases. Both period3 and period4 were over the blue corridor (or the 1x2 Gann Angle) and for a short while over the green corridor (or 1x4 Gann Angle). The pink zone with the X is where the trend changed. The up trend from 03/09/2009 was above the red 1x1 corridor and as we stated above you can expect the re accumulation phases to be more serious than those above the blue corridor (1x2 Gann Angle). The blue corridor suffered a few shifts to the right, but soon reestablished the pure markup trend.

As you can see below the blue corridor (1x2 Gann Angle) has been very important in the SPY chart. When the blue corridor has broken it has signalled a major trend change. Note: Charts will differ as to which corridor (Gann Angle) will dominate.

SPY Trend Change


We hope you agree that the Gann Angle can assist the Wyckoff investor as to the location of pure price mark up or down. Here is how we overcome the four Wyckoff D and E phase issues we posted above:

1) Place the Gann Angles on the last pivot point within phase D, if price is beginning a mark up or down phase then price should stay in the Blue Corridor (or 1x2 angle), or at the very least stay within the Red Corridor (or 1x1 angle).


2) The Gann Angles are drawn on a chart scale of equal time and price therefore if price action is in the Red Corridor or better you have secured one unit of price to one unit of time at the very least.


3) We hope the example on the SPY charts above prove to you that Gann Angles are excellent for highlighting the pure price mark up or down phases. Knowing this should keep the Wyckoff investor out of troublesome accumulation or distribution phases.


4) Gann Angles only require one pivot point and not two or three (ie for trendlines and channels). The selection of the pivot point should be the one just prior to the impulse move expected within the Wyckoff phase D and E. As price moves along, move the angle to the next pivot point. An issue with trendlines is that they are forced to redraw when price breaks the trend line. Gann Angles do not redraw and in this sense they provide a more solid constitution to judge price trends.


To conclude we would place Gann Angles at location 1, 2 and 3 on the first chart of this post. Then decide if the trade is warranted by judging price performance to stay within the desired Gann Angle corridor.

If you haven't yet worked it out, the Wyckoff Investor is a markup (or down) hunter. Wyckoff determined that the highest probability for markup (or down) to occur was on the completion of his nine rules. We believe the application of Gann Angles in the correct way aid the Wyckoff Investor to nurture and enjoy as much of the markup (or down) process as possible. Hope you concur.

Investing in the Wyckoff markup (or down) phase has major advantages compared to investing in either the accumulation or distribution phase:
  • Price in the markup phase is deliberately being moved up, therefore buying the short term pullbacks will be successful.
  • Price in a strong mark up phase will see heavy buying during short term pullbacks.
  • Price during the mark up phase often extends further than expected as this phase attracts a buying climax or blow off price action.
  • The accumulation or distribution phase is normally range bound and is populated with false break outs in either direction with the sole purpose to bust stops.
  • Profits are expected to be larger in the markup phase.

Gann Angles Advance: You can have a positive stock trend on a Gann Angle of 2x1 (or two units of time to one unit of price), but as this is under our minimum requirement of 1x1 or better we will leave the tricky and poor rewarding setups to others.

NOTE: Members can use both the QuickDraw (Ctl Z, Ctl X) and Object Gann Angles.




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NOTE: readtheticker.com does allow users to load objects and text on charts, however some annotations are by a free third party image tool named Paint.net

Investing Quote...

.."Frequent requests are made for the name of someone who will teach the Art of Tape Reading. I do not know of anyone able to read the tape with profit who is willing to become an instructor. The reason is very simple. Profits from the tape far exceed anything that might be earned by charging tuition fees to his students. Its simple economics"…

Richard D Wyckoff


..“One must search through a maze of complex and contradictory details to get to the significant facts … Then he must be able to operate coldly, clearly, and skilfully on the basis of those facts.” The challenge for the successful speculator is “how to disentangle the cold hard facts from the rather warm feelings of the people dealing with the facts.” Moreover, “if you get all the facts, your judgment can be right; if you don’t get all the facts, it can’t be right”...

Bernard Baruch


.."To cause high prices, all the Fed will do will be to lower the re discount rate..., producing an expansion of credit and a rising stock market; then when, business men are adjusted to these conditions, it can check, prosperity in mid career by arbitrarily raising the rate of interest. It can cause the pendulum of a rising and falling market to swing gently back and forth by slight changes in the discount rate, or cause violent fluctuations by a greater rate variation and in either case it will possess inside information as to financial conditions and advance knowledge of the coming change, either up or down. This is the most dangerous advantage ever placed in the hands of a special privilege class by any Government that ever existed. The are private, conducted for the purpose of obtaining the greatest possible profits from the use of other people's money. They know in advance when to create panics to their advantage, and when to stop panic."...

Charles August Lindbergh Snr

..The time of maximum pessimism is the best time to buy and the time of maximum optimism is the best time to sell"..

John Templeton


The minute you get away from the fundamentals – whether it’s proper technique, work ethic, or mental preparation – the bottom can fall out of your game.

Basketball Legend Michael Jordan.




Created on: 7/3/2011 3:49:19 AM   Last Update: 7/26/2017 7:21:08 PM Posted by: RTT
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We at readtheticker.com hold the view that a mix of stock chart technical analysis, Richard Wyckoff, William Gann and Jim Hurst methods plus market fundamentals allows the investor to formulate a very sound market opinion. These attributes are mutually inclusive and must be weighted equally before investing or trading in any Stock, ETF, Currency, Bond, Commodity, CFD or Mutual Fund



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