Learn To Trade Using Wyckoff Principles

what is wyckoff?

What Is Wyckoff Trading?

Trading is a business and it must be treated as such.  The reason companies like Walmart and McDonald’s succeed is that they consistently follow their business plan.  They have a strategy in place and the only time they deviate from that strategy is when it is planned out ahead of time.  Adjustments are made when economic conditions change, when trying new ways to increase profits, or if part of the plan isn’t working.

Richard D. Wyckoff was a successful stock trader from the early 1900's and developed a “business plan” of his own.  Through conversations, interviews and research of the successful traders of his time, Wyckoff augmented and documented the methodology he traded and taught.

Wyckoff worked with and studied Jessie Livermore, E. H. Harriman, James R. Keene, Otto Kahn, J. P. Morgan, W. D. Gann, and many other large operators of the day.  His thought was that you must develop the ability to translate price action, and the volume that drives that action, into trading opportunities.  The chart below is an example of his observations about what happens to markets.

Wyckoff felt there were three “laws” that defined trading:

  1. Effort vs. Result
  2. Cause vs. Effect
  3. Demand vs. Supply

He also had five steps he felt must be followed EVERY time when trading.  Excellence isn't a once in a while event, it must be done with every trade.

  1. Determine the trend and the position of the stock or commodity.
  2. Determine the relative strength or weakness of the stock or commodity.
  3. Trade the stock or commodity that gives you the best chance for profit.
  4. Determine the readiness of a stock or commodity to move up or move down.
  5. Time the trade of the individual stock or commodity relative to the general underlying market.

Why Is Wyckoff Important?

Volume and price are the only two indictors that are live and instantaneous.  Other "indicators" are lagging, meaning something has to happen with price for them to give their indication.  If one is to make a a decision, its always preferable to have the latest information, data, or other evaluative things to make that decision.  That's what price and volume allows.

Being a former CME floor trader. Gary Fullett has seen the order flows from larger and small clients and understands the mechanisms  and functions that the market serves.


How To Learn More?

Gary Fullett at LTG Trading teaches traders how to utilize Wyckoff principles in their trading every trading day.  Find out more about LTG's educational offerings

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