Richard Wyckoff traded
the stock and bond market in the early and mid 1900’s.
He was curious about the logic behind market action. Through conversations
with successful traders of his time he arrived at his methodology which
concentrated on Volume-Price analysis. Wyckoff method principally uses price charting and volume
studies as a means of analyzing and forecasting the stock market.
Richard D. Wyckoff
modeled and found many common characteristics among the greatest winning stocks and the
campaigns of some of the greatest stock market operators. After modeling the action of Jesse Livermore, Edward Wasserman,
James Keen, J.P. Morgan, and many other big operators of his day, Wyckoff
developed a trading system which helped to explain the boom and bust cycle
in stocks. He analyzed the market and determine where risk and reward were
optimal for trading. He emphasized the placement of stops and the
importance of controlling the risk of any particular trade. He implemented
this model and grew his account such that he eventually owned a mansion
next door to the Alfred Sloan Estate in the Hamptons.
Wyckoff’s ideas are
universal and may be applied in analyzing any market. His method
principally uses price charting and volume studies as a means of
analyzing and forecasting the stock market. It incorporates a common-sense
approach to trading that emphasizes study, practice and risk limitation.
It also takes into account investor psychology and provides insight into
how and why professional traders buy and sell stocks. The Day
Trader’s
Bible takes the reader step by step through the Wyckoff method:
first, the basic principles; second, examples of the method applied to the
bond market; and third, an outline of steps to put the method to use.
