Unfortunately, the "ton" of free material out there is mostly what somebody thought about what somebody else wrote about a variation of Wyckoff. I'm not aware of anyone who bases his work on the original course. I suggest, therefore, that you stick to the original course, above. Read Section 7 every weekend and you'll be in far better shape than nearly every trader out there.
Wyckoff's Monster
- Thread starter green.green
- Start date
Unfortunately, the "ton" of free material out there is mostly what somebody thought about what somebody else wrote about a variation of Wyckoff. I'm not aware of anyone who bases his work on the original course. I suggest, therefore, that you stick to the original course, above. Read Section 7 every weekend and you'll be in far better shape than nearly every trader out there.
An Overview of Taylor's Rules
On an ideal buy day (BD) we see price sell off below the previous day's low and then recover. We make our buy at or around the previous day's low.
On an ideal sell day (SD) we see price rally above the buy day high and close lower. Sell days are often typified by directionless price action (range or Z day). Taylor would take profit on the previous day's long above the buy day high and be out of the market.
On an ideal sell short day (SSD) we see price rally above the sell day high before selling off strongly. We make our sell at or around the previous day's high.
So what do we do when we don't get a standard BD or SSD signal? There were two other trade variations that Taylor took. On a BD if price opens near the high of the previous day then shorts can be initiated around the high of the previous day (identical to SSD). If on a SD price opens near the low of the BD then Taylor would look for a buy below the BD low (identical to a BD). There are no additional Taylor trades on an SSD.
Taylor called the short taken on a buy day a "short of High on a Buy Day made first". He called the buy taken on a short day a "buy day violation". For simplicity I will refer to these in the future as a buy day violation (BDV) and sell day penetration (SDP).
I'm sure this all sounds like complete gibberish to anyone reading this and I apologize. I've included a chart of how this might work in the real word. Looking at this you can see the chart starts as a SSD (not labeled). The low made on the SSD turned out the be the buying climax and the BD rally started from there. Most of the move up happened overnight.
After a strong move up we get continuation as expected in the SD. On the Sell short day be get a move above the previous day and a strong move down. Usually we would expect continuation down overnight and a selling climax on the buy day. Instead we get one last move above the SSD high. This should cue us into the possibility of a sell day penetration trade. We get a strong move lower as expected.
If anyone is wondering why I have "Day Only Gap" indicated on my chart its because it has been my experience that when there is a strong overnight move that results in no overlap between two days these areas often get retested. Overnight moves like this result in what I call "weak structure" due to the volume generally being extremely thin.
Being decisive and with help of Taylor I go short near the high this morning and managed to take 40 points out of the market before shutting it down.
On an ideal buy day (BD) we see price sell off below the previous day's low and then recover. We make our buy at or around the previous day's low.
On an ideal sell day (SD) we see price rally above the buy day high and close lower. Sell days are often typified by directionless price action (range or Z day). Taylor would take profit on the previous day's long above the buy day high and be out of the market.
On an ideal sell short day (SSD) we see price rally above the sell day high before selling off strongly. We make our sell at or around the previous day's high.
So what do we do when we don't get a standard BD or SSD signal? There were two other trade variations that Taylor took. On a BD if price opens near the high of the previous day then shorts can be initiated around the high of the previous day (identical to SSD). If on a SD price opens near the low of the BD then Taylor would look for a buy below the BD low (identical to a BD). There are no additional Taylor trades on an SSD.
Taylor called the short taken on a buy day a "short of High on a Buy Day made first". He called the buy taken on a short day a "buy day violation". For simplicity I will refer to these in the future as a buy day violation (BDV) and sell day penetration (SDP).
I'm sure this all sounds like complete gibberish to anyone reading this and I apologize. I've included a chart of how this might work in the real word. Looking at this you can see the chart starts as a SSD (not labeled). The low made on the SSD turned out the be the buying climax and the BD rally started from there. Most of the move up happened overnight.
After a strong move up we get continuation as expected in the SD. On the Sell short day be get a move above the previous day and a strong move down. Usually we would expect continuation down overnight and a selling climax on the buy day. Instead we get one last move above the SSD high. This should cue us into the possibility of a sell day penetration trade. We get a strong move lower as expected.
If anyone is wondering why I have "Day Only Gap" indicated on my chart its because it has been my experience that when there is a strong overnight move that results in no overlap between two days these areas often get retested. Overnight moves like this result in what I call "weak structure" due to the volume generally being extremely thin.
Being decisive and with help of Taylor I go short near the high this morning and managed to take 40 points out of the market before shutting it down.
First part of a PM exchange I've been having with slugar (March 7th)
This is in essence what I have been trying to do. The difficulty with the marriage of the two is time frame mostly. Taylor was looking to make either 0, 1 or 2 trades a day. As he put it he was attempting to trade the major daily trend and not the smaller counter moves. Using DBP's method to trade often has one jumping in and out of the market.
The way I have rectified that is when I get a confirmed Taylor setup I will only trade in the direction of that bias unless there is some kind of climatic action. For example yesterday was a sell short day on the NQ. The standard play is for a move above the high of the previous day (the sell day) before a sell off. Taylor would look at the price action below the previous day's low as a likely area to take profits on a swift move.
So if you look at the price action from yesterday we see that the overnight high takes out the previous day's high before falling off sharply. When the market rallies in the morning session back above the close I might take a quick long but I'm looking for an area to get short again for a bigger move down. Once we get a climatic move down and we have exceeded the previous day's low before moving higher my bias switches to long only. Unfortunately we don't get perfect Taylor setups each day but when we do it makes things much easier.
slugar said:
This is in essence what I have been trying to do. The difficulty with the marriage of the two is time frame mostly. Taylor was looking to make either 0, 1 or 2 trades a day. As he put it he was attempting to trade the major daily trend and not the smaller counter moves. Using DBP's method to trade often has one jumping in and out of the market.
The way I have rectified that is when I get a confirmed Taylor setup I will only trade in the direction of that bias unless there is some kind of climatic action. For example yesterday was a sell short day on the NQ. The standard play is for a move above the high of the previous day (the sell day) before a sell off. Taylor would look at the price action below the previous day's low as a likely area to take profits on a swift move.
So if you look at the price action from yesterday we see that the overnight high takes out the previous day's high before falling off sharply. When the market rallies in the morning session back above the close I might take a quick long but I'm looking for an area to get short again for a bigger move down. Once we get a climatic move down and we have exceeded the previous day's low before moving higher my bias switches to long only. Unfortunately we don't get perfect Taylor setups each day but when we do it makes things much easier.
Also March 7th...
Taylor's first step is to show how to make a book. The first step of making a book is determining when your buy day cycle starts. From there you work forward. BD -> SD -> SSD -> BD -> SD...
According to Taylor the day type should never change. I have looked at 3 years worth of data for the NQ when I made my book. Although the setups don't continuously appear - they appear regularly. I have never shifted or modified the cycle.
There are a few other things that Taylor tracked and kept averages of. One of them he called the 3-Day rally. It is the difference between the low on a BD and the High of the SSD two days later. In the NQ and other markets I have tested there is a positive 3-day rally over 85% of the time and some of the 15% where it doesn't hold true is around major turns and holidays.
I hope this doesn't confuse things too much. I think the 3-day rally % lends some credibility to his overall approach. Who knows what you might discover if you design your own "book"?
slugar said:
Taylor's first step is to show how to make a book. The first step of making a book is determining when your buy day cycle starts. From there you work forward. BD -> SD -> SSD -> BD -> SD...
According to Taylor the day type should never change. I have looked at 3 years worth of data for the NQ when I made my book. Although the setups don't continuously appear - they appear regularly. I have never shifted or modified the cycle.
There are a few other things that Taylor tracked and kept averages of. One of them he called the 3-Day rally. It is the difference between the low on a BD and the High of the SSD two days later. In the NQ and other markets I have tested there is a positive 3-day rally over 85% of the time and some of the 15% where it doesn't hold true is around major turns and holidays.
I hope this doesn't confuse things too much. I think the 3-day rally % lends some credibility to his overall approach. Who knows what you might discover if you design your own "book"?
slugar said:
Taylor and Wyckoff would have respected each other. Both of them were tape readers and both understood the market. I'm confident they can be married in a number of ways.
From March 11th...
Taylor's theory is there is a three day cycle to the market (due to manipulation). He is mainly interested in making purchases around previous day's highs or lows and then holding for the bigger move.
Today in the NQ for example was a sell short day. Price made two attempts to rally above yesterday's high before spending most of the day trending down . Where did it stop? Yesterday's low.
Highs and lows made first or second is important but it has to do with opportunity. For example if the high is made first on a sell short day (like today) then the setup occurs in the morning and you have the afternoon to increase gains. If the high is made last on a sell short day then its likely in the afternoon and your probabilities decrease on the trade.
So tomorrow is a buy day. Typically we should have some sort of attempt at the low in the morning. Sometimes price will fall to a lower support level, sometimes it will spring off of today's low. If the low is made in the morning the probabilities of a rally increase.
Taylor's whole system is about finding a good entry and trading the major moves. If he takes a position and the market doesn't do what he expected then he gets out before the close and waits for a higher probability setup. When you get a Taylor setup on the right day its high probability.
I hope this helps.
slugar said:
Taylor's theory is there is a three day cycle to the market (due to manipulation). He is mainly interested in making purchases around previous day's highs or lows and then holding for the bigger move.
Today in the NQ for example was a sell short day. Price made two attempts to rally above yesterday's high before spending most of the day trending down . Where did it stop? Yesterday's low.
Highs and lows made first or second is important but it has to do with opportunity. For example if the high is made first on a sell short day (like today) then the setup occurs in the morning and you have the afternoon to increase gains. If the high is made last on a sell short day then its likely in the afternoon and your probabilities decrease on the trade.
So tomorrow is a buy day. Typically we should have some sort of attempt at the low in the morning. Sometimes price will fall to a lower support level, sometimes it will spring off of today's low. If the low is made in the morning the probabilities of a rally increase.
Taylor's whole system is about finding a good entry and trading the major moves. If he takes a position and the market doesn't do what he expected then he gets out before the close and waits for a higher probability setup. When you get a Taylor setup on the right day its high probability.
I hope this helps.
slugar said:
I butted my head against the wall for a long time with this stuff but when it clicks it's pretty awesome. The simple answer is if today is a buy day tomorrow is a sell day regardless of today's price action. The cycle never changes.
To go with your example - lets say today is a limit down day and closes on its lows? First - Taylor was a tape reader so he wasn't blindly taking trades. At one point in his book he says something like "if you know what to expect and you don't get it you are better prepared for the unexpected". But Taylor would sit on his hands. He only cherry picked his setups. So on a sell day the only possibility for Taylor would be a "buy day low violation" which basically is his way of saying. When I don't get my buy on a buy day I should get it on a sell day. If the market continued to trend lower he simply would not trade. On the following day - the sell short day he would sell any high made first and if the action looked good he would hold this until the buy day - where he would take profits. So Taylor doesn't have you in the market every day.
Taylor is predictive - this is why people even bother with this book. There are real edges here. Generally I have found that Taylor's system will alert you to potential trend moves. There will be odd behavior in his book alerting you to a change in behavior before it occurs. Taylor has you tracking averages of certain high to low ranges and other signals that paint a bullish or bearish picture.
Also - Taylor would watch two markets with different cycles. If something didn't setup he probably just moved on to the other market. I hope something here was helpful. I don't want to come across as a Taylor guru. It is entirely possible that I have the whole thing wrong.
Here is a recommendation - read the "Pertinent Points" section once or twice. Then read the book from the beginning. You don't have to read the 3-day trading method or investor and swing trader sections. If your copy has commentary by Linda Raschke or George Angell I wouldn't read them at all or at least until you understand Taylor. You might have to read the book a few times and you're definitely going to have to make your own book to really get a feel for it. Once I had played with it for a while it made sense.
Since I and my approach are topics of conversation here, I suggest that you demonstrate the efficacy of this approach. Since this is a journal, that means posting what sort of day the following day will be and your trading plan for that day. Then, at the end of the day, explain what you did and why in the context of Taylor's approach. If what you did doesn't match up with what you said you were going to do, this will of course require some explanation, again according to Taylor.
It's unlikely anyone is going to read anything unless and until they are provided with compelling real-time results, or at least results that can be compared with a trading plan that's posted in advance. So far you've posted four days' trading in three weeks. This is insufficient for the case you're trying to make. If you don't happen to trade on a given day, you can nonetheless tell us what sort of day it's going to be and what your plan would be for that day if you were to trade it. Then people can make a well-informed decision as to whether or not they want to pursue this course.
It's unlikely anyone is going to read anything unless and until they are provided with compelling real-time results, or at least results that can be compared with a trading plan that's posted in advance. So far you've posted four days' trading in three weeks. This is insufficient for the case you're trying to make. If you don't happen to trade on a given day, you can nonetheless tell us what sort of day it's going to be and what your plan would be for that day if you were to trade it. Then people can make a well-informed decision as to whether or not they want to pursue this course.
Good suggestion as usual...
Tomorrow is a Sell Short Day in the NQ. On an ideal SSD we look for price to penetrate the previous day's high before reversing. Taylor also allows for selling a "high made first" on a SSD as long it is made earlier in the day.
I will be looking for price action to confirm a short around the 3670-3680 levels. We have support around 3648 and below that at 3620. This is the only pure Taylor play for tomorrow. If we open below 3650 tomorrow I will be looking for longs into the 3670 area (assuming we don't get up there overnight).
What is a "high made first"?
What constitutes "earlier in the day"?
What constitutes "confirmation" of a short?
If we open below 50 and you then look for longs, then why pre-characterize the day as a SSD in the first place?