Gary dayton wyckoffspring 2010 5 2

The Wyckoff Spring

An In-depth Look at a High Odds Trade

Dr. Gary Dayton
www.TradingPsychologyEdge.com
Copyright © 2010 Gary Dayton & Peak Psychology, Inc. All Rights Reserved.

Copyright © 2010 Gary Dayton & Peak Psychology, Inc. All Rights Reserved.


Disclaimer
IT SHOULD NOT BE ASSUMED THAT THE METHODS, TECHNIQUES, OR INDICATORS
DISCUSSED IN THIS PRESENTATION WILL BE PROFITABLE OR THAT THEY WILL NOT RESULT IN
LOSSES. THERE IS NO ASSURANCE THAT THE STRATEGIES AND METHODS PRESENTED WILL
BE SUCCESSFUL FOR YOU, OR THAT YOU WILL BECOME A PROFITABLE TRADER. THE PAST
PERFORMANCE AND RESULTS OF ANY TRADING SYSTEM OR TRADING METHODOLOGY ARE
NOT NECESSARILY INDICATIVE OF FUTURE RESULTS. YOU SHOULD NOT TRADE WITH
MONEY THAT YOU CANNOT AFFORD TO LOSE. EXAMPLES DISCUSSED AND PRESENTED IN
THIS PRESENTATION ARE FOR EDUCATIONAL PURPOSES ONLY. THESE ARE NOT
SOLICITATIONS OF ANY ORDER TO BUY OR SELL. DR. GARY DAYTON AND
TRADINGPSYCHOLOGYEDGE.COM AND ALL AFFILIATES ASSUME NO RESPONSIBILITY FOR
YOUR TRADING RESULTS. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL
OR IS LIKELY TO ACHIEVE PROFITS OR LOSSESS SIMILAR TO THOSE DISCUSSED IN THIS
PRESENTATION. THERE IS A VERY HIGH DEGREE OF RISK IN TRADING. YOU ARE
ENCOURAGED TO CONSULT A CERTIFIED FINANCIAL ADVISOR BEFORE MAKING ANY
INVESTMENT OR TRADING DECISION.
HYPOTHETICAL, HINDSIGHT, OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN
INHERENT LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, HYPOTHETICAL,
HINDSIGHT, OR SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, SINCE
SOME OF THE TRADES DISCUSSED IN THIS PRESENTATION HAVE NOT ACTUALLY BEEN

EXECUTED, THE RESULTS MAY HAVE UNDER- OR OVER-COMPENSATED FOR THE IMPACT, IF
ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. NO REPRESENTATION IS
BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES
SIMILAR TO THOSE DISCUSSED AND/OR SHOWN.

Copyright © 2010 Gary Dayton & Peak Psychology, Inc. All Rights Reserved.


Overview
 Key elements of a Spring
 Conceptual map of Spring
 Background conditions to look for
 When Springs fail
 Key entry considerations
 Where to exit
 Trade Setup specifications
 Additional examples

Copyright © 2010 Gary Dayton & Peak Psychology, Inc. All Rights Reserved.


Key Elements of a Spring
 Key idea: Lower prices are rejected
 Key elements:
 Support established
 A rally off of support
 Price returns to dip below and then goes back above support

 Extent of supply assessed:
 Width of spread or range

 Close
 Amount of volume

Copyright © 2010 Gary Dayton & Peak Psychology, Inc. All Rights Reserved.


Conceptual Map of a Spring

Copyright © 2010 Gary Dayton & Peak Psychology, Inc. All Rights Reserved.


Classic Spring
 Springs:
 Typically occur late in the trading range
 Strong market participants make a definitive assessment of

supply before rallying the market
 Also allows for the strong participant to gather additional stock
from weak participants at low prices

Copyright © 2010 Gary Dayton & Peak Psychology, Inc. All Rights Reserved.


Classic Spring Example

Copyright © 2010 Gary Dayton & Peak Psychology, Inc. All Rights Reserved.


Another Classic Example

Copyright © 2010 Gary Dayton & Peak Psychology, Inc. All Rights Reserved.


Classic Example Weekly Chart

Copyright © 2010 Gary Dayton & Peak Psychology, Inc. All Rights Reserved.


More on the Classic Spring
 Supply exhausted
 Danger point identified
 When volume moderate on the Spring, it may be tested

Copyright © 2010 Gary Dayton & Peak Psychology, Inc. All Rights Reserved.


Spring with a Test

Copyright © 2010 Gary Dayton & Peak Psychology, Inc. All Rights Reserved.


Going Beyond the Classic: Background
 Background more important than light volume retest (spring






bar)

Strong Trend – path of least resistance
No significant indication of weakness
Obvious buying at the support level
Established Trading Range
Heavy volume and no downside follow through at the Spring

Copyright © 2010 Gary Dayton & Peak Psychology, Inc. All Rights Reserved.


Background

Copyright © 2010 Gary Dayton & Peak Psychology, Inc. All Rights Reserved.


Background

Copyright © 2010 Gary Dayton & Peak Psychology, Inc. All Rights Reserved.


Spring with Heavy Buying

Copyright © 2010 Gary Dayton & Peak Psychology, Inc. All Rights Reserved.


A Pair of Springs

Copyright © 2010 Gary Dayton & Peak Psychology, Inc. All Rights Reserved.


Not Every Dip is a Spring

Copyright © 2010 Gary Dayton & Peak Psychology, Inc. All Rights Reserved.


Not Springs

Copyright © 2010 Gary Dayton & Peak Psychology, Inc. All Rights Reserved.


When Springs fail
 Downtrend
 Significant weakness in background
 Inability to rally away from the danger point

Copyright © 2010 Gary Dayton & Peak Psychology, Inc. All Rights Reserved.


When Springs Fail

Copyright © 2010 Gary Dayton & Peak Psychology, Inc. All Rights Reserved.


When Springs Fail

Copyright © 2010 Gary Dayton & Peak Psychology, Inc. All Rights Reserved.


When Springs Fail

Copyright © 2010 Gary Dayton & Peak Psychology, Inc. All Rights Reserved.

When Springs Fail

Copyright © 2010 Gary Dayton & Peak Psychology, Inc. All Rights Reserved.


When Springs Fail

Copyright © 2010 Gary Dayton & Peak Psychology, Inc. All Rights Reserved.


Entry Considerations
 On the Spring
 On a test of the Spring

Copyright © 2010 Gary Dayton & Peak Psychology, Inc. All Rights Reserved.