Reading The Market Bar by Bar

Reading the Market Bar-By-Bar:
Applying Classic Wyckoff Method Trading Tactics
Dr. Gary Dayton

Charts
All charts used in this presentation were created with

TradeStation © TradeStation Technologies, Inc.
www.TradingPsychologyEdge.com
What We Will Cover
• A little background on Wyckoff

• Basic Principles: What I look for in applying the
Wyckoff Method
– Detailed applications
• Advanced methods
– Detailed applications
• What it takes to get good
• Resources
Richard D. Wyckoff
Basic Principles: What I Look For
• Assess Supply & Demand and lack of Supply & lack of
Demand
• Study the interactions of price and volume with trend lines,
especially horizontal lines of support and resistance
• Look for stopping volume and climactic action
• Compare the effort of buying or selling with the result
• Watch for Ease of Movement & confirming retracements
• Watch for a Shortening of the Trust
• Look for failure to follow through
• Each bar tells a story: Consider its range, whether it is an
up, down, or level bar, and the position of the close.
Overview
“The study of responses is one of the most

valuable in the Tape Reader’s education. It is an
almost unerring guide to the technical position
of the market.”
- Rollo Tape*
* Note: Rollo Tape was a pen name of Richard Wyckoff
Overview
Overview
Drawing Lines
“I am constantly drawing lines as the market

unfolds. They help tell the story of the chart.”
- David Weis
Drawing Lines
Drawing Lines
Climactic Action
“Whenever you see high volume suddenly appear

on your chart, stick a wad of peanut butter on it
and mark it. You may not know what it means
right away, but that volume is important.”
- Robert G. Evans
Climactic Action
Climactic Action
Climactic Action
Shortening of the Thrust
• Indicates a change of behavior in the market

• Less and less progress made in direction of
recent trend
– Supply exerts itself in an up market
– Demand comes in as market moves down
• Leads to a pullback or a change in trend
Failure to Follow-Through
“If you traded only springs and upthrusts

you could do well.”
- David Weis
Failure to Follow-Through: UpThrust
UpThrust & Test
Failure to Follow-Through: Spring
Effort vs. Result
“A Bull Market occurs when there has been a
substantial transfer of stock from Weak Holders
to Strong Holders, generally at a loss to Weak
Holders. A Bear Market occurs when there has
been a substantial transfer of stock from Strong
Holders to Weak Holders, generally at a profit
to the Strong Holders.”
- Tom Williams
Effort vs. Result
Effort vs. Result
Effort vs. Result
Effort vs. Result
Effort vs. Result
Effort vs. Result
Effort vs. Result
Effort vs. Result
Advanced Methods
“Always think in waves.”

- Richard D. Wyckoff
Advanced Methods
“The most important thing to know about the

market is the trend…But you must always be on
the lookout for a change in this immediate trend
… This is how you detect the change:
In an up trend, when the selling waves begin to
increase in time and distance, or the buying
waves shorten. Either or both will be an
indication of a change in the immediate trend.
Apply the same reasoning to a down trend.”
- Richard D. Wyckoff
Advanced Methods
Advanced Methods
Advanced Methods
Advanced Methods
Setups: Afternoon of Fed “Twist”
Anticipating the Downdraft
Longer-Term Anticipation
Developing Trading Skills:
The Psychology of Expertise
• Deliberate Practice
• Specific, measurable goals related to skill
development
• Example: I will identify 70% of all springs occurring in
the last 12 months of 5-minute data for XYZ market.
• Do it mindfully
• Track progress
Resources
• TradingPsychologyEdge.com
– Chart Reading Mastery Video Course
– Weis Wave
– Deep Practice
• RichardWyckoff.org
• Jack Hutson, Ed. (1998). Charting the Market: The Wyckoff Method.
• Rollo Tape. (1910). Studies in Tape Reading.
• David Weis. (In Press). Trades About to Happen: A Modern Adaptation of the
Wyckoff Method.
• Richard Wyckoff. (1930). Wall Street Ventures & Adventures Through Forty
Years.
• Richard Wyckoff. (1931-1933). A Course of Instruction in Stock Market Science &
Technique.
• Richard Wyckoff. (1932). A Course of Instruction in Tape Reading & Active
Trading.
• Tom Williams. (1993). The Undeclared Secrets that Drive the Stock Market.
Thank You!

Reading The Market Bar by Bar

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Reading the Market Bar-By-Bar:

Applying Classic Wyckoff Method Trading Tactics

Dr. Gary Dayton

All charts used in this presentation were created with

• A little background on Wyckoff

“The study of responses is one of the most

* Note: Rollo Tape was a pen name of Richard Wyckoff

“I am constantly drawing lines as the market

“Whenever you see high volume suddenly appear

• Indicates a change of behavior in the market

“If you traded only springs and upthrusts

“Always think in waves.”

“The most important thing to know about the

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