The Wyckoff Method: Remind me please

A few weeks ago an email dropped into my inbox talking about this method and saying:

The Wyckoff Method
Richard D. Wyckoff started his trading career in 1888. He was an eternal student of the subject. He was a successful trader and a pioneer of technical analysis. Based on his theories, studies and real life experiences, Wyckoff developed a trading methodology that has stood the test of time. Wyckoff started with a broad market assessment and then drilled down to find securities with the most profit potential.

I have to admit, I didn’t know him or the technique.  Turning first to my trusted technical analysis bible, John J. Murphy’s Technical Analysis of the Futures Markets (1986 edition) there was no mention of him.  So, as most do today, I immediately Googled it.

Trusty Stockcharts.com has a good outline of his five key steps to formulating a trade.  One, determine the probable trend and then choose stocks that are in harmony with it.  Follow up by using point and figure-generated estimates of the stock’s measured target and evaluate whether it’s likely to ‘get a move on’.  Finally use bar charts and other methods to set trailing stops in case the market starts to turn.

http://stockcharts.com/school/doku.php?id=chart_school:market_analysis:the_wyckoff_method

Of greater interest is the article by Hank Pruden in the March 2017 issue of Market Technician (members will have received it online). Following on from the theme of London’s 2014 IFTA conference: Unravelling the DNA of the Market, he believes ‘that Wyckoff and Elliott represent ever more basic structural components of the market.  I further believe that the double-helix framework of DNA is a very useful metaphor for combining Wyckoff and Elliott for better, more profitable market timing decisions’.

Interestingly the method embraces the idea of market professionals, known today as ‘smart money’, fleecing the public (who have a tendency to mass behaviour).  Very much the line of thinking taken by the CFTC and their Commitment of Traders reports and the hedge fund coterie.  Maybe it’s time to muscle in with the big boys!

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The views and opinions expressed on the STA’s blog do not necessarily represent those of the Society of Technical Analysts (the “STA”), or of any officer, director or member of the STA.

The STA makes no representations as to the accuracy, completeness, or reliability of any information on the blog or found by following any link on blog, and none of the STA, STA Administrative Services or any current or past executive board members are liable for any errors, omissions, or delays in this information or any losses, injuries, or damages arising from its display or use.

None of the information on the STA’s blog constitutes investment advice.

About Nicole Elliott

Nicole Elliott

A graduate of the London School of Economics and Political Science (BSc Social Psychology) Nicole Elliott has worked in banks in the City of London for the last 30 years. Whether in sales, trading or forecasting technical analysis has always been the bedrock of her thinking. Key expertise lies within all areas of treasury: foreign exchange, money markets, fixed income and commodities.

She has also added to the body of knowledge of the industry writing the first western book on Ichimoku Cloud Charts. Strong media links and a cult following are due to her prescient calls on the markets and often entertaining format.

Nicole can be contacted at trending@sta-uk.org

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