Been studying a lot of TA a long time - too much, too long. I think one of the things learned from good TA traders is that this whole thing of searching, searching, searching will fuck you up because you must - at some point - settle down and settle on something. Something you can actually trade. Then trade it enough to find if it has a viable statistical edge. In fact, if you watch enough YouTube videos, a lot of TA gurus say this, the good and bad ones, even some of the idiots (and all of the fakes- utilizing their techniques, natch). And, of course, this is a certain, utter, indisputable truth.
Except I'd like to dispute it, somewhat. In a way. Absolutely, find a technique, determine some setups, establish Risk/Reward and Money Management parameters, create or buy a spreadsheet, journal it and trade it. But, while you're doing that, continue to study various TA philosophies and methodologies. Approach your study not with the intention of finding the latest and greatest, or even the oldest and greatest, rather with the POV of gaining a deeper understanding, a well-rounded sense of TA from a broad perspective. If one does that, I think the many, many ways that various styles of TA fit together can reveal and clarify a whole that is greater than the sum of its parts.
Let me give some specific examples, simple but relevant and very real:
A classic Wyckoff consolidation following an extended rally consists of a buying climax on high volume followed by the "automatic reaction" to a low, these two swings establishing the range resistance/support, then the "secondary test" which is a rally to (preferably) an upthrust of the climax high on lower volume, another reaction, then a third rally to a lower-high, a shallow test of the upthrust - Wyckoff's "last point of supply" - on still declining volume. Then a breakdown. Of course, this is the ideal and there are many subtleties and variations. It's rarely this clean (though, sometimes, it is indeed).
Of course, most will recognize this as also describing a classic Head & Shoulders pattern, or one with its many variations. Those familiar with Market and Volume Profile may deem the consolidation as a "balanced market" with Value Area Highs and Lows. Also, one may see some kind of triangle pattern within the range - ascending, descending, symmetrical - what Wyckoff terms an "apex"; in a Volume Profile this may very well occur at a High-Volume Node.
Here's an example maybe not so obvious at first glance: One of my favorite "Wyckoffians" is David Weis. It's been a long time since I've read the original Wyckoff course so I'm not sure if this is David's adaptation of the technique (of which he has many) or if it's from The Man himself, but in David's book he talks about "tests of high volume or vertical areas where trends accelerated". Natch such price behavior is usually climatic, at least in the short-term - and certainly on the lower timeframes - so one then attempts to gauge the strength of the trend via the nature of the reaction swing. The nature of that reaction is extremely important.
Using Volume Profile analysis one would look at that same vertical area but instead of the time-based high volume one would consider the price-based low volume node, a "rejection area". So, from one TA perspective you're looking at high volume, from another, low volume. If you understand what you're actually examining then the two techniques have a synergy.
One might also use Fibonacci levels here. In Wyckoff there is that 25% - 50% - 75% area (which I prefer over classic Fib levels and which are approximate anyway) which is one way you measure the validity of the reaction. When analyzing the individual bars at inflection points and other significant areas, one might utilize Candlestick patterns or (my preference again) individual candles - doji's especially can be very revealing and fit with Wyckoff analysis beautifully.
These are probably basic examples. As I said, with this kind of study, it's primarily about the whole, not the parts. And maybe this is all obvious. But one thing we learn is that when fine-tuning our trading techniques we must use only that which is actually productive, discarding all else. It only makes sense to me that that process can be made more efficient the deeper the knowledge and the more expansive one's perspective of TA. The more you know, the less you know you need to know to read a chart because there is so much synergy with those few vital (to you) TA elements you have selected.
Except I'd like to dispute it, somewhat. In a way. Absolutely, find a technique, determine some setups, establish Risk/Reward and Money Management parameters, create or buy a spreadsheet, journal it and trade it. But, while you're doing that, continue to study various TA philosophies and methodologies. Approach your study not with the intention of finding the latest and greatest, or even the oldest and greatest, rather with the POV of gaining a deeper understanding, a well-rounded sense of TA from a broad perspective. If one does that, I think the many, many ways that various styles of TA fit together can reveal and clarify a whole that is greater than the sum of its parts.
Let me give some specific examples, simple but relevant and very real:
A classic Wyckoff consolidation following an extended rally consists of a buying climax on high volume followed by the "automatic reaction" to a low, these two swings establishing the range resistance/support, then the "secondary test" which is a rally to (preferably) an upthrust of the climax high on lower volume, another reaction, then a third rally to a lower-high, a shallow test of the upthrust - Wyckoff's "last point of supply" - on still declining volume. Then a breakdown. Of course, this is the ideal and there are many subtleties and variations. It's rarely this clean (though, sometimes, it is indeed).
Of course, most will recognize this as also describing a classic Head & Shoulders pattern, or one with its many variations. Those familiar with Market and Volume Profile may deem the consolidation as a "balanced market" with Value Area Highs and Lows. Also, one may see some kind of triangle pattern within the range - ascending, descending, symmetrical - what Wyckoff terms an "apex"; in a Volume Profile this may very well occur at a High-Volume Node.
Here's an example maybe not so obvious at first glance: One of my favorite "Wyckoffians" is David Weis. It's been a long time since I've read the original Wyckoff course so I'm not sure if this is David's adaptation of the technique (of which he has many) or if it's from The Man himself, but in David's book he talks about "tests of high volume or vertical areas where trends accelerated". Natch such price behavior is usually climatic, at least in the short-term - and certainly on the lower timeframes - so one then attempts to gauge the strength of the trend via the nature of the reaction swing. The nature of that reaction is extremely important.
Using Volume Profile analysis one would look at that same vertical area but instead of the time-based high volume one would consider the price-based low volume node, a "rejection area". So, from one TA perspective you're looking at high volume, from another, low volume. If you understand what you're actually examining then the two techniques have a synergy.
One might also use Fibonacci levels here. In Wyckoff there is that 25% - 50% - 75% area (which I prefer over classic Fib levels and which are approximate anyway) which is one way you measure the validity of the reaction. When analyzing the individual bars at inflection points and other significant areas, one might utilize Candlestick patterns or (my preference again) individual candles - doji's especially can be very revealing and fit with Wyckoff analysis beautifully.
These are probably basic examples. As I said, with this kind of study, it's primarily about the whole, not the parts. And maybe this is all obvious. But one thing we learn is that when fine-tuning our trading techniques we must use only that which is actually productive, discarding all else. It only makes sense to me that that process can be made more efficient the deeper the knowledge and the more expansive one's perspective of TA. The more you know, the less you know you need to know to read a chart because there is so much synergy with those few vital (to you) TA elements you have selected.
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