Many traders place extra emphasis on trade entry. They look to buy as near as possible to the low tick or sell near the high. If a market starts to move and the trader missed getting in near the extreme tick, they look elsewhere thinking opportunity has passed them by. Too bad.
Sometimes, it is difficult to get in near the high or the low. Markets have become more volatile in recent years and we don’t always see the testing around a high or low that has been common in the past and has allowed for entries near tops or bottoms. But that doesn’t mean we can’t profit from the move.
Today’s market give us two examples. The first is in the S&P e-minis. It was tough making a short entry near the high of the day this morning. We didn’t see much weakness there. If you were on your toes, a short entry was available (first arrow) after the market had made both a lower high and a lower low — always a good place to look for a short. But you had to be quick; it was easy to miss. A clearer trade emerged for those who patiently waited (second red arrow). We have a nice UpThrust after clear weakness and where we would expect more selling to come in. It yielded a nice trade even though getting short near the day’s high or even as the market started to fall were missed.
In the British Pound, we have a similar situation. The market was choppy and in the early part of the American session, it did dip back and test the overnight low. I was looking for a Spring, but that didn’t happen and no trade was taken. We do see demand come in and then a pullback where the market started to hold (first green arrow). Clear buying took place as seen in the bars in the 1.6340 area and when it had a Spring it signaled a nice long trade. A later Spring opportunity also set up.
Again, the point being that it is not always possible to buy the low. Be patient, continue to read the price, volume and structure, and wait for the market to line up for your type of play. Springs and UpThrusts are the daily bread and butter trades for Wyckoff Method practitioners. You will usually get an opportunity every day by watching only 2–3 markets. As David Weiss says, you can trade nothing but Springs and UpThrusts and make money. Think in these terms rather than in terms of trading near the high or low tick.
For more on Springs: Wyckoff Spring Trade Setup
For more on UpThrusts: Wyckoff UpThrust Trade Setup
Springs are my bread & Butter trade. No doubt about that.
They were first described by Bob Evans, a great teacher of the Wyckoff Method. Wyckoff had talked about something similar in a terminal shake out at the end of a prolonged trading range. It was Evans who saw other applications of the flush, which he described as a Spring.
For the swing traders (also day traders who can see the intraday in the daily chart) springs are an excellent trade setup to the long side. It is a great way to enter a long position in an uptrending market.
Swing Trading the Russell 2000
Here is the Russell 2000 daily chart. This is a market that can trend nicely. Every pullback over the last 5–6 months has ended in a Spring.
Not all Springs work out. B and C both are valid Springs that would have gotten stopped out as the market shook out at 1. But at 1, we also have a Spring. Note, too, the heavy volume in this area. When we are in a trading range and the volume is high but we don’t fall lower, it means some larger players are in there buying. We want to ride their coattails and the Spring is an excellent way to do that because it tells us that there is low odds for any further downside.
We see additional Springs at 2, 3, and 4. Spring setups at 2 and 4 set up on top of market structure and Spring 3 occurs at the Demand Line where we expect buying to come in. All Springs also show price action at the time it is occurring that cue us that the downside is limited. These are all things we can anticipate in advance and watch carefully to see if what we expect is actually happening.
This is what is taught in our various educational tutorials which are being offered with a 30% discount through midnight tonight (Eastern or New York Time). If you are interested in learning more about Springs, market structure, how to read the importance of volume and a whole host of other market tells, the Black Friday sale that Helen has put up is a good opportunity for you at a discounted price. You can learn more here:
Black Friday Sale.
Happy Thanksgiving to Everyone!
We are very appreciative of the great community of traders who visit the site, who we meet in seminars and trading events across the globe, and who participate in Chart Reading Mastery and Deep Practice. Where ever you are in this small world, we wish you peace, prosperity and happiness as we enter the holiday season. We are grateful to you.
Gary & Helen
Some traders tell me that they don’t like to trade during holiday weeks because the markets don’t move that much. That was probably true in years past, but there are more and more participants each year, many from outside the US. These traders are having their impact on the volume and activity of the markets. This trend is giving us better opportunities in the liquid markets during the Thanksgiving Holiday week. We’ll look at a few liquid markets.
In the S&P e-minis (ES), we had a very nice UpThrust occur on Monday, November 25. This occurs after weakness entered the market via a Buying Climax in the Asian session — note the low, low volume on that drive up! We have discussed in Deep Practice how to evaluate price and volume in the overnight markets, and this was a prime example. We take the UT as a matter of course and target profit objective logically.
Tuesday saw an UT of the prior day’s high in Crude Oil (CL). UTs of daily highs can often be significant, depending on market structure. We emphasize structure in our trading (see Chart Reading Mastery) and here it set up a good move down. We see this UT get tested and then start a two-day fall. 3–10 Oscillator trades and two other UTs offer solid trade entry locations.
The British Pound had the opposite structure. Starting in the Asian session today and carrying through London/Europe and the early morning of the US session, we have nice 3–10 trades until the market becomes overbought. An UT marks the end of the uptrend for now.
We have many of our trading and trading psychology tutorials on sale. Helen has put them at 30% off for Black Friday. This is the biggest discount ever offered. This discount can be applied to Chart Reading Mastery (recorded sessions), too! Helen says that the sale is in effect now, so you don’t have to wait until Friday if interested. Be sure to use the code Friday30 at checkout. Ends Friday midnight. You can learn more here:
Black Friday 30% Sale
In Thursday’s Deep Practice session, one of the members asked about using the 3–10 Oscillator. It is a tool that I have used for over a decade. You don’t need to use it, everything can be seen in the chart, but it can be helpful in various situations.
I like to use it in conjunction with a 20-period moving average. I use the EMA, but a SMA will work just as well. When momentum comes into the market, we look for a pullback in the oscillator. Price typically comes back to around the MA, which is our measure of central tendency and serves as a substitute trend line. You can get some very nice trades setting up with this simple tool and we see two well-depicted areas for long trades that occurred on Friday (green arrows). These two trades would have netted about 7–8 points up to about 12 points, depending on how they were traded. I did a tutorial on the 3–10 showing this and several other choice setups you can find here: 3–10 Video Tutorial along with ten days of trading it in the ES.
Several traders in our community asked for “Black Friday” specials on our products. Black Friday is the traditional start of the Christmas shopping season in the US and most all stores now have a sale on this day. Black Friday is November 29 and Helen has set up a special discount of 30% for this one day only. If you are interested, you can take advantage of the discount at this link: Black Friday Special – Nov. 29th Only
More on the 3–10
Crude oil had a text-book day for the 3–10 on Friday. The day began with an UpThrust early in the American session, traded down, then turned around and began rallying up. You can see by this tool that it really isn’t necessary to pick the top or the bottom. (Use the Wyckoff UT and Spring for that). If you are sensitive to momentum (which is what the 3–10 measures) you have ample opportunities every day watching just two or three markets.
Wyckoff is certainly alive and well in the modern markets. There is probably no more modern stock than Google (GOOG). It is on the cutting edge of technology and the internet. Despite how ‘modern’ GOOG is, it behaves according to Wyckoff principles. This is true for all liquid markets. Take a look at the weekly chart.
We have springs occurring in early October 2011, another late June 2012, and one just this past week. That’s one each year in this stock alone for very nice moves. Other ‘modern’ stocks show similar Wyckoff principles, including spring setups.
Springs are great trade setups because they have strong odds of success and they define what Wyckoff called the ‘danger point,’ i.e., the price at which you know you are wrong. Too many traders want to always be right. That’s just not possible. Even a spring setup will fail on occasion. What I teach in Deep Practice and the various tutorials we’ve put out is this: See your stop (the danger point) before taking a trade. Know where the danger point is located and trade against that. Springs make this easy because they have a clear danger point close to entry. In many cases, spring trades do not entail large risk. High odds of success, a clear danger point and low risk stops make springs the bread & butter setup that Wyckoff traders trade day in and day out.
This last spring took GOOG up above $1,000 a share. Very nice.
For more information on springs and how to trade them, see: Wyckoff Spring Tutorial
For more information on my weekly Deep Practice program, see: Deep Practice
As the S&Ps were rallying on Friday, there was a nice trade setup that occurred in Crude Oil. This is one of the trade setups we discussed in the free webinars last week (Click this link to access webinars). At A, the market tested the overnight high. I left the normal volume on the chart along with the Weis Wave volume. Note the high volume and poor closes at A. This was strong selling. Since the higher time frame trends have been down, this was a choice trade setup.
As discussed in the free webinars, stopping volume occurs at B letting us know to exit the trade. It also occurs again at C and D. Volume stops the market. There were also springs at C & D, but these would not be choice trades.
Last Day to Save 20% on Video Tutorials
All of our tutorials are on sale this week at 20% off the normal price. This includes tutorials on (click tutorial for more information):
In addition, all of our trading psychology tutorials are also 20% off:
But all this ends tonight at midnight. Tomorrow, prices return to normal. Now is a good time to save money on any of our video trainings. Use the coupon code Wyckoffcore20 at checkout to save 20%.
20% Off On All Tutorials
This week all video tutorials are 20% off, including Chart Reading Mastery. This ends midnight, October 15th (Tuesday). We usually don’t discount our training materials, so if you have been thinking of one of our highly rated Wyckoff Method trainings, now is a good time to buy. Be sure to use the coupon code Wyckoffcore20 at checkout. Learn more here: Wyckoff Training Video Tutorials
29 Wyckoff Trades
During the past week, we held two webinars on the Wyckoff Method. In the first webinar, I discussed some of the core Wyckoff principles on judging the market by its own actions. A week later, in the second webinar, we looked to see how those principles played out in a handful of markets. There were 29 profitable trades that occurred in those markets in the week after the first webinar. Twenty-nine profitable trades! Almost every market had at least one Wyckoff trade a day (and many had two or more).
You can access the two free webinars here: Wyckoff Core Principles
Today, Saturday, October 12 at 4:00 PM ET (New York Time).
We will be reviewing fundamental principles in the past week’s markets. I guarantee you will be amazed at the trading that occurred based on four basic Wyckoff principles. I have over 30 slides to show you. It’s free and you will definitely learn something.
This is session #2 of a two-part webinar. The first webinar provided a detailed review of Wyckoff principles. Today’s webinar shows you how they played out in the past week. Register below for today’s webinar. It automatically gives you access to last week’s webinar, too! Registration will give you access for later viewing if you can’t make the live session:
Free Webinar on Wyckoff Principles This Week
Last week, I reviewed the fundamental principles used in the Wyckoff Method in a free webinar. These are the market behaviors I and other Wyckoff traders look for every day in trading. If you missed that webinar, you will receive a link to the recording by registering below. It’s free and runs about an hour and 20 minutes. It is packed with excellent information.
On Saturday, October 12 at 4:00 PM ET (New York Time), I will be presenting a follow-up webinar. In this free webinar, we will look at how the principles occurred this past week in several popular trading markets and how they led to profitable trades. Already during the first two days, more than four outstanding trades occurred that began and ended with the same principles discussed in the first webinar. If you haven’t already, please sign up for Saturday using the link below. It’s free and, if you haven’t seen Wyckoff before, it will open your eyes to what is truly possible in the markets.
To sign up for Saturday’s webinar: Applications of Wyckoff Principles – registering for Saturday’s webinar will also give you access to the first webinar
Both Free Webinars will be recorded and the link to recordings will be provided to all registrants.