Handout for videos

December 17, 2016


SWING TRADING USING THE WYCKOFF
METHOD
December 17, 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: These workshop sessions are being recorded in four segments, which will be
made available to you on a password-protected page within a few days. These recordings are
intended for your personal use only. Please respect the proprietary, copyrighted nature of the
materials and do not share or distribute your password or the slides.
You should have received four separate GotoWebinar links, one for each part of the workshop.
Please log in to each part of the workshop about 5 minutes before the above-noted start times so
that we can remain on schedule.
Workshop slides: You should also have received a pdf file of the slides to facilitate note-taking
and chart annotation. Please feel free to take notes during the workshop, but also be ready to
engage in the discussion.
Breaks: There will be three breaks today, as noted above. Please return to your computer and log
in on time for each part of the workshop!
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 SWING TRADING!
www.WyckoffAnalytics.com

Copyright © 2016 Wyckoff Associates, LLC. All Rights Reserved.


Disclaimer
This workshop and all presentations, slides and discussions today are for educational purposes only; they
should not be construed as investment advice of any kind. Roman Bogomazov (“Presenter”) is not a registered
investment advisor or broker-dealer and does not purport to recommend any securities to buy or sell.
Presenter assumes no responsibility or liability for your trading and investment results. You understand and
acknowledge that there is a very high degree of risk involved in trading securities. 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 Presenters are not
indicative of future returns by that trader or system, and are not indicative of future returns which will be
realized by you. 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 OVERCOMPENSATED 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.
www.WyckoffAnalytics.com

Copyright © 2016 Wyckoff Associates, LLC. All Rights Reserved.

MY BACKGROUND AND EXPERIENCE

www.WyckoffAnalytics.com

Copyright © 2016 Wyckoff Associates, LLC. All Rights Reserved.


WORKSHOP OUTLINE

www.WyckoffAnalytics.com

Copyright © 2016 Wyckoff Associates, LLC. All Rights Reserved.


SWING TRADING USING THE WYCKOFF METHOD
December 17, 2016
Outline of today’s material (1):
1.

Introduction

2.

Your definitions of a swing trade
•
How do you define a swing?
•
What is your preferred timeframe for a swing trade?
•
Do you swing trade long-only or both long and short?

•
What technical criteria do you use for selecting the best swing trades?
•
How much experience do you have with swing trading?

3.

General Characteristics of an Ideal swing trade
•
Easily identifiable - Selection
•
Starts directional movement right away – Readiness
•
Moves with high velocity – Momentum
•
Covers a lot of one-directional distance – Trend
•
Gives clear entry and exit points – Trade Management
•
Outperforms the market and peers - Leadership
•
Presents optimal Reward-to-Risk opportunity – Risk Management and Reward/Risk
Optimization
•
Creates largest net result and profit in the shortest period of time using proper
leverage and reflecting your personal risk aversion  Optimal Trade

4.
www.WyckoffAnalytics.com

Technical characteristics of an ideal swing trade selection (Accumulation)
Copyright © 2016 Wyckoff Associates, LLC. All Rights Reserved.


SWING TRADING USING THE WYCKOFF METHOD
December 17, 2016
Outline of today’s material (2):

www.WyckoffAnalytics.com

5.

Synchronicity with the market trend (“Which direction”)
•
Swing Trading in sync with the market trend
•
Swing Trading against the market trend
•
Swing Trading in a non-directional environment

6.

Types of traders and their best entry and exit points (“Who”)

7.

Market trend definitions (STEP #1)
•
Case Study: S&P500 E-mini
•

Visual Quantitative definition of Change of Character for Distribution
•
Visual Quantitative definition of Change of Character for Accumulation

8.

Selection process using Stockcharts.com features (STEP #2)
•
Leadership (“What”)
•
Top-Down screening
•
Other Scanning tools
•
Previous Leadership – Prior Institutional Participation
•
52-week highs: Local Relative/Comparative Outperformance – Institutional
Sponsorship
•
Heatmaps: Unified industry peers strength confirmation Institutional Buy Program
ã
IBD50

Copyright â 2016 Wyckoff Associates, LLC. All Rights Reserved.


SWING TRADING USING THE WYCKOFF METHOD
December 17, 2016
Outline of today’s material (3):
9.

Selecting swing trading candidates from a pool of long-term industry groups (STEP#3)
• Why swing trade a leading stock/industry group?
• When to start swing trading stocks in a leading industry group?
• Case Study: Airlines Industry Group (ALK, LUV, JBLU and UAL)
• From Macro to Micro views
• Selecting swing trading candidates in an established long-term trend of a leading industry
group
• Strength analysis

10.

Selecting swing trading candidates based on structural analysis (STEP#4)
•
Wyckoff structural position (“Where”)
•
Case Study: MNST
•
Conventional and alternative Wyckoff trading range labeling
•
Change of Character as a directional tool

11.

www.WyckoffAnalytics.com

Supply and Demand Confirmation (STEP#5)
•
Supply absorption (“When”)
•

Active demand signature – institutional interest
•
Decreased volatility as a filtering tool

Copyright © 2016 Wyckoff Associates, LLC. All Rights Reserved.


SWING TRADING USING THE WYCKOFF METHOD
December 17, 2016
Outline of today’s material (4):
12.

www.WyckoffAnalytics.com

Swing Trading Tactics and Trade Management (STEP#6) (“How”)
• Review of points of entry in emerging and established trends
• Review of stop-loss techniques and exit strategies
• Switch Technique: Opportunities for day-traders
• Review of points of exits

13.

Case Study Exercise
• SKX

14.

Q&A session

Copyright © 2016 Wyckoff Associates, LLC. All Rights Reserved.

SWING TRADING DEFINITIONS

www.WyckoffAnalytics.com

Copyright © 2016 Wyckoff Associates, LLC. All Rights Reserved.


SWING TRADING DEFINITIONS
Your Definitions for Swing Trading
•
•
•
•
•

How do you define a swing?
What is your preferred timeframe for a swing trade?
Do you swing trade long-only or both long and short?
What technical criteria do you use for selecting the best swing trades?
How much experience do you have with swing trading?

www.WyckoffAnalytics.com

Copyright © 2016 Wyckoff Associates, LLC. All Rights Reserved.


Comparison of Long-Term Investing vs. Swing Trading
Swing Trade #1

Swing Trade #2

Swing Trade #3

Notes:
All swing trades selections, entries and exits are based on technical signals for
optimal swing trading using the Wyckoff Method. However, entries and exits are
based on weekly closing prices, and are therefore not identical to those that
would have been obtained with trading on a daily timeframe. Long-Term Trade

Swing Trade #3

Swing Trade #2
Long-Term Trade
Swing Trade #1

Three swing trades have kept you in the market for 448
days for an Average Annualized Return of 160.2%.
Question: Can you find similar swing trades in the remaining 882 days of the longterm trade and, if so, how would that influence your portfolio return?
www.WyckoffAnalytics.com

Copyright © 2016 Wyckoff Associates, LLC. All Rights Reserved.


GENERAL CHARACTERISTICS OF
AN IDEAL SWING TRADE

www.WyckoffAnalytics.com

Copyright © 2016 Wyckoff Associates, LLC. All Rights Reserved.


General Characteristics of an Ideal Swing Trade
•
•
•
•
•
•
•

•

Easily identifiable Selection
Starts directional movement
right away – Readiness
Moves with high velocity –
Momentum
Covers a lot of onedirectional distance – Trend
Gives clear Entry and Exit
Points – Trade Management
Outperforms the market
and peers - Leadership
Presents optimal Rewardto-Risk opportunity – Risk
Management and
Reward/Risk Optimization
Creates largest net result, $
in the shortest period of
time, using proper leverage

and reflecting your personal
risk aversion  Optimal
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!!!
Note: We will discuss this intraday optimization later on

Local RS Outperformance - Selection & Leadership

www.WyckoffAnalytics.com

Copyright © 2016 Wyckoff Associates, LLC. All Rights Reserved.


TECHNICAL CHARACTERISTICS OF

AN IDEAL SWING TRADE
SELECTION

www.WyckoffAnalytics.com

Copyright © 2016 Wyckoff Associates, LLC. All Rights Reserved.


Technical Characteristics of an Ideal Swing Trade Selection (Accumulation)
Question: How do we know WHAT stock to select,
in WHICH direction it will move, and WHEN and
WHERE to open a swing trade?
•

•

•

•

Leadership (WHAT)
•
Previous Leadership – Prior Institutional
Participation
•
Local Relative/Comparative Outperformance –
Institutional Sponsorship
•
Strength prior to Phase |C|
•

Sweet Spot as a Comparative Strength
indicator of future outperformance
•
Unified industry peers’ strength confirmation –
Institutional Buy Program
Wyckoff Structural Position (WHERE)
•
SOS rally – transition from Phase |C| to |D|
•
Phase |E| Trend
•
Apex and Teepee formations – Velocity Accelerators
•
Change of Character as a directional tool
Supply and Demand Confirmation (WHEN)
•
Supply Absorption
•
Active Demand Signature – Institutional Interest
•
Springboard as a timing tool
•
Supply and Demand Signature
•
Price Signature
Synchronicity with the Market Trend (WHICH DIRECTION)
•
Swing Trading in sync with the Market Trend
•
Swing Trading against the Market Trend

•
Swing Trading in a non-directional environment

www.WyckoffAnalytics.com

POE
Why here?
Why up?
Why this stock?

Copyright © 2016 Wyckoff Associates, LLC. All Rights Reserved.


Case Study: MNST Optimal Swing Trades (1)
Swing Trade #1

Swing Trade #2

Swing Trade #2

Swing Trade #1

Question:
- At each Point of Entry, why are we choosing
THIS STOCK to swing trade?

www.WyckoffAnalytics.com

Copyright © 2016 Wyckoff Associates, LLC. All Rights Reserved.

SELECTION OF A SWING TRADE
CANDIDATE:
SYNCRONICITY WITH THE
MARKET

www.WyckoffAnalytics.com

Copyright © 2016 Wyckoff Associates, LLC. All Rights Reserved.


Case Study: MNST Optimal Swing Trades (2) – Synchronicity with the Market
Synchronicity with the Market Trend (which direction)
•
Swing Trading in sync with the Market Trend
•
Swing Trading against the Market Trend
•
Swing Trading in a non-directional environment

Question:
What is the Market environment during the best swing opportunities?
www.WyckoffAnalytics.com

Copyright © 2016 Wyckoff Associates, LLC. All Rights Reserved.


Synchronicity with the Market: Swing Trading against the Market Trend

Question:

What is the Market environment during the best down swing opportunities?
www.WyckoffAnalytics.com

Copyright © 2016 Wyckoff Associates, LLC. All Rights Reserved.


TYPES OF TRADERS AND THEIR
BEST ENTRY AND EXIT POINTS

www.WyckoffAnalytics.com

Copyright © 2016 Wyckoff Associates, LLC. All Rights Reserved.


All-too-typical Question from a Swing Trader

Typical Question: How can I swing trade this stock at this spot?
Response: What time frame do you use for swing trading? (Swing Trading Time Frame = Average holding period of a winner)
Typical Answer: Up to a month.
Response: You are too late for any meaningful profit potential based on recent price advances in the market and the stock.
BETTER QUESTION: How can I be in the same type of large swing the next time, considering my swing trading time frame?

www.WyckoffAnalytics.com

Copyright © 2016 Wyckoff Associates, LLC. All Rights Reserved.


Entries, add-ons and exits for Investors and Swing Traders during secular/cyclical bull markets
LONG-TERM INVESTOR

LONG-TERM SWING TRADER

SHORT-TERM SWING TRADER

Average holding period

More than 6-9 months

2-3 months to 6-9 months

2-5 days to 1-2 months

Trends in consideration

Secular trends with
cyclical lows

Cyclical trends with short-term
counter moves

Short-term trend swings

Secular and cyclical lows

Cyclical lows

Counter-trend reaction lows

(below 20% or 10-20% lows)

(10-20% lows)

(1-5% lows)

Cyclical lows

Counter-trend reactions and
stepping stone trading ranges

Breakouts from reaction lows

Confirmation of SOS+BU

Confirmation of SOS+BU

Short-term breakouts

Any stepping stone
trading range

Any stepping stone trading
range

Secular and cyclical
CHoCH

Cyclical CHoCH

Best entry points
Best add-on entry points

Aggressive buying

Exits
www.WyckoffAnalytics.com

Any short-term CHoCH
Copyright © 2016 Wyckoff Associates, LLC. All Rights Reserved.


MARKET TREND DEFINITIONS
Case study: S&P 500 E-mini

www.WyckoffAnalytics.com

Copyright © 2016 Wyckoff Associates, LLC. All Rights Reserved.


Market Definitions: Case study – S&P 500, 2000-2003

www.WyckoffAnalytics.com

Copyright © 2016 Wyckoff Associates, LLC. All Rights Reserved.