Using the Wyckoff tests

S

She

Hello,

I have studied the wyckoff tests and would like to chat regarding their application to stocks.

I see them as logical, but are they in any way unreliable? To those who use them have you backtested them or is that unnecessary?

She:)
 
I don't know anything about backtesting, but Wyckoff was a discretionary trader, not a mechanical one, so I don't think it would work with his techniques. As for "reliability" the sooner you buy, say on a ST, or a shakeout or test of a shakeout, the higher your risk but the greater potential for reward. The safest, most "reliable" place to buy, according to W, would be the test after the Sign of Strength or subsequent pullbacks in the trend that met W criteria (low vol, narrow spreads, shallow). You could also use his "Buy/Sell Tests".

If you're a "Wyckoffian" you may be interested in this group. Lots of info in the Files section, including the Buy/Sell tests (Pre-trade Analysis Record.doc):

http://finance.groups.yahoo.com/group/Wyckoff-SMI/

Harold
 
Quote from She:

Hello,

I have studied the wyckoff tests and would like to chat regarding their application to stocks.

I see them as logical, but are they in any way unreliable? To those who use them have you backtested them or is that unnecessary?

She:)
More...

I know very little about Wyckoff, but I have all of John Hill's material, and he is a very advanced Wyckoff student. Hill's created a simple mechanical system for springs and thrusts, which I've found to be very good for my trading. The spring is:

1. A pivot point low is made.
2. Rally takes place.
3. Market moves to new low below the prior pivot.
4. Within one to six days of the last, lower pivot,
a. Close is > than the two previous closes.
b. Close is > than previous pivot point low.
c. Today's range is > than previous bar.
d. Today's close is > than opening and mid range.

Thrusts are just the opposite.

This is easy to code and backtest. There are obvious areas where they perform best. Sometimes at the mkt and sometimes you want to buy when the actual spring confirmation is exceeded. Springs are one of my best performing short term swings.

CWU
 
Some of the most rigerous work on this sort of stuff was done by Dunnigan (look for his books Gains in Grains and The One Way Formula). The one way formula describes his research to develop a method for trading any instrument based on price action alone. Not sure whether he was pre or post Wychoff but he new his price action. Worth checking out.

Cheers,
Nick
 
Quote from CWU:

I know very little about Wyckoff, but I have all of John Hill's material, and he is a very advanced Wyckoff student. Hill's created a simple mechanical system for springs and thrusts, which I've found to be very good for my trading. The spring is:

1. A pivot point low is made.
2. Rally takes place.
3. Market moves to new low below the prior pivot.
4. Within one to six days of the last, lower pivot,
a. Close is > than the two previous closes.
b. Close is > than previous pivot point low.
c. Today's range is > than previous bar.
d. Today's close is > than opening and mid range.

Thrusts are just the opposite.

This is easy to code and backtest. There are obvious areas where they perform best. Sometimes at the mkt and sometimes you want to buy when the actual spring confirmation is exceeded. Springs are one of my best performing short term swings.

CWU
More...

Thank you CWU.

That is some interesting stuff there. I@ll investigate John Hill`s work.

She
 
Quote from BlowFish:

Some of the most rigerous work on this sort of stuff was done by Dunnigan (look for his books Gains in Grains and The One Way Formula). The one way formula describes his research to develop a method for trading any instrument based on price action alone. Not sure whether he was pre or post Wychoff but he new his price action. Worth checking out.

Cheers,
Nick
More...

Nick,

Thanks. I believe his strategies were quite good.

she
 
Using the wyckoff wave seems to have its merits. What would be the demerits of using it and how important would they be?

For those who have traded with it.

She
 
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