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WYCKOFF ASSOCIATES, LLC PRESENTS
INTRADAY TRADING USING THE WYCKOFF METHOD
INTRADAY TRADING USING THE WYCKOFF METHOD WORKSHOP March 19, 2016
SWING TRADING USING THE WYCKOFF METHOD March 19, 2016
Today’s Schedule: 8:30 – 10:20 am - Part I 10:20 – 10:30 am - Break 10:30 – 12:30 pm - Part II 12:30 – 1:15 pm - Lunch 1:15 – 2:50 pm - Part III 2:50 – 3:00 pm - Break 3:00 – 4:30 pm - Part IV Video recording: This workshop will be recorded for further distribution to workshop participants. These recordings are intended for your own use only. Please respect the proprietary, copyrighted nature of the materials and do not share or distribute them. Workshop slides: The PDF slides file will be available to you. Make a lot of notes, but be ready to engage in the discussion. Lunch: Lunch break is from 12:30 to 1:15 pm. Please return on time! Evaluation form: We will ask you to complete an evaluation form after the workshop. We would greatly appreciate your feedback to help improve the workshop for future presentations. Most importantly:
HAVE A GREAT EXPERIENCE LEARNING ABOUT WYCKOFF INTRADAY TRADING! www.WyckoffAnalytics.com
Disclaimer Roman Bogomazov (“Presenter”) is not a registered investment advisor or broker-dealer and does not purport to recommend or suggest any securities to buy or sell. You understand and acknowledge that there is a very high degree of risk involved in trading securities. Presenter assumes no responsibility or liability for your trading and investment results. You and you alone are responsible for your own trading and investment decisions and results. It should not be assumed that the methods, techniques, or indicators presented will be profitable or that they will not result in losses. Past results of any individual trader or trading system published by Presenter are not indicative of future returns by that trader or system, and are not indicative of future returns which will be realized by you. In addition, the indicators, strategies, articles and all other features of Presenter's products are provided for informational and educational purposes only and should not be construed as investment advice. Accordingly, you should not rely solely on the Presenter’s information in making any investment. Rather, you should use the Presenter’s information only as a starting point for doing additional independent research in order to allow you to form your own opinion regarding investments. You should always check with your licensed financial advisor and tax advisor to determine the suitability of any investment. HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN INHERENT LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING AND DO NOT INCLUDE BROKERAGE AND OTHER FEES, OR SLIPPAGE. ALSO, IN SIMULATED PERFORMANCE RESULTS NO TRADES HAVE ACTUALLY BEEN EXECUTED, AND THEREFORE THE RESULTS MAY HAVE UNDER- OR OVER-COMPENSATED FOR THE IMPACTS OF A VARIETY OF MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS, IN GENERAL, CAN ALSO BE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES SIMILAR TO THOSE SHOWN.
INTRODUCTION
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MY TRADING TRAINING AND TEACHING EXPERIENCE Roman Bogomazov: -Originally from Vladivostok, Russia. Immigrated in 1996. Education: - Student at Golden Gate University (GGU) in 1997-2000. Bruce Fraser and Professor Hank Pruden were my teachers and continue to be my mentors - Certificate in technical market analysis and MS in Finance, both from GGU - Passed Level I and II CMT designation exams - Series 7 designation Trading experience: - I consult for hedge funds and other financial institutions on trading strategies and implementation - I have been trading for the last 20 years. I have traded stocks, options, futures, and forex - I trade two strategies: (1) a short-term swing/intraday strategy, based on momentum of a swing; (2) longer-term swing trading of stocks based on the Wyckoff methodology Teaching and coaching: - Teaching FI354 and FI355 Wyckoff classes online at Golden Gate University - Teaching an Advanced Wyckoff Trading Course (AWTC), Wyckoff Practicum Trading Course (WPTC) and conducting weekly Market and Stocks Outlook (MASO) sessions with Wyckoff Associates, LLC Affiliations: - Past President of TSAASF (www.tsaasf.org) and Board Member of IFTA (ifta.org) - Member of San Francisco chapter of Ed Seykota’s trading tribe www.WyckoffAnalytics.com
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INTRADAY TRADING USING THE WYCKOFF METHOD March 19, 2016
Student Intentions: - Name - Your intention: what do you hope to gain from this workshop?
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WORKSHOP OUTLINE
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INTRADAY TRADING USING THE WYCKOFF METHOD March 19, 2016
Outline of material for today (page 1):
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1.
Introduction
2.
The Wyckoff Method Review • Change of Character • Wyckoff Phase Analysis • Wyckoff Accumulation Trading Range Events • Wyckoff Distribution Trading Range Events • Swing Reversal Concept
3.
Synchronization of Different Time Frame Structures • Case Study #1: EURUSD • Monthly EURUSD structure • Daily EURUSD structure • 240 minutes EURUSD structure • 30 minutes EURUSD structure • Points of Entry • Different trading sessions
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INTRADAY TRADING USING THE WYCKOFF METHOD Outline of material for today (page 2): 4.
Selection of the Momentum Stocks for Day Trading • Case Study #2: AMZN • Leadership with momentum stocks • Identification of the Daily Swing Bias • Identification of the Daily Chart Trend • Identification of the Daily Swing Structure • Resumption of the Leadership Trend on a lower time frame
5. General Guidelines and Rules for Day Trading Momentum Stocks 6. Intraday Comparative Selection and Points of Entry • Case Study #3: Momentum Stocks (FANG) • Daily Swing Bias • Comparative evaluation of the first 30 minutes of a session • Intraday points of entry 7. Intraday Trades vs. Intraday Switch to a Swing Trade • Case Study #4: GOOGL • Long-term price analysis • Daily swing reversal • Predominant intraday trend • Intraday points of entry • Comparison between intraday and swing trades
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SWING TRADING USING THE WYCKOFF METHOD Outline of material for today (page 3): 8. Intraday Switch to a Swing Trade - I • Case Study #5: MNST • Intraday point of entry switch to a swing trade • Intraday points of entry 9.
General Guidelines and Rules for Trading E-minis • Rules and Guidelines • Exercise
10. Trading Intraday Price Structure • Case Study #6: ES • Daily Swing Bias analysis • Daily chart structural analysis • Exercise: Combining intraday structural analysis with intraday swing reversal entries 11. Intraday Switch to a Swing Trade - II • Case Study #7: ES • Daily structural analysis • Intraday price structure • Intraday points of entry 12. Q&A session www.WyckoffAnalytics.com
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The Wyckoff Method Main Structural Concepts + Reversal of a Swing Concept
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CHoCH
CHANGE OF CHARACTER (CHoCH)
CHoCH
WHEN does a trend change into consolidation? HOW can we identify this change in environment?
Phase A
Phase D
“The Creation of a Trend”
CHoCH
Phase A Non-trending environment www.WyckoffAnalytics.com
CHoCH
Phase D Trending environment
Non-trending environment
Trending
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STRUCTURAL ANALYSIS: What are Wyckoff Phases? INTENTIONS BEHIND PHASES (Accumulation)
STOP
BUILD CAUSE SUPPLY & DEMAND
TEST
MARKUP in TR
MARKUP out of TR
CHoCH CHoCH
Wyckoff Buy Zone www.WyckoffAnalytics.com
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STRUCTURAL ANALYSIS: What are Wyckoff Accumulation Events?
ELEVEN WYCKOFF TRADING RANGE EVENTS (Accumulation) 1. PS – preliminary support, where substantial buying begins to provide pronounced support after a prolonged down-move. Volume and the price spread widen and provide a signal that the down-move may be approaching its end. 2. SC – selling climax, the point at which widening spread and selling pressure usually climaxes and heavy or panicky selling by the public is being absorbed by larger professional interests at prices near the bottom. At the low, the climax helps to define the lower level of the trading range. 3. AR – automatic rally, where selling pressure has been exhausted. A wave of buying can now easily push up prices, which is further fuelled by short covering. The high of this rally will help define the top of the trading range. 4. ST – secondary test, price revisits the area of the selling climax to test the supply/demand at these price levels. If a bottom is to be confirmed, significant supply should not resurface, and volume and price spread should be significantly diminished as the market approaches support in the area of the SC. 5. The “Creek” is a wavy line of resistance drawn loosely across rally peaks within the trading range. There are minor lines of resistance and a
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more significant “creek” of supply that will have to be crossed before the market’s journey can continue onward and upward. 6-7. “Springs” or “shakeouts” usually occur late within the trading range and allow the dominant players to make a definitive test of available supply before a markup campaign will unfold. If the amount of supply that surfaces on a break of support is very light (low volume), it will be an indication that the way is clear for a sustained advance. Heavy supply here usually means a renewed decline. Moderate volume here may mean more testing of support and a time to proceed with caution. The spring or shakeout also serves the purpose of providing dominant interests with additional supply from weak holders at low prices. 8. “Jump” – continuing the creek analogy, the point at which price jumps through the resistance line; a bullish sign if the jump is achieved with increasing speed and volume. 9. SOS – sign of strength, an advance on increasing spread and volume, usually over some level of resistance 10-11. BU/LPS – last point of support, the ending point of a reaction or pullback at which support was met. Backing up to an LPS means a pullback to support that was formerly resistance, on diminished spread and volume after an SOS. This is a good place to initiate long positions or to add to profitable ones.
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STRUCTURAL ANALYSIS: What are Wyckoff Events?
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ELEVEN WYCKOFF TRADING RANGE EVENTS (Distribution)
7. (MSOW) Major sign of weakness, a pronounced break through the ice that will likely be followed by attempts to get back above it. A failure to get back above firm 1. (PSY) Preliminary Supply, where support may mean a “drowning” for the market. substantial selling begins to provide 8. (LPSY) Last Point of Supply After we test pronounced resistance after an upmove. the ice(support) on a SOW, a feeble rally Volume and spread widen and provide a signal that the upmove may be approaching attempt on narrow spread shows us the difficulty the market is its end. having in making a further rise. Volume may 2. (BC) Buying Climax, the point at which be light or heavy, showing weak demand or widening spread and the force of buying climaxes, and heavy or urgent buying by the substantial supply. It is at these LPSY’s that public is being filled by larger professional the last waves of distribution occur before markdown begins. interests at prices near a top. 3. (AR) Automatic Reaction, when buying is 9. Return to the ICE After a break through the ice, a rally attempt is thwarted at the pretty much exhausted and heavy supply continues to appear, an AR follows the BC. ice’s surface (now resistance). The rally meets a last wave of supply before The low of this selloff will help define the markdown ensues. LPSY’s here are good bottom of the Trading Range (TR). 4. (ST) Secondary Test(s) revisit the area of places to initiate a short position or to add to the BC to test the demand/supply balance at already profitable ones. these price levels. If a top is to be confirmed, 10. (UTAD) Upthrust After Distribution Similar to the Spring and Terminal Shakeout supply will outweigh demand and volume in the trading range of Accumulation, a and spread should be diminished as the UTAD may occur in a TR of distribution. It is a market approaches the resistance area of more definitive test of new demand after a the BC. 5. (SOW) Sign of Weakness will usually occur breakout above the resistance on increased spread and volume. Supply is line of the TR and usually occurs in the latter stages of the TR. dominant. Our first “fall on the ice” holds 11. (UT) as a ST (added by Roman). A violent and we get up try to forge ahead. rally to the upper boundaries of the range 6. The ICE is an analogy to a wavy line of support drawn loosely under reaction lows with subsequent failure down into the trading range. of the Trading Range.
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Swing Reversal Concept Distinction: Definition of a swing (based on the reversal bar pattern)
1. Identify the last significant bar. (SBar – big spread, close shows commitment to a trend) 2. Look for a reversal bar that closes below/above of the true range of a Sbar. (Rbar – commitment to an opposite trend) 3. The distance between the highest and lowest points is a swing. *There are quite a few methods of identifying a swing in real-time! Some of the most popular are comparison of counter-moves and penetration of pivot lows/highs.
- Last significant bar of a swing - Reversal bar - Swing
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CASE STUDY #1: INSTRUMENT: - Euro Dollar Currency Pair (EURUSD) TIME FRAMES: - Monthly (Long-term Price Structure) - Daily (Swing Price Structure) - 240 Minutes (Point of Entry Zone) IDEA #1: Day Trade when the long-term structure, daily swing structure and intraday structure are all in sync!
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Buying Climax
USE WYCKOFF STRUCTURAL ANALYSIS TO IDENTIFY A HIGH-PROBABILITY POINT OF ENTRY ZONE
Secondary Test
Secondary Test
Last Point of Supply In Phase |C|
High-Probability Point of Entry Zone on a Monthly Time Frame Automatic Reaction
Phase A
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Sign of Weakness in Phase |B|
Phase B
Phase C
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Buying Climax
Secondary Test
Upthrust in |B|
Upthrust After Distribution Last Point of Supply
High-Probability Point of Entry Zone on a Daily Time Frame Sign of Weakness
Automatic Reaction
Phase A
Phase B
Ph C Ph D
Automatic Rally
Exit is based on the Change of Character (CHoCH) behavior. Possible multiple exit points around CHoCH Bar and Secondary Test. www.WyckoffAnalytics.com
Selling Climax
Secondary Test
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USE WYCKOFF STRUCTURAL ANALYSIS TO IDENTIFY A HIGH-PROBABILITY POINT OF ENTRY ZONE ON A LOWER TIME FRAME
Upthrust After Distribution
Automatic Rally
Last Point of Supply
High-Probability Point of Entry Zone on a 240-minute Time Frame Selling Climax
Phase A
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Sign of Weakness
Secondary Test
Phase B
Phase C
Phase D
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USE WYCKOFF STRUCTURAL ANALYSIS TO IDENTIFY A HIGHPROBABILITY POINT OF ENTRY ZONE ON A LOWER TIME FRAME Selloff during European session
Upthrust After Distribution Automatic Rally
Selling Climax
Reaction starts during European session Selloff during European session
Last Point of Supply
Selloff during European session
Secondary Test
Phase A
Last Point of Supply
Phase B
Phase C
Phase D
Extreme Sign of Weakness Major Sign of Weakness
US session
Potential POE – US session www.WyckoffAnalytics.com
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CASE STUDY #2: INSTRUMENT: - Amazon (AMZN) TIME FRAMES: - Daily (Swing Price Structure) - 60 Minutes (Intraday Price Structure and Points of Entry) Questions to discuss: - Which stocks would you choose for intraday trading? - What are the preferred daily structural positions for stocks you select to day trade?
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USE WYCKOFF STRUCTURAL ANALYSIS TO IDENTIFY A HIGH-PROBABILITY POINT OF ENTRY ZONE ON A LOWER TIME FRAME Phase A
Phase C
Phase B
Phase D Sign of Strength Rally
Backing Up Action Selling Climax
Secondary Test in Phase|B|
Sign of Weakness in Phase |B|
Current Structure is under consideration for an Intraday/Swing trade
Last Point of Support in Phase |C| Supply contracts
Leadership Resumes
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Uptrending Relative Strength – Leadership remains
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USE WYCKOFF RELATIVE STRENGTH ANALYSIS TO IDENTIFY A HIGH-PROBABILITY POINT OF ENTRY ZONE ON A LOWER TIME FRAME Exit based on the Change of Character behavior
High-Probability Point of Entry Zone for an Intraday/Swing trade
IDEA #2: Established intermediateterm uptrend in a momentum stock is a good place to day trade!
Leadership Resumes
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Uptrending Relative Strength – Leadership remains
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General Guidelines and Rules for Day Trading Momentum Stocks
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Pre - Market
US session
Daily Swing Bias – UP
SOS
BUA Swing Reversals near Support - POE
LPS in Phase |C| Swing Reversal near Support - POE
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General Guidelines and Rules (for momentum stocks): #1: Define a current Daily Swing Bias #2: Trade a full-size position in the direction of the Daily Swing Bias and trade a lighter position during a counter-trend move #3: Define an intraday structural position, if possible #4: Define the intraday bias based on the intraday structural position. Go to a full-size position based on the intraday structural position, even if the Daily Swing Bias is in the opposite direction. #5: Define the Pre-Market boundaries (support and resistance structure) #6: Buy an intraday reversal near support and sell an intraday reversal near resistance #7: Define boundaries of the lunch period – 9:00-11:00 am (Pacific Time) – and use them as a Stop-Loss reference. #8: Do not open an intraday position in the last 20-30 minutes of a session #9: During the first 30 minutes of a session, compare a stock to the market and its peers
Intraday Comparative Selection CASE STUDY #3: INSTRUMENT: - QQQ and FANG stocks TIME FRAMES: - Daily (Swing Bias) - 5 Minutes (Points of Entry) IDEA #4: Day trade the stocks that are exhibiting comparative outperformance early in a session
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Daily Bias - UP
Daily Bias - UP
Daily Reversal
Daily Reversal
Daily Bias - UP
Daily Reversal
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Daily Bias - DOWN
Daily Reversal
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Daily Bias - UP
Daily Bias - UP
Break to the downside after 7:30am. Look to short.
Stronger than peers and market - Buy Structural Reversal after 11am. Look to buy.
Daily Bias - UP
Daily Bias - DOWN Break Below 30 mins Support – POE short
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Daily Bias - UP
Daily Bias - UP
Reversal. Look to buy.
Daily Bias - UP
Daily Bias - DOWN
Higher low on reversal shows that GOOGLE is stronger than peers and market - Buy
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Daily Bias - UP
Daily Bias - UP
Reversal after 11am. Look to buy.
Reversal. Look to buy.
Daily Bias - UP
Daily Bias - DOWN
Stronger than peers and market - Buy
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Daily Bias - UP
Daily Bias - UP
Stronger than peers and market - Buy
Reversal. Look to buy.
Daily Bias - UP
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Daily Bias - DOWN
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CASE STUDY #4: Intraday Trades vs. Intraday Switch to a Swing Trade
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Long-term Structural Price Analysis
Trade under consideration
BC
ST
Long-term ChoCH
LPS AR Phase A
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Phase B
Phase C
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Phase D
Structural Price Analysis of Long-term Phase |C|
Trade under consideration
Phase A
Phase B
Phase C
ST ChoCH
AR
ST
ST
Long-term Phase C
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LPS
Let’s look here at: 1. Intraday Price Structure 2. Daily Swing Reversal 3. Predominant Intraday Trend
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Daily Swing Reversal
60-minute time frame works really well and keeps us in this position for 3.5 days
Intraday Price Structure and Predominant Intraday Trend Predominant Trend on the previous rally is 60 minutes – use 60-minute time frame for your SL
Swing Reversal
SOS BU UA
Minor SOS
POE
AR LPS - Test SC
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ST
St
Spring
LPS - Test
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Intraday Points of Entry POE
#5
Minor SOS SOS
UA
AR
#4 SC
Spring
#1
ST
LPS - Test
Long-Term Phase C
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#2
Spring #3
ST BUA
LPS - Test
POINTS OF ENTRY Areas: #1: A reaction after a Minor SOS should be considered, but it contains a lot of Supply and therefore requires testing #2: Decreased Supply during lunch hours is suspect; need to wait for a true reversal #3: Too close to the end of the session – better wait for the opening #4: The reaction after the SOS gap up contains Supply – wait for a test #5: Biggest rally, smallest reaction – ChoCh – OPEN intraday position on a swing reversal and assess switching to a swing trade at the close
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Comparison between 5-minute Swing Reversal Trades vs. Intraday Switch-to-a-Swing Trades BC
5-minute Swing Reversal Trades: (Rules: 1. Opening position only between 7:00 am-12:30 pm PT; 2. Only go long; 3. No overnight positions) #1: 555.15 to 557.75= $2.6 #2: 557.50 to 557.75= $0.25 #3: 565.75 to 571.75= $6 #4: 582 to 583.50= $1.50 #5: 583.85 to 587.15= $3.3 #6: 584.75 to 583= -$1.75 (Total=$11.90)
ST
60-minute Predominant Trend Reversal Trades: CHoCH
#1: 555.15 to 582.50= $27.35 #2: 590.10 to 695.40= $105.30
ChoCh suggests exiting on the ST rally
Total collected: $132.65 2 wins, 0 losses
#7: 590.10 to 596.30= $6.20 #8: 596 to 601.75= $5.75 #9: 689.75 to 695.60= $5.85 #10: 696.30 to 695= -$0.30 #11: 699.30 to 698.75= -$0.55
POE
Total collected: $27.85 8 wins, 3 losses
Exit on the 60-min time frame reversal POE
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CASE STUDY #5: MNST - Intraday Switch to a Swing Trade
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Case Study: MNST – Intraday POE Switch to a Swing Trade
Exits - TM
TREND
POE- TM
CAUSE - Selection Momentum
Supply Absorption and Higher Lows - Readiness
Risk Management and Reward/Risk Optimization POE=28.50, SL=26.50, Risk=$2 Ave. Exit=$40, Ave. Profit=$11.50 Reward/Risk=11.50/2=5.75 For intraday POE and Daily Exit: Reward/Risk=12.35/0.30=41!!!
How do we achieve a higher Reward/Risk ratio?
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Case Study: MNST– Intraday POE Switch to a Swing Trade Stock opens up weaker than the market – no reason to trade it intraday. The price should be tested on the Daily chart.
Stock opens up stronger than the market, but there is no entry signal after the first 30 minutes of trading
Both market and stock gap down at open and the stock creates a lower low – skip intraday entry as Daily test has failed.
Stock opens up stronger than the market, but there is no entry signal after the first 30 minutes of trading
Stock opens up with the gap, but the first 30 minutes are weaker than the market – no intraday POE
Stock opens up with the gap, but the first 30 minutes are weaker than the market – no intraday POE
Stock opens up in line with the market. Only one successful intraday trade is possible, but no switch to Daily
Stock opens up stronger than the market, but there is no entry signal after the first 30 minutes of trading
Stock opens up stronger than the market and the first 30 minutes are stronger – execute intraday POE, hold through the day and keep original intraday SL in place.
POEs
Day 1
Day 2
Day 3
Day 4
Day 5
Day 6
Day 7
Day 8
Day 9
Phase C on Daily! – Start looking for intraday POE for an Optimal Swing Trade Risk Management and Reward/Risk Optimization POE=27.65, SL=27.35, Risk=$0.30 (instead of $2); Ave. Exit=$40, Ave. Profit=$12.35; Reward/Risk=12.35/0.30=41 What does this mean for a $100k portfolio? If your risk aversion level is only 0.25%=$250 per position, you will be able to buy $250/0.30=833 shares, or commit $23,032 of your capital. Your profit, after converting to Daily and Weekly stop-losses and with an average exit of around $40, will be $12.35*833=$10,288 or 10.3% in 122 days. You are risking $250 to gain over $10k! Your biggest risk is an overnight gap down. Imagine a 20% gap down from POE price of $27.65. The loss will equal 833*$5.53=$4,607 or 4.6% of your equity. If your risk aversion level is 1%=$1,000, you will be able to buy $1,000/0.30=3,333 shares or commit $92,158 of your capital. Your profit, after converting to Daily and Weekly stop-losses and with an average exit at around $40, will be $12.35*3,333=$41,163 or 41.2% in 122 days. Your biggest risk is still a gap down.
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General Guidelines and Rules for Day Trading E-minis
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US session Pre - US session (Asia and Europe)
General Guidelines and Rules (for E-minis): #1: Define a current Daily Swing Bias #2: Trade a full-size position in the direction of the Daily Swing Bias and trade a lighter position during a counter-trend move #3: Define an intraday structural position, if possible #4: Define the intraday bias based on the intraday structural position. Go to a full-size position based on the intraday structural position, even if the Daily Swing Bias is in the opposite direction. #5: Define the Pre-Market boundaries (support and resistance structure) #6: Buy an intraday reversal near support and sell an intraday reversal near resistance #7: Define boundaries of the lunch period – 9:00-11:00 am (Pacific Time) – and use them as a Stop-Loss reference. #8: Do not open an intraday position in the last 20-30 minutes of a session www.WyckoffAnalytics.com
Let’s look at all of the intraday trades for this US session and apply our guidelines and rules
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General Guidelines and Rules (for Eminis): #1: Define a current Daily Swing Bias #2: Trade a full-size position in the direction of the Daily Swing Bias and trade a lighter position during a counter-trend move #3: Define an intraday structural position, if possible #4: Define the intraday bias based on the intraday structural position. Go to a full-size position based on the intraday structural position, even if the Daily Swing Bias is in the opposite direction. #5: Define the Pre-Market boundaries (support and resistance structure) #6: Buy an intraday reversal near support and sell an intraday reversal near resistance #7: Define boundaries of the lunch period – 9:00-11:00 am (Pacific Time) – and use them as a Stop-Loss reference. #8: Do not open an intraday position in the last 20-30 minutes of a session
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Exercise #1.0 Task: Identify all possible Points of Entry
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General Guidelines and Rules (for Eminis): #1: Define a current Daily Swing Bias #2: Trade a full-size position in the direction of the Daily Swing Bias and trade a lighter position during a counter-trend move #3: Define an intraday structural position, if possible #4: Define the intraday bias based on the intraday structural position. Go to a full-size position based on the intraday structural position, even if the Daily Swing Bias is in the opposite direction. #5: Define the Pre-Market boundaries (support and resistance structure) #6: Buy an intraday reversal near support and sell an intraday reversal near resistance #7: Define boundaries of the lunch period – 9:00-11:00 am (Pacific Time) – and use them as a Stop-Loss reference. #8: Do not open an intraday position in the last 20-30 minutes of a session www.WyckoffAnalytics.com
Daily Swing Bias – UP, but Daily VPA suggests an Upthrust action and shows some weakness. Therefore, both short and long are possible with full-size positions.
Exercise #1.0 - Solution
Swing Reversal near Resistance - POE
Swing Reversal near Support – POE. Premarket boundary is acting as a Support! Swing Reversal – POE. Alternative POE during lunch hours. Swing Reversal near Support - POE Swing Reversal near Support - POE
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CASE STUDY #6: Trade Intraday Price Structure (EXERCISE)
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Secondary Test
Buying Climax
USE WYCKOFF STRUCTURAL ANALYSIS TO TRADE INTRADAY :
|C| Last Point of Supply
Automatic Reaction
Directional Daily Swing Bias: DOWN Potential Longer-term Structural Scenarios at point #1: 1. Is this a Secondary Test (ST) in Phase |A|? 2. Is this a ST in Phase |B|? 3. Could this be Phase |C|? All three scenarios suggest an upswing to retest the 1,930 price area.
Minor Sign of Weakness
Intraday Trading Range under trading consideration
Selling Climax
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#1
Trading Tactics: - Trade the trading range structure intraday based on Wyckoff structural analysis - IDEA #5: Define the intraday bias based on the trading range structure - Switch intraday position to a longer-term swing position if change of character is confirmed (to be discussed later)
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Exercise #1.1: ES – Wyckoff Structure defines Intraday Bias
Questions to discuss: 2
US session
3 1
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-
What is the current Daily Swing Bias? How do you interpret rally 1-2? Label it. How do you interpret reaction 2-3? Label it. What is your intraday bias for the next trading session based on your Wyckoff labeling?
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Exercise #1.1 Task: Identify all possible Points of Entry
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Exercise #1.1 - Solution
Swing Reversal near Resistance - POE
Daily Swing Bias – DOWN, but Intraday Structure suggests an Upthrust and Secondary Tests in Phase |B|. Therefore, both short and long are possible with full-sized positions.
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Swing Reversal near Support - POE
Swing Reversal near Support - POE
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Exercise #1.2: ES – Wyckoff Structure defines Intraday Bias
2
Automatic Rally
Questions to discuss: - What is the current Daily Swing Bias? - How do you interpret points 1-2-3? Label them.
Secondary Test
US session Selling Climax
3 1
- What is your intraday bias for the next trading session based on your Wyckoff labeling?
Phase A
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Exercise #1.2 Task: Identify all possible Points of Entry
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Exercise #1.2 - Solution Swing Reversals near Resistance - POE
Daily Swing Bias – DOWN, but Intraday Structure suggests an Upthrust in Phase |B|. Therefore, both short and long are possible with full-sized positions.
Swing Reversal - POE Swing Reversal near Support - POE
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Exercise #1.3: ES – Wyckoff Structure defines Intraday Bias
2
Upthrust Action in Phase |B| Automatic Rally
1
Secondary Test
US session Selling Climax
Phase A
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Questions to discuss:
3 Secondary Test in Phase |B|
- What is the current Daily Swing Bias? - How do you interpret points 1-2-3? Label them. - What is your intraday bias for the next trading session based on your Wyckoff labeling?
Phase B
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Exercise #1.3 Task: Identify all possible Points of Entry
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Exercise #1.3 - Solution Daily Swing Bias – DOWN, but Intraday Structure suggests possible Phase |C|. Therefore, both short and long are possible with full-sized positions.
Swing Reversal - POE
Swing Reversal - POE
Swing Reversals near Support - POE
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Upthrust Action in Phase |B|
Exercise #1.4: ES – Wyckoff Structure defines Intraday Bias
Upthrust Action in Phase |B| Automatic Rally
Questions to discuss:
Secondary Test
US session Selling Climax
Phase A
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Secondary Test in Phase |B|
Phase B
1
2
- What is the current Daily Swing Bias? - How do you interpret points 1-2? Label them. - What is your intraday bias for the next trading session based on your Wyckoff labeling?
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Exercise #1.4 Task: Identify all possible Points of Entry
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Exercise #1.4 - Solution
Daily Swing Bias – UP after previous day’s CHoCH bar.
Swing Reversal near Support - POE
Swing Reversal - POE
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Upthrust Action in Phase |B|
Upthrust Action in Phase |B|
Exercise #1.5: ES – Wyckoff Structure defines Intraday Bias
Automatic Rally Sign of Strength Rally in Phase |D|
Secondary Test
US session Selling Climax
Phase A
Secondary Test in Phase |B|
Phase B
Phase C
Phase D
Shakeout in Phase|C| with a Test
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Intraday Trades vs. Intraday Switch to a Swing Trade CASE STUDY #3: INSTRUMENT: - E-Mini Continuous Contract (ES) TIME FRAMES: - Daily (Swing Price Structure) - 30 Minutes (Intraday Price Structure) - 3 Minutes (Point of Entry Zone)
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Secondary Test
Buying Climax
USE WYCKOFF STRUCTURAL ANALYSIS TO CREATE A TRADING TACTIC:
|C| Last Point of Supply
Automatic Reaction
Events at bars #1 and 2: - Possible Change of Character (#1) - Confirmation of Up Swing Reversal (#2)
Minor Sign of Weakness
Resistance at 1,930
Projected trade with intraday POE and a switch to a swing trade
#2
Selling Climax
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Directional Swing Bias: UP. Target: Resistance at 1,930 level. Possible Structural Scenarios at bar #1: 1. ST in Phase |A| 2. ST in Phase |B| 3. Phase |C| All three scenarios suggest an upswing as a retest of the 1,930 price area.
#1 ST in Phase |A|, or ST in Phase |B|, or Phase |C|
Trading Tactics: - Find an intraday point of entry - IDEA #5: Switch intraday position to swing position on the confirmation of the change of character - Exit based on the swing reversal or another change of character near the 1,930 target area Copyright © 2016 Wyckoff Associates, LLC. All Rights Reserved.
Upthrust Action in Phase |B|
Upthrust Action in Phase |B|
Daily Bar #1
Daily Bar #2
- Potential Change of Character Bar near Support Area
-
-
Change of Character of Bar #1 and a Swing Reversal Confirmation Daily Directional Bias is UP
Automatic Rally Sign of Strength Rally in Phase |D|
Secondary Test
Selling Climax
Phase A
Intraday Point of Entry Zone
Secondary Test in Phase |B|
Phase B
Phase C
Phase D
Shakeout in Phase|C| with a Test
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INTRADAY POINT OF ENTRY AND A SWITCH TO SWING TRADE WITH A STRUCTURAL TARGET EXIT
Daily Bar #2 -
-
Change of Character of Bar #1 and Swing Reversal Confirmation Daily Directional Bias is UP
Another possible POE
Another possible POE
DAILY Resistance at 1,930
Intraday Point of Entry Bar – 1,829.75 Stop-loss – 1,824
#2 #1
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Intraday POE and a switch to a swing trade with a structural exit
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Q&A session
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INTRADAY TRADING USING THE WYCKOFF METHOD
INTRADAY TRADING USING THE WYCKOFF METHOD WORKSHOP March 19, 2016
SWING TRADING USING THE WYCKOFF METHOD March 19, 2016
Today’s Schedule: 8:30 – 10:20 am - Part I 10:20 – 10:30 am - Break 10:30 – 12:30 pm - Part II 12:30 – 1:15 pm - Lunch 1:15 – 2:50 pm - Part III 2:50 – 3:00 pm - Break 3:00 – 4:30 pm - Part IV Video recording: This workshop will be recorded for further distribution to workshop participants. These recordings are intended for your own use only. Please respect the proprietary, copyrighted nature of the materials and do not share or distribute them. Workshop slides: The PDF slides file will be available to you. Make a lot of notes, but be ready to engage in the discussion. Lunch: Lunch break is from 12:30 to 1:15 pm. Please return on time! Evaluation form: We will ask you to complete an evaluation form after the workshop. We would greatly appreciate your feedback to help improve the workshop for future presentations. Most importantly:
HAVE A GREAT EXPERIENCE LEARNING ABOUT WYCKOFF INTRADAY TRADING! www.WyckoffAnalytics.com
Disclaimer Roman Bogomazov (“Presenter”) is not a registered investment advisor or broker-dealer and does not purport to recommend or suggest any securities to buy or sell. You understand and acknowledge that there is a very high degree of risk involved in trading securities. Presenter assumes no responsibility or liability for your trading and investment results. You and you alone are responsible for your own trading and investment decisions and results. It should not be assumed that the methods, techniques, or indicators presented will be profitable or that they will not result in losses. Past results of any individual trader or trading system published by Presenter are not indicative of future returns by that trader or system, and are not indicative of future returns which will be realized by you. In addition, the indicators, strategies, articles and all other features of Presenter's products are provided for informational and educational purposes only and should not be construed as investment advice. Accordingly, you should not rely solely on the Presenter’s information in making any investment. Rather, you should use the Presenter’s information only as a starting point for doing additional independent research in order to allow you to form your own opinion regarding investments. You should always check with your licensed financial advisor and tax advisor to determine the suitability of any investment. HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN INHERENT LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING AND DO NOT INCLUDE BROKERAGE AND OTHER FEES, OR SLIPPAGE. ALSO, IN SIMULATED PERFORMANCE RESULTS NO TRADES HAVE ACTUALLY BEEN EXECUTED, AND THEREFORE THE RESULTS MAY HAVE UNDER- OR OVER-COMPENSATED FOR THE IMPACTS OF A VARIETY OF MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS, IN GENERAL, CAN ALSO BE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES SIMILAR TO THOSE SHOWN.
INTRODUCTION
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MY TRADING TRAINING AND TEACHING EXPERIENCE Roman Bogomazov: -Originally from Vladivostok, Russia. Immigrated in 1996. Education: - Student at Golden Gate University (GGU) in 1997-2000. Bruce Fraser and Professor Hank Pruden were my teachers and continue to be my mentors - Certificate in technical market analysis and MS in Finance, both from GGU - Passed Level I and II CMT designation exams - Series 7 designation Trading experience: - I consult for hedge funds and other financial institutions on trading strategies and implementation - I have been trading for the last 20 years. I have traded stocks, options, futures, and forex - I trade two strategies: (1) a short-term swing/intraday strategy, based on momentum of a swing; (2) longer-term swing trading of stocks based on the Wyckoff methodology Teaching and coaching: - Teaching FI354 and FI355 Wyckoff classes online at Golden Gate University - Teaching an Advanced Wyckoff Trading Course (AWTC), Wyckoff Practicum Trading Course (WPTC) and conducting weekly Market and Stocks Outlook (MASO) sessions with Wyckoff Associates, LLC Affiliations: - Past President of TSAASF (www.tsaasf.org) and Board Member of IFTA (ifta.org) - Member of San Francisco chapter of Ed Seykota’s trading tribe www.WyckoffAnalytics.com
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INTRADAY TRADING USING THE WYCKOFF METHOD March 19, 2016
Student Intentions: - Name - Your intention: what do you hope to gain from this workshop?
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WORKSHOP OUTLINE
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INTRADAY TRADING USING THE WYCKOFF METHOD March 19, 2016
Outline of material for today (page 1):
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1.
Introduction
2.
The Wyckoff Method Review • Change of Character • Wyckoff Phase Analysis • Wyckoff Accumulation Trading Range Events • Wyckoff Distribution Trading Range Events • Swing Reversal Concept
3.
Synchronization of Different Time Frame Structures • Case Study #1: EURUSD • Monthly EURUSD structure • Daily EURUSD structure • 240 minutes EURUSD structure • 30 minutes EURUSD structure • Points of Entry • Different trading sessions
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INTRADAY TRADING USING THE WYCKOFF METHOD Outline of material for today (page 2): 4.
Selection of the Momentum Stocks for Day Trading • Case Study #2: AMZN • Leadership with momentum stocks • Identification of the Daily Swing Bias • Identification of the Daily Chart Trend • Identification of the Daily Swing Structure • Resumption of the Leadership Trend on a lower time frame
5. General Guidelines and Rules for Day Trading Momentum Stocks 6. Intraday Comparative Selection and Points of Entry • Case Study #3: Momentum Stocks (FANG) • Daily Swing Bias • Comparative evaluation of the first 30 minutes of a session • Intraday points of entry 7. Intraday Trades vs. Intraday Switch to a Swing Trade • Case Study #4: GOOGL • Long-term price analysis • Daily swing reversal • Predominant intraday trend • Intraday points of entry • Comparison between intraday and swing trades
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SWING TRADING USING THE WYCKOFF METHOD Outline of material for today (page 3): 8. Intraday Switch to a Swing Trade - I • Case Study #5: MNST • Intraday point of entry switch to a swing trade • Intraday points of entry 9.
General Guidelines and Rules for Trading E-minis • Rules and Guidelines • Exercise
10. Trading Intraday Price Structure • Case Study #6: ES • Daily Swing Bias analysis • Daily chart structural analysis • Exercise: Combining intraday structural analysis with intraday swing reversal entries 11. Intraday Switch to a Swing Trade - II • Case Study #7: ES • Daily structural analysis • Intraday price structure • Intraday points of entry 12. Q&A session www.WyckoffAnalytics.com
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The Wyckoff Method Main Structural Concepts + Reversal of a Swing Concept
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CHoCH
CHANGE OF CHARACTER (CHoCH)
CHoCH
WHEN does a trend change into consolidation? HOW can we identify this change in environment?
Phase A
Phase D
“The Creation of a Trend”
CHoCH
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CHoCH
Phase D Trending environment
Non-trending environment
Trending
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STRUCTURAL ANALYSIS: What are Wyckoff Phases? INTENTIONS BEHIND PHASES (Accumulation)
STOP
BUILD CAUSE SUPPLY & DEMAND
TEST
MARKUP in TR
MARKUP out of TR
CHoCH CHoCH
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STRUCTURAL ANALYSIS: What are Wyckoff Accumulation Events?
ELEVEN WYCKOFF TRADING RANGE EVENTS (Accumulation) 1. PS – preliminary support, where substantial buying begins to provide pronounced support after a prolonged down-move. Volume and the price spread widen and provide a signal that the down-move may be approaching its end. 2. SC – selling climax, the point at which widening spread and selling pressure usually climaxes and heavy or panicky selling by the public is being absorbed by larger professional interests at prices near the bottom. At the low, the climax helps to define the lower level of the trading range. 3. AR – automatic rally, where selling pressure has been exhausted. A wave of buying can now easily push up prices, which is further fuelled by short covering. The high of this rally will help define the top of the trading range. 4. ST – secondary test, price revisits the area of the selling climax to test the supply/demand at these price levels. If a bottom is to be confirmed, significant supply should not resurface, and volume and price spread should be significantly diminished as the market approaches support in the area of the SC. 5. The “Creek” is a wavy line of resistance drawn loosely across rally peaks within the trading range. There are minor lines of resistance and a
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more significant “creek” of supply that will have to be crossed before the market’s journey can continue onward and upward. 6-7. “Springs” or “shakeouts” usually occur late within the trading range and allow the dominant players to make a definitive test of available supply before a markup campaign will unfold. If the amount of supply that surfaces on a break of support is very light (low volume), it will be an indication that the way is clear for a sustained advance. Heavy supply here usually means a renewed decline. Moderate volume here may mean more testing of support and a time to proceed with caution. The spring or shakeout also serves the purpose of providing dominant interests with additional supply from weak holders at low prices. 8. “Jump” – continuing the creek analogy, the point at which price jumps through the resistance line; a bullish sign if the jump is achieved with increasing speed and volume. 9. SOS – sign of strength, an advance on increasing spread and volume, usually over some level of resistance 10-11. BU/LPS – last point of support, the ending point of a reaction or pullback at which support was met. Backing up to an LPS means a pullback to support that was formerly resistance, on diminished spread and volume after an SOS. This is a good place to initiate long positions or to add to profitable ones.
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STRUCTURAL ANALYSIS: What are Wyckoff Events?
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ELEVEN WYCKOFF TRADING RANGE EVENTS (Distribution)
7. (MSOW) Major sign of weakness, a pronounced break through the ice that will likely be followed by attempts to get back above it. A failure to get back above firm 1. (PSY) Preliminary Supply, where support may mean a “drowning” for the market. substantial selling begins to provide 8. (LPSY) Last Point of Supply After we test pronounced resistance after an upmove. the ice(support) on a SOW, a feeble rally Volume and spread widen and provide a signal that the upmove may be approaching attempt on narrow spread shows us the difficulty the market is its end. having in making a further rise. Volume may 2. (BC) Buying Climax, the point at which be light or heavy, showing weak demand or widening spread and the force of buying climaxes, and heavy or urgent buying by the substantial supply. It is at these LPSY’s that public is being filled by larger professional the last waves of distribution occur before markdown begins. interests at prices near a top. 3. (AR) Automatic Reaction, when buying is 9. Return to the ICE After a break through the ice, a rally attempt is thwarted at the pretty much exhausted and heavy supply continues to appear, an AR follows the BC. ice’s surface (now resistance). The rally meets a last wave of supply before The low of this selloff will help define the markdown ensues. LPSY’s here are good bottom of the Trading Range (TR). 4. (ST) Secondary Test(s) revisit the area of places to initiate a short position or to add to the BC to test the demand/supply balance at already profitable ones. these price levels. If a top is to be confirmed, 10. (UTAD) Upthrust After Distribution Similar to the Spring and Terminal Shakeout supply will outweigh demand and volume in the trading range of Accumulation, a and spread should be diminished as the UTAD may occur in a TR of distribution. It is a market approaches the resistance area of more definitive test of new demand after a the BC. 5. (SOW) Sign of Weakness will usually occur breakout above the resistance on increased spread and volume. Supply is line of the TR and usually occurs in the latter stages of the TR. dominant. Our first “fall on the ice” holds 11. (UT) as a ST (added by Roman). A violent and we get up try to forge ahead. rally to the upper boundaries of the range 6. The ICE is an analogy to a wavy line of support drawn loosely under reaction lows with subsequent failure down into the trading range. of the Trading Range.
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Swing Reversal Concept Distinction: Definition of a swing (based on the reversal bar pattern)
1. Identify the last significant bar. (SBar – big spread, close shows commitment to a trend) 2. Look for a reversal bar that closes below/above of the true range of a Sbar. (Rbar – commitment to an opposite trend) 3. The distance between the highest and lowest points is a swing. *There are quite a few methods of identifying a swing in real-time! Some of the most popular are comparison of counter-moves and penetration of pivot lows/highs.
- Last significant bar of a swing - Reversal bar - Swing
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CASE STUDY #1: INSTRUMENT: - Euro Dollar Currency Pair (EURUSD) TIME FRAMES: - Monthly (Long-term Price Structure) - Daily (Swing Price Structure) - 240 Minutes (Point of Entry Zone) IDEA #1: Day Trade when the long-term structure, daily swing structure and intraday structure are all in sync!
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Buying Climax
USE WYCKOFF STRUCTURAL ANALYSIS TO IDENTIFY A HIGH-PROBABILITY POINT OF ENTRY ZONE
Secondary Test
Secondary Test
Last Point of Supply In Phase |C|
High-Probability Point of Entry Zone on a Monthly Time Frame Automatic Reaction
Phase A
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Sign of Weakness in Phase |B|
Phase B
Phase C
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Buying Climax
Secondary Test
Upthrust in |B|
Upthrust After Distribution Last Point of Supply
High-Probability Point of Entry Zone on a Daily Time Frame Sign of Weakness
Automatic Reaction
Phase A
Phase B
Ph C Ph D
Automatic Rally
Exit is based on the Change of Character (CHoCH) behavior. Possible multiple exit points around CHoCH Bar and Secondary Test. www.WyckoffAnalytics.com
Selling Climax
Secondary Test
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USE WYCKOFF STRUCTURAL ANALYSIS TO IDENTIFY A HIGH-PROBABILITY POINT OF ENTRY ZONE ON A LOWER TIME FRAME
Upthrust After Distribution
Automatic Rally
Last Point of Supply
High-Probability Point of Entry Zone on a 240-minute Time Frame Selling Climax
Phase A
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Sign of Weakness
Secondary Test
Phase B
Phase C
Phase D
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USE WYCKOFF STRUCTURAL ANALYSIS TO IDENTIFY A HIGHPROBABILITY POINT OF ENTRY ZONE ON A LOWER TIME FRAME Selloff during European session
Upthrust After Distribution Automatic Rally
Selling Climax
Reaction starts during European session Selloff during European session
Last Point of Supply
Selloff during European session
Secondary Test
Phase A
Last Point of Supply
Phase B
Phase C
Phase D
Extreme Sign of Weakness Major Sign of Weakness
US session
Potential POE – US session www.WyckoffAnalytics.com
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CASE STUDY #2: INSTRUMENT: - Amazon (AMZN) TIME FRAMES: - Daily (Swing Price Structure) - 60 Minutes (Intraday Price Structure and Points of Entry) Questions to discuss: - Which stocks would you choose for intraday trading? - What are the preferred daily structural positions for stocks you select to day trade?
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USE WYCKOFF STRUCTURAL ANALYSIS TO IDENTIFY A HIGH-PROBABILITY POINT OF ENTRY ZONE ON A LOWER TIME FRAME Phase A
Phase C
Phase B
Phase D Sign of Strength Rally
Backing Up Action Selling Climax
Secondary Test in Phase|B|
Sign of Weakness in Phase |B|
Current Structure is under consideration for an Intraday/Swing trade
Last Point of Support in Phase |C| Supply contracts
Leadership Resumes
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Uptrending Relative Strength – Leadership remains
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USE WYCKOFF RELATIVE STRENGTH ANALYSIS TO IDENTIFY A HIGH-PROBABILITY POINT OF ENTRY ZONE ON A LOWER TIME FRAME Exit based on the Change of Character behavior
High-Probability Point of Entry Zone for an Intraday/Swing trade
IDEA #2: Established intermediateterm uptrend in a momentum stock is a good place to day trade!
Leadership Resumes
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Uptrending Relative Strength – Leadership remains
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General Guidelines and Rules for Day Trading Momentum Stocks
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Pre - Market
US session
Daily Swing Bias – UP
SOS
BUA Swing Reversals near Support - POE
LPS in Phase |C| Swing Reversal near Support - POE
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General Guidelines and Rules (for momentum stocks): #1: Define a current Daily Swing Bias #2: Trade a full-size position in the direction of the Daily Swing Bias and trade a lighter position during a counter-trend move #3: Define an intraday structural position, if possible #4: Define the intraday bias based on the intraday structural position. Go to a full-size position based on the intraday structural position, even if the Daily Swing Bias is in the opposite direction. #5: Define the Pre-Market boundaries (support and resistance structure) #6: Buy an intraday reversal near support and sell an intraday reversal near resistance #7: Define boundaries of the lunch period – 9:00-11:00 am (Pacific Time) – and use them as a Stop-Loss reference. #8: Do not open an intraday position in the last 20-30 minutes of a session #9: During the first 30 minutes of a session, compare a stock to the market and its peers
Intraday Comparative Selection CASE STUDY #3: INSTRUMENT: - QQQ and FANG stocks TIME FRAMES: - Daily (Swing Bias) - 5 Minutes (Points of Entry) IDEA #4: Day trade the stocks that are exhibiting comparative outperformance early in a session
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Daily Bias - UP
Daily Bias - UP
Daily Reversal
Daily Reversal
Daily Bias - UP
Daily Reversal
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Daily Bias - DOWN
Daily Reversal
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Daily Bias - UP
Daily Bias - UP
Break to the downside after 7:30am. Look to short.
Stronger than peers and market - Buy Structural Reversal after 11am. Look to buy.
Daily Bias - UP
Daily Bias - DOWN Break Below 30 mins Support – POE short
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Daily Bias - UP
Daily Bias - UP
Reversal. Look to buy.
Daily Bias - UP
Daily Bias - DOWN
Higher low on reversal shows that GOOGLE is stronger than peers and market - Buy
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Daily Bias - UP
Daily Bias - UP
Reversal after 11am. Look to buy.
Reversal. Look to buy.
Daily Bias - UP
Daily Bias - DOWN
Stronger than peers and market - Buy
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Daily Bias - UP
Daily Bias - UP
Stronger than peers and market - Buy
Reversal. Look to buy.
Daily Bias - UP
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Daily Bias - DOWN
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CASE STUDY #4: Intraday Trades vs. Intraday Switch to a Swing Trade
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Long-term Structural Price Analysis
Trade under consideration
BC
ST
Long-term ChoCH
LPS AR Phase A
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Phase B
Phase C
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Phase D
Structural Price Analysis of Long-term Phase |C|
Trade under consideration
Phase A
Phase B
Phase C
ST ChoCH
AR
ST
ST
Long-term Phase C
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LPS
Let’s look here at: 1. Intraday Price Structure 2. Daily Swing Reversal 3. Predominant Intraday Trend
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Daily Swing Reversal
60-minute time frame works really well and keeps us in this position for 3.5 days
Intraday Price Structure and Predominant Intraday Trend Predominant Trend on the previous rally is 60 minutes – use 60-minute time frame for your SL
Swing Reversal
SOS BU UA
Minor SOS
POE
AR LPS - Test SC
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ST
St
Spring
LPS - Test
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Intraday Points of Entry POE
#5
Minor SOS SOS
UA
AR
#4 SC
Spring
#1
ST
LPS - Test
Long-Term Phase C
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#2
Spring #3
ST BUA
LPS - Test
POINTS OF ENTRY Areas: #1: A reaction after a Minor SOS should be considered, but it contains a lot of Supply and therefore requires testing #2: Decreased Supply during lunch hours is suspect; need to wait for a true reversal #3: Too close to the end of the session – better wait for the opening #4: The reaction after the SOS gap up contains Supply – wait for a test #5: Biggest rally, smallest reaction – ChoCh – OPEN intraday position on a swing reversal and assess switching to a swing trade at the close
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Comparison between 5-minute Swing Reversal Trades vs. Intraday Switch-to-a-Swing Trades BC
5-minute Swing Reversal Trades: (Rules: 1. Opening position only between 7:00 am-12:30 pm PT; 2. Only go long; 3. No overnight positions) #1: 555.15 to 557.75= $2.6 #2: 557.50 to 557.75= $0.25 #3: 565.75 to 571.75= $6 #4: 582 to 583.50= $1.50 #5: 583.85 to 587.15= $3.3 #6: 584.75 to 583= -$1.75 (Total=$11.90)
ST
60-minute Predominant Trend Reversal Trades: CHoCH
#1: 555.15 to 582.50= $27.35 #2: 590.10 to 695.40= $105.30
ChoCh suggests exiting on the ST rally
Total collected: $132.65 2 wins, 0 losses
#7: 590.10 to 596.30= $6.20 #8: 596 to 601.75= $5.75 #9: 689.75 to 695.60= $5.85 #10: 696.30 to 695= -$0.30 #11: 699.30 to 698.75= -$0.55
POE
Total collected: $27.85 8 wins, 3 losses
Exit on the 60-min time frame reversal POE
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CASE STUDY #5: MNST - Intraday Switch to a Swing Trade
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Case Study: MNST – Intraday POE Switch to a Swing Trade
Exits - TM
TREND
POE- TM
CAUSE - Selection Momentum
Supply Absorption and Higher Lows - Readiness
Risk Management and Reward/Risk Optimization POE=28.50, SL=26.50, Risk=$2 Ave. Exit=$40, Ave. Profit=$11.50 Reward/Risk=11.50/2=5.75 For intraday POE and Daily Exit: Reward/Risk=12.35/0.30=41!!!
How do we achieve a higher Reward/Risk ratio?
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Case Study: MNST– Intraday POE Switch to a Swing Trade Stock opens up weaker than the market – no reason to trade it intraday. The price should be tested on the Daily chart.
Stock opens up stronger than the market, but there is no entry signal after the first 30 minutes of trading
Both market and stock gap down at open and the stock creates a lower low – skip intraday entry as Daily test has failed.
Stock opens up stronger than the market, but there is no entry signal after the first 30 minutes of trading
Stock opens up with the gap, but the first 30 minutes are weaker than the market – no intraday POE
Stock opens up with the gap, but the first 30 minutes are weaker than the market – no intraday POE
Stock opens up in line with the market. Only one successful intraday trade is possible, but no switch to Daily
Stock opens up stronger than the market, but there is no entry signal after the first 30 minutes of trading
Stock opens up stronger than the market and the first 30 minutes are stronger – execute intraday POE, hold through the day and keep original intraday SL in place.
POEs
Day 1
Day 2
Day 3
Day 4
Day 5
Day 6
Day 7
Day 8
Day 9
Phase C on Daily! – Start looking for intraday POE for an Optimal Swing Trade Risk Management and Reward/Risk Optimization POE=27.65, SL=27.35, Risk=$0.30 (instead of $2); Ave. Exit=$40, Ave. Profit=$12.35; Reward/Risk=12.35/0.30=41 What does this mean for a $100k portfolio? If your risk aversion level is only 0.25%=$250 per position, you will be able to buy $250/0.30=833 shares, or commit $23,032 of your capital. Your profit, after converting to Daily and Weekly stop-losses and with an average exit of around $40, will be $12.35*833=$10,288 or 10.3% in 122 days. You are risking $250 to gain over $10k! Your biggest risk is an overnight gap down. Imagine a 20% gap down from POE price of $27.65. The loss will equal 833*$5.53=$4,607 or 4.6% of your equity. If your risk aversion level is 1%=$1,000, you will be able to buy $1,000/0.30=3,333 shares or commit $92,158 of your capital. Your profit, after converting to Daily and Weekly stop-losses and with an average exit at around $40, will be $12.35*3,333=$41,163 or 41.2% in 122 days. Your biggest risk is still a gap down.
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General Guidelines and Rules for Day Trading E-minis
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US session Pre - US session (Asia and Europe)
General Guidelines and Rules (for E-minis): #1: Define a current Daily Swing Bias #2: Trade a full-size position in the direction of the Daily Swing Bias and trade a lighter position during a counter-trend move #3: Define an intraday structural position, if possible #4: Define the intraday bias based on the intraday structural position. Go to a full-size position based on the intraday structural position, even if the Daily Swing Bias is in the opposite direction. #5: Define the Pre-Market boundaries (support and resistance structure) #6: Buy an intraday reversal near support and sell an intraday reversal near resistance #7: Define boundaries of the lunch period – 9:00-11:00 am (Pacific Time) – and use them as a Stop-Loss reference. #8: Do not open an intraday position in the last 20-30 minutes of a session www.WyckoffAnalytics.com
Let’s look at all of the intraday trades for this US session and apply our guidelines and rules
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General Guidelines and Rules (for Eminis): #1: Define a current Daily Swing Bias #2: Trade a full-size position in the direction of the Daily Swing Bias and trade a lighter position during a counter-trend move #3: Define an intraday structural position, if possible #4: Define the intraday bias based on the intraday structural position. Go to a full-size position based on the intraday structural position, even if the Daily Swing Bias is in the opposite direction. #5: Define the Pre-Market boundaries (support and resistance structure) #6: Buy an intraday reversal near support and sell an intraday reversal near resistance #7: Define boundaries of the lunch period – 9:00-11:00 am (Pacific Time) – and use them as a Stop-Loss reference. #8: Do not open an intraday position in the last 20-30 minutes of a session
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Exercise #1.0 Task: Identify all possible Points of Entry
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General Guidelines and Rules (for Eminis): #1: Define a current Daily Swing Bias #2: Trade a full-size position in the direction of the Daily Swing Bias and trade a lighter position during a counter-trend move #3: Define an intraday structural position, if possible #4: Define the intraday bias based on the intraday structural position. Go to a full-size position based on the intraday structural position, even if the Daily Swing Bias is in the opposite direction. #5: Define the Pre-Market boundaries (support and resistance structure) #6: Buy an intraday reversal near support and sell an intraday reversal near resistance #7: Define boundaries of the lunch period – 9:00-11:00 am (Pacific Time) – and use them as a Stop-Loss reference. #8: Do not open an intraday position in the last 20-30 minutes of a session www.WyckoffAnalytics.com
Daily Swing Bias – UP, but Daily VPA suggests an Upthrust action and shows some weakness. Therefore, both short and long are possible with full-size positions.
Exercise #1.0 - Solution
Swing Reversal near Resistance - POE
Swing Reversal near Support – POE. Premarket boundary is acting as a Support! Swing Reversal – POE. Alternative POE during lunch hours. Swing Reversal near Support - POE Swing Reversal near Support - POE
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CASE STUDY #6: Trade Intraday Price Structure (EXERCISE)
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Secondary Test
Buying Climax
USE WYCKOFF STRUCTURAL ANALYSIS TO TRADE INTRADAY :
|C| Last Point of Supply
Automatic Reaction
Directional Daily Swing Bias: DOWN Potential Longer-term Structural Scenarios at point #1: 1. Is this a Secondary Test (ST) in Phase |A|? 2. Is this a ST in Phase |B|? 3. Could this be Phase |C|? All three scenarios suggest an upswing to retest the 1,930 price area.
Minor Sign of Weakness
Intraday Trading Range under trading consideration
Selling Climax
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#1
Trading Tactics: - Trade the trading range structure intraday based on Wyckoff structural analysis - IDEA #5: Define the intraday bias based on the trading range structure - Switch intraday position to a longer-term swing position if change of character is confirmed (to be discussed later)
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Exercise #1.1: ES – Wyckoff Structure defines Intraday Bias
Questions to discuss: 2
US session
3 1
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-
What is the current Daily Swing Bias? How do you interpret rally 1-2? Label it. How do you interpret reaction 2-3? Label it. What is your intraday bias for the next trading session based on your Wyckoff labeling?
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Exercise #1.1 Task: Identify all possible Points of Entry
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Exercise #1.1 - Solution
Swing Reversal near Resistance - POE
Daily Swing Bias – DOWN, but Intraday Structure suggests an Upthrust and Secondary Tests in Phase |B|. Therefore, both short and long are possible with full-sized positions.
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Swing Reversal near Support - POE
Swing Reversal near Support - POE
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Exercise #1.2: ES – Wyckoff Structure defines Intraday Bias
2
Automatic Rally
Questions to discuss: - What is the current Daily Swing Bias? - How do you interpret points 1-2-3? Label them.
Secondary Test
US session Selling Climax
3 1
- What is your intraday bias for the next trading session based on your Wyckoff labeling?
Phase A
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Exercise #1.2 Task: Identify all possible Points of Entry
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Exercise #1.2 - Solution Swing Reversals near Resistance - POE
Daily Swing Bias – DOWN, but Intraday Structure suggests an Upthrust in Phase |B|. Therefore, both short and long are possible with full-sized positions.
Swing Reversal - POE Swing Reversal near Support - POE
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Exercise #1.3: ES – Wyckoff Structure defines Intraday Bias
2
Upthrust Action in Phase |B| Automatic Rally
1
Secondary Test
US session Selling Climax
Phase A
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Questions to discuss:
3 Secondary Test in Phase |B|
- What is the current Daily Swing Bias? - How do you interpret points 1-2-3? Label them. - What is your intraday bias for the next trading session based on your Wyckoff labeling?
Phase B
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Exercise #1.3 Task: Identify all possible Points of Entry
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Exercise #1.3 - Solution Daily Swing Bias – DOWN, but Intraday Structure suggests possible Phase |C|. Therefore, both short and long are possible with full-sized positions.
Swing Reversal - POE
Swing Reversal - POE
Swing Reversals near Support - POE
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Upthrust Action in Phase |B|
Exercise #1.4: ES – Wyckoff Structure defines Intraday Bias
Upthrust Action in Phase |B| Automatic Rally
Questions to discuss:
Secondary Test
US session Selling Climax
Phase A
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Secondary Test in Phase |B|
Phase B
1
2
- What is the current Daily Swing Bias? - How do you interpret points 1-2? Label them. - What is your intraday bias for the next trading session based on your Wyckoff labeling?
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Exercise #1.4 Task: Identify all possible Points of Entry
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Exercise #1.4 - Solution
Daily Swing Bias – UP after previous day’s CHoCH bar.
Swing Reversal near Support - POE
Swing Reversal - POE
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Upthrust Action in Phase |B|
Upthrust Action in Phase |B|
Exercise #1.5: ES – Wyckoff Structure defines Intraday Bias
Automatic Rally Sign of Strength Rally in Phase |D|
Secondary Test
US session Selling Climax
Phase A
Secondary Test in Phase |B|
Phase B
Phase C
Phase D
Shakeout in Phase|C| with a Test
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Intraday Trades vs. Intraday Switch to a Swing Trade CASE STUDY #3: INSTRUMENT: - E-Mini Continuous Contract (ES) TIME FRAMES: - Daily (Swing Price Structure) - 30 Minutes (Intraday Price Structure) - 3 Minutes (Point of Entry Zone)
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Secondary Test
Buying Climax
USE WYCKOFF STRUCTURAL ANALYSIS TO CREATE A TRADING TACTIC:
|C| Last Point of Supply
Automatic Reaction
Events at bars #1 and 2: - Possible Change of Character (#1) - Confirmation of Up Swing Reversal (#2)
Minor Sign of Weakness
Resistance at 1,930
Projected trade with intraday POE and a switch to a swing trade
#2
Selling Climax
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Directional Swing Bias: UP. Target: Resistance at 1,930 level. Possible Structural Scenarios at bar #1: 1. ST in Phase |A| 2. ST in Phase |B| 3. Phase |C| All three scenarios suggest an upswing as a retest of the 1,930 price area.
#1 ST in Phase |A|, or ST in Phase |B|, or Phase |C|
Trading Tactics: - Find an intraday point of entry - IDEA #5: Switch intraday position to swing position on the confirmation of the change of character - Exit based on the swing reversal or another change of character near the 1,930 target area Copyright © 2016 Wyckoff Associates, LLC. All Rights Reserved.
Upthrust Action in Phase |B|
Upthrust Action in Phase |B|
Daily Bar #1
Daily Bar #2
- Potential Change of Character Bar near Support Area
-
-
Change of Character of Bar #1 and a Swing Reversal Confirmation Daily Directional Bias is UP
Automatic Rally Sign of Strength Rally in Phase |D|
Secondary Test
Selling Climax
Phase A
Intraday Point of Entry Zone
Secondary Test in Phase |B|
Phase B
Phase C
Phase D
Shakeout in Phase|C| with a Test
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INTRADAY POINT OF ENTRY AND A SWITCH TO SWING TRADE WITH A STRUCTURAL TARGET EXIT
Daily Bar #2 -
-
Change of Character of Bar #1 and Swing Reversal Confirmation Daily Directional Bias is UP
Another possible POE
Another possible POE
DAILY Resistance at 1,930
Intraday Point of Entry Bar – 1,829.75 Stop-loss – 1,824
#2 #1
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Intraday POE and a switch to a swing trade with a structural exit
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Q&A session
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