All language subtitles for Session 2

Hello, everyone. Today is September
17th, and this is a second session of

YCAP Trading Practical Course.

I thought we had a really good start
last week, so let's just keep up this

intensity. We're going to do a lot of
stuff today, so I'm not going to spend a

lot of time on administrative stuff. The
only thing that I want to mention is

thank you for sending the files in the
correct way.

one file, all of the charts in there,
and that's usually the PDF or power

charting file.

So those work very nicely, and thank you
for putting the name of the class into

the title right away. It's being sorted
out for me, and then it's just easier

for me to go through those. I did look
at all of the homeworks that were sent,

and just tremendous job.

There is a big difference between this
class and the Monday class in the way

people analyze.

So you guys obviously are much more
advanced and, you know, knowing all of

concepts, so it shows in your analysis.

For the announcements, WMD promotion for
those of you who are not attending the

Wednesday class, you don't even have to
attend.

You know, you could just, you know,
watch the recording whenever you want.

We're going to do three sessions for $30
for those of you who are new

subscribers on September 25th, October
2nd, and 9th. Check this out.

October special, I'm extremely excited.

Together with John Colucci, we're going
to talk about scanning, scanning for

Wyckoff candidates, but in such a way
that we would be looking for specific

structural spots.

So this is the next step in the
evolution of the selection process.

So we definitely are going to bring a
lot of examples.

John is going to show a lot of his
scans. I'm going to be talking about

characteristics of the spots that we are
looking for. Together we will post

-analyze the results of the candidates
that we receive.

I highly recommend, especially at this
level, at your level, you should be

extremely interested in something like
this.

Today's session, we're going to finish
the conversation that we started in

WTC on the significant bar analysis.

That's kind of like the main theoretical
emphasis today.

I don't recall exactly to which point
we've talked about this.

I think it was at the very rudimentary
level, so we have to come back and we

can't really move forward without this
knowledge.

But we're going to start with something
else. We're going to start with an array

of things.

The first thing that we're going to do
is one of our students who

has been with us for years and years,
friends, he has

decided, and let me see, let me...

find friends. Okay.

Hold on a second.

There you go.

So he had decided to start publishing a
blog on Wyckoff Analytics.

And by the way, and especially again for
this group, if some of you are

interested, maybe a writing piece
expressing yourself on the knowledge of

Wyckoff or what you're going through in
your trading and you really have to read

Francis' blog because he goes through
his trades, analyzes mistakes, and we

all of us to do that, exactly that. So
at least when you read his blog, what

happens, at least to me, is I would say,
okay, I remember I made this mistake,

the same mistake.

So what was kind of like the cause of
that mistake?

And as you read Francis' blog, you are
going through that analysis yourself.

So in a way, you're encompassing some of
the, you know, better practices in

those type of situations.

So we're going to have the market update
from him.

Then we're going to come back to our
articles on outliers and mundanity

of excellence. We'll quickly talk about
that.

We'll check out our bias game.

We'll jump into the anatomy of a trade.
There is a development right there.

There is one question that we need to
address, and then we will review the

significant bar analysis.

If we are lucky, we'll get to the
exercise.

All right. Well, Franz, are you there?

I'm here.

Okay, great. Welcome.

How are you doing?

I'm doing fine, Roman. How are you this
evening?

I'm doing well.

I guess it's afternoon in California.

Yes, it's 3 p .m. So before we go into
your material, which I thought was

very interesting, could you... Tell our
students here maybe a little bit

about your blog in your own words.

Sure.

Well, first of all, I got introduced to
the Wyckoff Method

through a chat room that I participate
in back in

2016. And kind of following the thread,
I ended up.

at Wyckoff Analytics in the end of 2017.

And then I ended up taking just a little
background myself. I ended up taking

the trading course, the trading
practicum, and I participate regularly

WMD.

So that's a little bit of.

Bring up the speed on my involvement.
And one of the things that's cool about

WMD is that Ramon and Bruce started off
by saying, welcome, Wyckoff Nation,

which is what we all are. We're all
trying to learn this this particular

process.

And I'm, you know, I'm moving up the
learning curve, but I'm just like

else. I'm still a student.

My blog, I decided.

about six months ago that I really
needed to put a trading plan together.

And some of that was, I should say more
than some, but a lot of that was from

Roman's prompting.

So in the process of doing that, looking
at, you know,

you're doing your back testing, looking
at historical trades that you've done

and analyzing them.

And I found all sorts of mistakes that I
was making. So I thought, well, you

know, why don't I?

really hold myself accountable to, you
know, trying to not make so many

by actually, you know, airing them out,
putting it out for everybody to see and

going through the analysis myself.

And hopefully that will cause me to not
make the same mistakes as many times in

the future. I'm sure I'll continue to
make, you know, we all do. But at any

rate, that's a little bit of the
background on the blog, Ramon.

Okay. Well, great.

And such a great example, friends, of
what you do.

And in the way, I like really the way
how you do this. You are helping

by writing this, but you're also helping
others, which is so wonderful.

I kind of see the teaching the same way.
So I'm helping myself to get better.

But at the same time, you know, I'm
giving back to the community. So it's

great to see.

Okay.

So let's go to your presentation, and as
usual, everything is for educational

purposes. Stop the video. Read the
disclaimer.

Franz, I don't know. We didn't really
communicate on this. Would you like a

screen, or I have all of your slides
here.

What would you like to do?

Why don't we just try putting them up,
and I'll tell you kind of what the

different. that I'm trying to put across
here.

Obviously, these are the three major
laws that we operate under.

And backing up just one step in putting
this trading plan that I've been working

on together, the first thing that we do
is analyze the overall market.

And obviously, we use the same
techniques and tools to do that.

Looking at a kind of a shortcut to try
to analyze the law of supply and demand

as it applies to the market, I came
across an indicator that I'm sure other

people are familiar with called the
Chaykin money flow.

And looking at that, I should, again,
back up one step. I

do an analysis each week of a whole lot
of different ways of just looking at the

overall market.

And it's about 90 right now. And again,
this is for educational purposes. But

from my read of things, it's about 98
percent bullish.

Just about everything that I look at.

But there's one little fly in the
ointment, and that is the law of supply

demand. And it goes completely.

I know I follow Bruce Fraser. I'm sure
many of you other other White Coff

participants do as well.

And just Friday, his.

power charting episode was talking about
how PNF

charting right now substantiates the
bull case.

So what I am just saying, there's just a
little fly in the ointment as I see it,

and it's being generated by this Chaykin
money flow indicator.

So if you can go to the next slide.

What is the shaken money flow indicator?

Well, shaken money flow combines price
and volume to show how money may be

flowing into or out of a stock or the
market.

It's an alternative to the accumulation
distribution line. And then it goes

through how it's calculated. And just
very quickly and simplistically, all it

does is it looks at the last 20 periods
and it looks at where.

On each of those bars for the last 20
periods, the market closes.

And if it closes at the top of the bar,
it gets a plus one.

If it closes at the bottom of the bar,
it gets a minus one. And if it closes in

the middle of the bar, it gets a zero.

Then what it does is it takes that
reading and multiplies it times the

volume.

For that particular day, for that
particular bar, that period, it could be

doesn't have to be a day. It could be in
my case. I'm looking at months,

actually.

But it looks at that and then it
multiplies those two and takes the last

20 readings and sums them.

And then every period forward, it drops
the last one off and adds the next one.

So hopefully that makes sense. But
basically it's just looking at how

price interact in a very simplistic way
to

define whether there is a lot of demand
or whether there's supply or

whether we're somewhere in the middle.

Does that make sense, Ramon?

Yeah, absolutely.

Okay. So next slide.

which is actually this is the Wilshire
5000.

And when I look at the market, rather
than, you know, looking at individual

indicators, excuse me, individual
indexes, the first thing I like to look

just what the overall market's doing.
And the Wilshire 5000, it says 500

that's a mistype, should be the Wilshire
5000, is pretty much the entire broad

stock market.

So this looks at the last 20 years of
the Wilshire 5000, which is just a great

way to get perspective on what the U .S.
I know there are other people besides U

.S. people involved here, but this is
the U .S. market for the last 20 years.

And, you know, we talk about
consolidations and trading ranges and we

trends. And I think I pretty well
identified starting in the year 2000.

at the kind of the tech bubble top
there, that was an obvious distribution.

There was a redistribution on the way
down. So both of those are circled or

circled, rectangular in red there.

Then in 2003, we had an accumulation.

I was reviewing one of the teaching
sessions talking about vertical

And if you look at these, particularly
the bottom here in 2003 and the bottom

2009, this is a little bit of an aside,
but you can really see vertical

absorption coming off the bottom. So
that's kind of an interesting thing to

alert to if we do get another bear
market.

at some point in the future, which I'm
sure we will. So following the 2003

accumulation,

we get two periods of

reaccumulation and with trending

periods in between, which then top out
in 2008.

And I'm going to come back to the.

Shaken above in a second, but I just
want to kind of walk through this whole

history. Then we get another major
downtrend, which ends

in 2009.

And here we see another accumulation and
major league vertical absorption coming

out of that.

That's just a very powerful.

Once it started to move, it didn't give
people a whole lot of time to get on.

Up until 2010, we had a reaccumulation,
another

reaccumulation, went to 2015 -16,
another reaccumulation. These are all

associated with events, but it's more
just, you know, the market goes from a

trending to a non -trending environment,
and now most recently we're in this.

consolidation period that started in
early 2018, which is the last one.

Okay, so now let's go across at the top
and look at the behavior

of the shaken money flow at these
different accumulation and distribution

periods. And if you can start over
there, pretty much line up with that

2000 up there at the top.

And notice as the consolidation period
move forward, notice what's

happening to money flow.

It's gradually, you know, supply is
diminishing. You've still

got supply. You've still got, anytime
you're above the zero line, you've got

positive flows, but it's definitely on a
downtrend there.

And to me, that's just a real simple,
easy way of visualizing supply and

Once we hit that second distribution
area, the redistribution,

you can see that money flow actually
went negative.

And then, very interestingly, in the
2003 period,

if you'll notice, As we moved through

the distribution and into the
accumulation in

2003, if you'll just put your pointer
there and line it up with the highs

in that accumulation period, so just
late 2003, and

notice where, and then coming out, and
notice what money flow is doing.

So we're making suddenly we're making a
higher high at each of these higher

highs in the price bar.

So just a very simple relationship. And
it's the same thing. That's right. Just

going across.

Anytime you've got a.

Reaccumulation.

From the beginning to the end, you've
actually got pretty much invariably,

you've got a higher level of shake and
money flow at the end than you do at the

beginning.

So once you get into the 2008
distribution, it's the opposite.

At the peak, you've got high money flow.

And as you progress through.

supply is diminishing and the cumulative
money flow is coming

down. So by the time you're exiting the
distribution period, you're definitely

in a significant downtrend in money
flow, just as prices as well.

So pretty much follow this all the way
across, and I won't go through each

distribution, but I think it's
interesting.

If you go to the very last now, the
current distribution period, or excuse

reaccumulation period, and notice what
money flow is doing now. As we came

into this in early 2018, money flow is
very,

very strong. It's making a peak.

But we make a higher high.

And look what money flow is doing.

And again, and now we're trying to make
another higher high. And once more, so

this, like I said, this is the one fly
in the ointment that I'm seeing.

And supply and demand is, you know, is
really one of the probably the most

important of the three rules. And to me,
even though there's still a significant

amount of.

money flow available, it's heading in
the wrong direction for this kind of,

for this point in a reaccumulation.

So that's kind of the long -term
picture. Then I kind of zoomed in. So if

to the next chart,

now we're looking at weekly, and

we're just looking at the 2018.

So we're looking at that last
reaccumulation period.

And you can almost break this down into
two.

Roman has talked in the past about how
sometimes the market goes through kind

a rolling, different rolling stages
where you start off looking like you

be in one kind of bias, and that bias
might change as

the

Consolidation continues.

So notice there at the beginning, notice
what money flow is doing.

Very high.

And then notice the higher high that we
made last October and notice what money

flow is doing.

Yeah. And very soon thereafter, you
know, the bottom fell out.

So now we get this rally coming, you
know, from December.

of last year into the high, and money
flow is doing what you'd expect it to

But then we're making another higher
high back in July, and now look.

So, again, something doesn't smell just
exactly right to me about

this market. And if you go down and look
at the actual volume bars down below,

Yeah, exactly.

Very, very high.

You know, is this what's going on here?
So go to the next slide and there's my

question.

And what I've done in this next slide is
I've just taken the period from last

December, from the low last December
into this year and

kind of tried to overlay maybe some
phase analysis on it.

The way it looks to me, the way I'm
seeing it is, you know, we've kind of

it through phase A and we're now in
phase B. But here's what,

at least by my interpretation, here's
what volume is doing and here's what

flow is doing. And maybe this will right
itself. Maybe it'll correct itself.

But. This is what I'm seeing right now.
And it's like I say, all my other, my

moving averages, my momentum, my
sentiment indicators, everything is

except for supply and demand.

And it's basically just supply and
demand as I'm reading it from this check

money flow indicator.

But like I said, something doesn't
exactly smell right.

So, Roman, you're welcome to shoot holes
in my theory, but that's what I'm

seeing.

All right.

Questions. All right.

And then, you know, Franz, first of all,
are you done?

Yes. Yes? Okay, great.

So let's go through the questions,
comments, guys, first, and then I'll

a little bit of my take on this as well.

Question from Simon.

Should volume be directly proportional
to money flow?

For example, high volume should have a
higher volume money flow area.

So as the – let me kind of like
translate this a little bit.

So, Simon, as the volume signature
increases, you're asking should the

flow area also increase, so like this
area right here. Is that the question?

Yes.

So, Franz?

Well, if you think about the way – the
money flow indicator is calculated,

it's based on where does the market
close on each of those

bars. So here we're looking at weekly
bars.

So let's say that first week in August,
let's say the bar closed right in the

middle, although it didn't. Maybe we
could say it closed towards the bottom.

let's say it closed right in the middle.
Well, that would give, remember, the

range. for the indicator for each bar is
from plus one to minus one.

So a close in the middle would be a
zero.

That then is multiplied times the actual
amount of volume.

So you could get a reading, even with
very high volume, you could get a

for that period of zero. Now, in this
case, you've obviously got a close

probably in the bottom, what, eight?

Point eight of the bar or something like
that. I can't tell exactly.

But but you've got a reading towards the
low of the bar and a very high

volume spike. So how is that going to
affect the last 20 days? Well, it's

to you know, it's going to have a, you
know, more than insignificant impact on

the overall indicator.

That makes sense.

So volume is important, but it's.

It's the multiplier of that volume,
which is from where the price bar

I hope that helps to answer that
question. I hope it makes sense.

Okay, and Simon is saying understood.
Thank you.

All right, so it seems like no more
questions.

So I would approach this, and usually
when I look at Chaikin, oh, there is one

here. Actually, okay.

I think, okay, Michael is right and to
the point that I want to make.

From Rami, should the point marked as
selling climax in the chart be marked as

the buying climax?

So I think that I know the answer, but
Franz, please go ahead.

Yes, I'm sorry.

Sometimes I type a little bit quicker
than I'm thinking.

Oh, I see. So this was just a title?

Yeah, that should be a piece.

Because I thought that maybe, Rami, you
were referring to, I know that Anna

Kulin in her book actually labels
climactic actions the opposite the way

we do it.

And her explanation is that the
composite operator, the institutional

is selling into the excitement of weak
hands on the climactic run, so therefore

this is a selling climax by
institutions.

Which I kind of, and actually not kind
of, which I disagree because there

are so many things here that could be
discussed.

Climactic action, in this case, buying,
not selling, that's what's

happening. So we are having a climax
of...

buy -in wave, not a sell -in wave.

So that's my kind of like primary
argument there. All right. And really

thing that defines that is the change of
character that occurs between May and

June.

Like you say, it's not a big volume
signature.

So here is my take on Chaikin in the way
how...

I kind of look at that. And I'll see if
maybe we could include this into the

November special.

So November special is going to be all
about momentum and volume.

Those are the two things that actually
precede relative strength.

So some of my recent trades are...

more about that, where I'm trying to get
pre -momentum and pre -relative

strength. Why? Well, because there is a
lot of premium that we are not getting

if we are too late to the party, so to
say.

So maybe Chaikin could be discussed
there as well, because as I look at

indicator and we're going through all of
these points.

What I'm thinking here about is effort
and the result.

And I'm looking at how there is an
expansion of liquidity in one direction,

expansion of liquidity in another
direction, and then what the price is

And I'm thinking like with this
expansion, what are we doing in terms of

price? And I keep comparing it. And I
think this is the

pretty useful way of using an indicator
like this because basically the

indicator is showing effort whereas the
price is showing the result.

So we have that effort result
relationship that we could use in our

So for instance, you know, for instance,
I'm just kind of like showing what I'm

seeing.

There is a move to the downside here.

So supply is increasing by that picture,
right, and demand is going down.

Am I correct?

The way I'm interpreting it is that

supply is increasing and demand is going
down. Yeah, exactly.

Yeah, okay. So we have more selling than
buying.

Right, so on a very simplistic level, if
this is happening

and the price is making a higher high
and a higher low,

to me that kind of says that there is a
pressure to the downside that is

increasing over demand, but yet the
result to the downside is somewhat

So I'm kind of interpreting this as a
bullish scenario.

So that is kind of thought number one.

The second thought that I had when I was
looking at this latest reading on

the indicator, we had somewhat, I don't
know, maybe a somewhat similar situation

right here where it's going down. So,
again, supply is increasing, demand is

decreasing.

And we are actually making multiple
higher highs

on the divergence with that indicator.
So kind of reminiscent

of what we're having right now.

We're having higher highs, higher lows,
higher highs, higher lows, and then kind

of the same is happening.

And then obviously we see what happens
after that. That's like this big

speculative wave that we have in 2017.

So I wonder what if we are seeing kind
of like an

interim rotation at this juncture that
leads

the indicator to look like this.

But because of the result of what we
see,

You know, it might basically suggest
that we might actually have a rally.

So that's just maybe a slightly
different take on how to interpret this.

have any thoughts on this front?

Well, the only I guess the 2007 the 2017

period was.

We're definitely in an uptrend. And I
guess you could make the same case,

though. You could say that potentially
we're in an uptrend here, yeah. Well, we

are in an uptrend, right? So higher
highs, higher lows.

And if we've actually broken that. And I
just, Franz, hold on a second. I think

this is a very important point.

Are we in the uptrend, guys, or are we
not in the uptrend? In the intermediate

timeframe, we are in the uptrend of the
significant low.

we've been going up.

In the more longer term picture, we're
still in the consolidation right here.

I just want to make this point in front.

Totally agree.

Okay, so, well, let's observe how it's
going to unfold.

So I would pay attention to this type of
scenarios where, and actually would

kind of like explore this a little bit
more.

right here as We were doing this also
another valuable thing is

what I do with a lot of the indicators
is I look at a big

sample of history here and Every time I
see that this indicator basically

showing also the forces the momentum So
what I'm seeing here in 2009 10 and 11

And this is what we will be talking
about in December session. So maybe this

where I could use the syndicate to show
the institutional buying.

So this whole wave right here into 2011
was an institutional

momentum buying of the market that lost
so much value.

They brought up the market back into the
area where they had it before.

And then after that, we want to look at
the somewhat what I call is

sustainability of the trend.

Could we sustain this trend to continue
or longer?

So the money flow is actually very
valuable here because every time we have

kind of cyclical low, we want to check
on does momentum emerge?

Is there a force behind the next point
where... sustainability is at

question so this flow was you know
questioning that sustainability of the

and then momentum comes so we know we
are confirming that the long -term trend

is still sustainable and then another
momentum drive here and then

we see even through this area right here
that momentum is increasing and then

going into 2015 this is where both price
is stolen And then momentum is starting

to go down. So this is where we could
anticipate a more meaningful reaction,

probably on par with what we had in 11
and 10.

With the same analysis here, we could
see the momentum coming back into the

market, and they are still buying, a lot
of buying.

And then this momentum goes down.

goes down, and this is where we could
have anticipated this reaction.

And then what happens?

This latest rally has that institutional
momentum and flow of money.

So, and we are probably, I'm just
thinking out loud here, friends.

This is a slow momentum, but we're not
giving up, you know, these positions.

So maybe slightly reminds me a little
bit of this situation.

Maybe somewhere also here.

Kind of like waiting, waiting.

Momentum definitely is down. The flow is
down.

It's an indecision point, but the price
does not go lower.

So that's what's catching my eye on this
thing.

And then we could just double check
because we have so many price cycles

Look at how they're buying value first.

We've talked about this in WTC, and I
brought this material to you guys last

week. Then momentum buy, this whole
thing.

Then they're just doing nothing. While
they are doing nothing, the market is

just very lackluster.

And then another wave of buying, and
then sustain that trend until

we have this deterioration, and then
this is the downtrend.

I'll show you a little bit more during
the December special.

This is going to be interesting just
because we're going to talk about long

-term campaigns and how we swing trade
around those.

So very exciting material.

But, Franz, this is really great. I
would like you to bring this back to us

some point, maybe like in a month or
two.

Would that be okay?

Sure. for us just to see and to develop
this material a little bit more. I

definitely see a lot of value, and it's
just been a great presentation.

So let's just explore more on this
material.

Very good. And thanks for your analysis,
Roman.

Absolutely. It's something that I see,
and I don't totally know how to

it.

Getting more eyes, especially here.

Listen,

I am, again, I'm just showing what I'm
seeing and how I'm interpreting, but it

doesn't mean that I'm correct.

So that's why I want you to come back
with this material so that we would see

what's going to happen.

And we would post -analyze this.

In December, I think that we could
explore this more, and I can show some

tools here with this as well.

So thank you so much, Franz.

Thank you. And let's just jump to the
next segment.

Let me see if there was a comment here.

Okay. I think that we're done with this.
All right. Great.

All right, guys.

Now let's talk about the homework. I ask
you to read two articles, Outliers and

the Mundanity of Excellence.

Please say yes, and there is no
punishment if you have not read this. So

say yes if you've read it, if you read
those pieces.

Okay, okay, great, yes.

People are saying yes. So really
quickly, just one volunteer, and, you

we'll go through this like in five
minutes. I'm just going to ask you a

of questions.

Just say yes, and I'll unmute you.

Anyone?

Okay, let's go with Rick.

Hi, Rick. How are you doing?

Hello. Yeah. How are you doing?

Hello. I'm doing good. Yeah, I can hear
you. Well, Rick, I want to quickly ask

you some questions about your trading
and your education around trading.

So I'm going to just keep asking you
questions and just approximate the

that you think that you might be.

spending on all of these activities so
for instance i would like to ask you how

much time do you spend on our classes in
at wyckoff analytics so let's say one

class per week maybe two classes per
week some homework how many hours per

do you usually spend on education

oh six hours

six hours this is a really good number
of hours to spend, because I'm thinking

each day, at least an hour, slightly
less.

So if you would do this consistently,
you know, for years and years and years,

oh my gosh, you know, this is going to
be a really good strive to get to a

really good place. Okay. Well, what
about a weekly selection process?

So you're looking for your candidates,
you're looking at the market, you're

analyzing the charts.

How many hours does this take?

15.

15 hours.

Wow, that's a lot.

Okay, next thing.

Any other activities that you would do,

maybe like reading a book about trading?

Yes, reading books.

I'm sorry?

Yes, definitely books.

Okay. Definitely books.

Books, okay. So books, how many hours do
we spend per week on that?

Three hours. Three hours. Okay, great.

Okay, so anything else trading -related
that actually develops your skill or

increases your knowledge? Not looking at
the screen, but maybe looking at the

screen and analyzing. I would be
imagining that this is either under

or selection. But anything else that
we're missing here?

Yeah, I would probably say two hours on
the trade journal.

Awesome.

Trade in journal.

Yes.

How long have you been doing this
routine, Rick?

For how long?

I'm finishing up my third year.

Third year.

Excellent. Okay, so.

What do we do here?

We want to, you know, this article about
outliers, this is from the book from

Malcolm Gladwell, talks about the 10
,000 hours that it usually takes to

master a skill, master a craft, or at
least

to become masterful.

at something to a certain level.

And we are taking this as a basis and as
an idea that we do need to practice. So

sometimes I have people, you know, when
I talk about practicing trading, meaning

practicing analysis, practicing
execution on charts, going through the

and then going through the post
analysis, they are saying that this is

meaningful because during actual trading
emotions are going to be swaying you in

different directions.

Completely disagree.

I would rather be swayed emotionally
with an array of analytical tools that I

feel comfortable with and at least be
confident in my analysis rather than,

you know, to be swayed in my emotions
when I don't have the knowledge and I

don't have the system and I don't have
the skill.

So we need to practice.

The question is how to practice, and
obviously, you know, this latest term,

deliberate practice, you know, and I
wanted to bring you a couple of other

articles that I read just recently on
that, and I probably will.

The way how we practice is very
important. So what I'm seeing here from

that there is a routine for three years
where There is a devotion to the craft,

the devotion to advancement, progress,
and so on and so forth. So let's

calculate this really quickly.

We have 26 hours.

That's per week.

Two weeks of vacation, right, maybe?

Per year?

Sure. So this brings us to 1 ,300 hours
per year.

And times three, that's 3 ,900 hours

that Rick has spent on trading education
that

would have a meaningful impact on

the way how Rick trades or how the
analysis or selection is happening.

Was it helpful to be in this routine, by
the way, Rick?

for this three years. What has happened
qualitatively?

Did your trading improve?

Yes,

my trading has improved.

Three years ago, I got laid off from the
oil industry.

I had been studying and reading for
probably 20 years prior to that

with the goal that when I retired, I was
going to trade.

So I got started a little earlier than I
anticipated.

And so I've got a trading

plan.

system and I'm just diligent and

during this education of course I came
across the Wyckoff

method and Wyckoff analytics and man I
couldn't be more excited

so it has definitely paid off that's
great Rick such a

great way of building a systematic
approach to your

trading, to the knowledge that you
receive. So just very commendable. Thank

so much for sharing this with us.

Okay, so.

Sure, thank you.

Okay, absolutely, Rick.

Thank you. I'm going to mute you now.

So this is obviously.

One of the best examples that we could
hear from our community, from students,

on the practices that you guys are using
for your

preparation for trading, Rick is doing
just a tremendous job right here. This

is awesome. I don't have so much time to
devote to my own

education. I would love to have more
time just for R &D.

But what is important here is that this
type of education, once you establish

this routine, has to go through years
and years and years.

That's point number one. The second
point is the way, you know, how it

happening. So it has to be very
deliberate. And I think that the

know, when we were creating it back
then, you know, five years ago, and I

talking to my staff,

Our conversations were about skill
building, skill development.

And obviously, you know, I'm a little
bit obsessive. I'm kind of realizing

about myself, you know, obsessive with
the details on the chart and so on and

forth. So it becomes a little bit more
of exploration into the,

you know, well, where is the truth? You
know, what do we actually see? That's

why, you know, with France, I want to
see what's going to happen.

I want to see how should we be
interpreting this type of structural

So we have to be extremely deliberate in
our practice. If you don't have a

chance... to log in as many hours as,
let's say, Rick is logging in here, and

you're working 9 to 5, you have to find
the way to have at least an hour or

two or three per week, maybe put
somewhere throughout the whole week,

you're doing specific processes. For
instance, the process of selection.

You have to go through this, you know,
on a weekly basis.

How do you get to your candidates?

The process of education.

What do you identify as your blind
spots?

And how do you actively go after about
acquiring the knowledge, asking me or

someone else, looking for that blind
spot and answer to that blind spot in

literature somewhere, publications and
so on and so forth.

And then.

uh maybe the third hour devoted to um
just studies studies of the market

of the charts and if you could have
those three things uh lined up for each

and you just consistently do this over
and over with the very deliberate

practice so methodically slowly um
understanding you know and exploring

a lot of the points there

then definitely the improvement will
come.

All right, so that's our point here.

I always love to give the whole class
the intention of how we're going to do

things in this classroom.

It's going to be slow, but it's going to
be very deliberate.

And with that, let's jump to the next
module.

We had the second assignment, which was
the bias game.

All right, so let's look at this, and
I'm going to go quickly here, and then

going to give you the assignment for
next week for the bias game.

So we are going into the trading range
from the uptrend. It looks like demand

very stable, supply is occasional.

There is not a lot of big reactions that
are happening on the way up.

This was the largest.

and we are anticipating maybe with this
supply that maybe soon we're going to

have more supply as the price goes
higher supply indeed is increasing and

we know that somebody is selling into
the strength of the trend um and

then obviously here on the change of
character we're seeing that supply is

culminating meaning that supply is in
synchronicity with the result, or

the increasing effort is in
synchronicity with the result, and we're

largest reaction, which means that we
are going to go into a trading range.

here we are in this trading range. And
it's just such a great

concept.

a change of character. I was just
teaching it yesterday to the new WTC

And it just, every time I teach this or
I talk about change of character, it's

so elegant and simplistic in its
concept.

And it just gives you so many different
ideas and points about what the

structure is going to be.

It basically gives you an idea for an
untrading environment.

That's number one.

Secondly, right away, it identifies two
important points for us, buying climax

and automatic reaction or automatic
rally if we are in accumulation.

And those define areas of resistance and
support.

So we know exactly where the price is
going to spend the majority of the time.

And we could expect that the price is
just going to consolidate.

It's going to have some rallies.

It's going to have some reactions.

There might be an increase in
volatility, decrease in volatility.

And through all of those actions, we
need to define what the bias is.

We usually start with the bias being the
same as on the previous trend.

So this means that

Out of the uptrend, we are expecting a
continuation and a reaccumulation.

Our first task is just to see what kind
of level of supply is coming in on the

change of character itself in Phase A.

Is this a distributional supply, or is
this just rotational supply?

Usually, distributional supply would
have the characteristics of expansion,

that expansion would be quite different
than what we've seen before. And I don't

see this necessarily here.

I see that there is a slight increase of
the supply, but it's not as much as

what we're seeing, you know, in the area
where there is some selling into the

strength.

I also don't see, and this is the second
thing that we would be judging a change

of character or the presence of the
supply for the distributional

characteristics or rotational
characteristics.

How does the price react to that supply?

Does the reaction break the previous
support?

As we go down, would the spread
drastically increase? Would we have

How would the price react around the
stopping point? Would the price react

quickly out of that point, or would it
just stay there and produce just more

limited rally?

And with all of those elements, it feels
that... a change of character still

suggests that we are in the
reaccumulation.

And we are probably going through some
kind of rotational pattern here in this

particular stock.

So some of the hands are giving up their
position, and this is probably a value

or contrarian investor.

And then someone else is picking up this
position, and because there is enough

liquidity in other institutions,

anticipating that maybe there's going to
be another growth opportunity out of

this trading range.

So that exchange of shares, rotational
exchange of

shares between institutions should not
produce a lot of movement to the

downside. Because it's when the price
moves to the downside, that's when we

that there is selling.

There is selling.

Here we're seeing selling and then the
price stabilized and stays kind of like

in the same range.

So what happens next?

What's the next Wyckoff story here?

Well, once they bought in into this and
rotated, so sellers, those institutional

sellers sold and they became inactive.

And the institutional buyers,

acquired the position, accumulated the
position, and they became inactive.

So therefore, when the two major
participants have become inactive, what

we expect?

We would expect that the volume would go
down. It did.

And then with that diminished volume
characteristic, what is the price doing?

It's actually going up.

So that tells me that even though they
are inactive, the price chooses to go up

and not down.

It means that supply has been observed
in this area right here.

And that's the major kind of premise
here for this rally.

We're calling this a week.

just because weak hands participate in
this rally.

It's not that they are producing this
rally.

The composite operator, these two
institutional types that rotated the

between themselves, they are producing
this rally by being inactive, but weak

hands are just participating.

We see the climactic end to that rally,
suggesting that supply has come.

And we're thinking that probably this is
just, you know, professional mean

reversion trade that is being produced.

But then when we see that this happens,
that suggests that this initial

supply had some kind of institutional
signature as well.

So they sold into the high.

And we need to start thinking, is our

bias changing.

This is what France was alluding to, you
know, when I'm talking, guys, about

different, you know, and I was kind of
like hoping to hear the phrase textures.

Look at the texture of the uptrend.

Look at the texture of the next rally.

Somewhat similar, slight differences, if
you can, you know, if your eye could

catch that, there is

a little bit more volatility the way how
the price moves, but yet it doesn't

progress a lot to the upside, suggesting
some kind of resistance.

Then supply comes in, and here we're
thinking, would there be

a change of bias to the downside?

That's the question that we are gonna
address after we see the emergence of

supply.

Well, the price definitely goes down,
supply emerges, and this is the highest

supply, so we're instantly thinking, are
we in the bearish bias?

Okay, well, the answer to this question
is in the result.

What is the downward result that we see
and that we have?

Have we committed below the support?

No.

Have we closed in the lower part of the
spread?

No.

Have we had only signs of supply and no
demand?

No.

And it seems that there is some demand
that came in and they bought

in into the lows, into the value.

So they saw this as a value, and it
seems that this institutional buying

of the volume signature, because how
high it is, is somewhat reminiscent of

we had somewhere here, where we have a
lot of buying even on the way down. So

all of this is buying, buying, buying,
buying, buying,

buying again.

Then this is a sell.

Then they are heavy buyers again, right
here. This is the value zone, so they

want to buy in the value zone.

We could see that further down here,
here,

all of this buying in support of the
prices being in the

value zone.

Because it didn't close below the
support level, that's what tells us that

still a reaccumulation. And now they
have bought here and they have

bought here.

So by this point, supply should start
being exhausted.

And we should see the confirmation of
this exhaustion in two things.

In the structure,

we should be seeing higher highs, higher
lows, or at least higher lows.

And then in the volume or effort, we
should see that supply is going down.

Well, we definitely see that supply is
diminishing.

And then we see that, yes, indeed, we
have higher lows throughout, not just

one, two, three.

We don't have a higher high, but we are
in the apex formation, and apex

formation does not supposed to have a
higher high until a breakout.

So with all of that and with the lower
volatility in this area right here,

thinking that the bias here is up.

Now, what I want you guys to do with
this exercise, and it's very important,

please, for your records, I want you to
count how

many exercises, bias exercises we went
through and how many of them you guessed

correctly and how many of them you
guessed incorrectly.

And then we'll talk about those numbers
as well. We did this with the previous

cycle.

And it was really helpful for students
and myself as well, you know, from

teaching perspective, you know, to see,
you know, where we're going with this.

There's going to be some struggle here
when you're going to look at the

And I want you to go through this
struggle.

The key is just to let yourself know
where you are.

This is a really great measurement, this
bias game, on the knowledge that you

have.

on the price and volume relationship.

So it basically very quickly shows you
your blind spots.

So please use this exercise to improve.

All right, and here we have McDonald's
and I

think this is the last bar that we had
here.

You guys can go to our Twitter. This has
been tweeted last week. So as you've

noticed, I'm giving you the exercises
that are coming up next week

or this week, rather, as a bias

exercise. I think that's how it's going
to work.

All right. So please feel free to read
the whole Wyckoff story and to go

this analysis.

at your own time and this is the next
chart that i want you to go through

so as usual print it

out analyze it and then just send me uh
your chart

with the bias and with the explanations
all right great where are we with time

four o 'clock okay awesome let's look at
the anatomy of the trade Yeah, so there

is a big development here, ACB, Aurora
Cannabis.

When we started our class a week ago, we
were somewhere here.

And since then, there was an earnings
report.

I believe it was last Wednesday, I
think, last Wednesday

or, yeah, yeah, yeah.

It was Wednesday, yeah. So this is
Thursday, and this is Wednesday. So we

right here.

Yes, okay.

So the trade just did not work out, and
I kind of closed the probe.

I still have other positions in cannabis
industry, so one of my positions that

actually is working right now is in
canopy growth.

I know that... A lot of you are
following a lot of fundamental news on

stocks and the group in general.

This is not the group that is showing
relative strength by any means, and I

a lot of comments from you guys on that.

So it's great that you're noticing this,
yet we are looking for a different

trade. We are looking for the trade
that...

we are not going to pick up somewhere
here in the middle of the range.

I was looking for the trade to pick up
somewhere at the bottom of the range of

the long -term formation for a campaign.

So from that perspective, let's quickly
go through the analysis of this anyway,

because it's important to understand the
logic of even this entry and just to

post -analyze this. And I want you to be
very critical of my trade here.

So if you have any suggestions or
comments, please feel free to write them

and I'll possibly respond to them.

Okay, so as we are having a very
speculative run here, a very quick

distribution, and please note how short
this distribution is.

There is an urgency to distribute.

So they are distributing into the
climactic run.

then sell -in, and that produces small
reaction, then sell -in produces larger

reaction, then sell -in again into the
up -thrust and sell -in again to the

downside. So this is the most volatile
period that we see after the uptrend,

and then after that, they are done.

We see this texture change right away in
the volume signature and in the price

as well.

So what does it tell us?

The speculators that were present on the
way up, they sold,

and I'm talking about institutional

speculators, they sold in this area
right here.

And because they were the sizable
position players, then look at how the

of the spread is changed.

All of the attempts to go up, those are
just hopes of weak hands market

participants that after a big
speculative run that they might not

have anticipated and did not participate
in, they are picking up some value

here. And they are being pulled in on
all of these reversals and short

-term continuation momentum.

There is some selling that we could see
from the volume signature, and it's just

institutions, so pros are shortening to
the rallies.

Then suddenly a big pickup, so something
is going on, so that attracts our

attention. But at the same time,
obviously, volatility shows still some

problems. That volatility acts the same
way.

Look at how texture repeats itself.

a lot of volatility in this area, and
then slowly down.

A lot of volatility first, and then
slowly down.

So you always want to invest when, or
get

into the position when volatility
diminishes.

Because when volatility diminishes after
such a strong volatility,

to the downside, that suggests that we
are done with selling.

So we just need some kind of
confirmation of the possible reversal

possible rally, right? So what would be
that confirmation out of that diminished

volatility? So here is a diminished
volatility, and here is diminished

volatility.

Okay, well, here is our first momentum
rally.

And this is what we want to look for as
the rally starts. We want to get on

this rally as soon as possible.

So here is that rally again.

We will have a second chance here to
enter here, here, here, and then to have

least another rally.

So most recent reaction.

has somewhat of the same but slightly
different characteristics. We have a

laborious move to the downside.

So from some supply that came in at the
top,

we are definitely diminishing supply
signature and volume signature in

And then this is what got me in. So the
beginning of the rally. So the beginning

of the rally.

And that's what kind of attracted my
attention

throughout the whole group, not just in
the Aurora, but actually the whole group

kind of looked the same.

A question here from Mitri.

Why enter right before earnings?

This is a great question, and it's also
a great comment in terms of the trade.

Was thinking, Dmitry, that anticipating
a better result on earnings or

at least a better result in terms of how
the analysis worked out going

into that earnings report.

So seeing that there is not a lot of
selling, anticipating that maybe there's

going to be a more favorable reaction
before earnings and we're going to have

some kind of gap like we had a gap right
here.

So that was the thought.

And it just happened in the opposite
way. So the only thing that I had to do

for this specific position just to get
out of the position. And I'm still

thinking that we're probably going into
this area, and I wonder what's going to

happen here. Because I see that in our
cannabis stocks, there is an attempt to

accumulate.

Maybe a false start, could be, but
definitely the goal was to come in

closer to the low, not on the momentum
itself, and not

to be late, especially if we want to
leverage this position.

Okay, so what else?

Okay, another question, actually a
couple. When analyzing the tape, if you

an earnings report but you see a valid
point of entry, is it part of the

methodology to enter and take a chance
with earnings?

Yes, a good question. So here is my
rule, Dmitry, on that.

If we are in the reaccumulation,

In general, I would definitely would
take the position if I'm identifying,

let's say, potential phase C here.

And this is a much more higher
probability.

Let's say if the earnings event is
somewhere here going into phase D, then

there is a much higher probability that
there's going to be a more favorable

reaction to earnings.

If we are in the...

And this is really, you know, this move
is done.

And if we're thinking that this is
reaccumulation, this probably looks more

a full accumulation because new
participants are coming, you know, into

market in this area right here.

So it's being accumulated in its own
way.

So here my preference would be, you
know, to be more cautious.

about earnings because there is
definitely more structural

problems in this type of accumulation
than in the reaccumulation.

So therefore, the answer to your
question is what does methodology kind

requires? Yeah, that was exactly what I
said.

And then I'm just not fully following
the plan here in hopes that it's going

actually gap up on earnings.

Would an option trade be more
appropriate before an announcement?

It actually, Ramy, was an option trade.

Probably you are months early from Rick.
Yes.

So that's exactly what happened. So as
I'm post -analyzing a lot of my

trades this year, I'm noticing, and even
from last year as well, I'm a little

bit early.

And the reason why I think is because
I'm seeing changes of behavior.

So, for instance, this is a change of
behavior because initially here we have

the highest volume signature.

Obviously, this is a lot of selling
here, but we don't see that type of

signature anywhere else. So there is
more institutional participation at this

point in this company.

So they have, and they are not
necessarily.

getting out as the price is going down,
unless this was just a speculative

run right there, which we could say that
it definitely was.

So yeah, so sometimes I'm a little bit
early, but that's fine because I'm

usually establishing a probe which is
just about 20 basis points of my regular

position.

So it really is not a huge loss to me,
especially if I'm taking it much, much

faster than where the stop loss actually
is. So that's how

it just happened this way and

nothing kind of like that we can do
about this.

All right.

What else?

Okay, how do you determine options,
expiration and strike?

So I'm thinking about the duration of
the potential move.

So I look at the history of how quickly
moves could happen, and therefore

I'm projecting, you know, somewhat of a
scenario where I'm saying that if this

type of move would happen, what is kind
of like the duration that I could

expect? so i'm thinking about the
duration of the uptrend and then based

this is going to be my expiration and
then the same way only vertically i'm

thinking about where the uh the price
would go

And from here, if I'm thinking that it's
going to go to around $12, maybe like

as a sign of strength or an upthrust
type of rally. And both are actually

for this trade.

I wouldn't care to have an upthrust
rally either.

Why wouldn't I, right? So usually those
are extremely fast.

So if I'm thinking that my target is
$12, I probably would be accumulating

options between $7 .50 and $9 .50.

I want my options to be somewhat
slightly far away, but yet have some

run into the money into my target.

So that's usually my direction of play
on options.

All right, with this, this trade is
done. So what's exciting about this is

that I want to play a much deeper game
with you guys.

Because WMD and WTC, those are specialty
classes. And I can't do this

for one reason or another.

But with you, I can. And we're going to
experiment here. So I want you, within

the next five minutes, to choose the
stock that we would have bought today at

the close.

And then we are going to follow it as a
group. And I want you as a group to vote

on that stock.

So why don't you just right away tell me
your candidates and we'll analyze

those and we'll make some kind of
decision or it will become a homework.

So what do you guys think? What kind of
stocks are you looking at?

Anybody? Any symbols?

Anything that we can look at?

Gold, okay, yes, an interesting
candidate.

So what kind of trade? Let's just
determine what kind of trade we are

for, right? So we are looking for the
trade that would last our whole

We are not looking for the trade that
would last a

week or two, right? So obviously ACB did
not last long.

but hopefully something else so okay one
candidate gold so we can vote on that

second candidate polter group

so that's in the home construction i
think a very sound selection here

all right

technology prospector interesting well
this is uh kind of like more

maybe even uh speculative because this
is an ipo okay what else guys let

me let me write it down all of that

sun power

had a reversal today

Looks good.

Yes.

Also interesting.

And in the interesting sector.

Okay.

And okay.

Spotify.

Oh, no, not Spotify. Yeah, Spotify.

Okay.

Yeah, very interesting.

This is kind of like, maybe it's just
the challenge of it, you know, that just

attracts me to these candidates lately.

It's just to figure out where is that
phase C? And Mitri here is saying

possible phase C happening now.

Yeah.

very interesting okay i think this is
enough so we have one two three four

six okay one more from from larry okay
so target

all right great so um

let's see

what candidates do we have we have gold

we have home construction we have

ipo software

we have solar power

hats

spotify and target

okay

So I'm going to assume, guys, that we
look at those and we are thinking that

would be entering this position at the
close to date.

That would be our analysis.

So we need to pick something.

So why don't we just vote? And by the
way, I'm going to give you just one

maybe. So as you look at my screen, you
know, pull out another screen.

and just look at all of the stocks, and
then just write one time which stock

you would like to play. And then I'm
just going to calculate, you know, which

stock repeats more often.

Please do not submit the stock that
you've submitted before, right? So let's

for something else.

So I'm going to give you one minute.
Please do this exercise.

So go through all of them. Look at the
charts.

and write down the stock that you would
like us to follow this semester, at

least as the next stock.

All right, guys, I'm back. Let's see
what we're coming up with.

Okay.

Maybe one more answer. Maybe two more
answers.

Okay.

Okay, so it seems that we are leaning
towards

sun power.

This is the most voted symbol.

Okay.

let's do some power all right guys so
for the next week uh as the homework

let's analyze some power let me quickly

show you okay so this is where

we are um with sun power really good uh
move up so we would

think that we have opened the position
right here on this bar.

So please do your analysis, long -term,
short -term, tactical analysis,

what to expect, where the stop loss
should be.

And then next week, we're gonna follow
with this trade just for the sake of it

so that we would know.

Let's vote on the stop loss.

because this is very important as well
where do you guys think that our stop

loss should be and i let me just
determine the

points here okay one two three

maybe four we're extremely conservative

which level do you think our stop loss
should be

Okay, below 11, point number two, below
11, point number four, okay.

Michael, I wonder what you think.

Where the stop loss should be if we're
entering at this point right here.

Three, okay.

Okay, so two.

under the last low okay all right sounds
good this is the trade we are in uh

please analyze send me your charts and
we'll discuss it next week okay great

another segment is done awesome okay
let's go to a q a we have just one

here from simon so simon uh is talking
about the last week assignment

and he says predicting volume was just
In this exercise

where you did use the volume information
based on price information, would it be

fair to say that the assumption when
performing this task is that

like a flow of effort and the result is
complied to that there is

synchronicity between price and volume?

Yes.

So this is one of the

main concepts that we are studying in
this class with our

analysis of the price and the volume.

We are looking either for the
synchronicity or we are looking for some

kind of divergence in the price volume
behavior.

If it's true, then is it reasonable that
when you disclose the solution slide

that there could be a misalignment where
price and volume are not in

synchronicity because price and volume
will not always exhibit synchronicity?

Yes, so sometimes there would be a
divergence. So where these diversions

be found on this particular chart that
we looked at last time.

Okay, so we would be looking for...

disharmony or divergences where let's
say effort is increasing and the result

not following the effort.

Okay, so where could we find this?

For instance, on this attempt to go
down, we have an increase in downward

to push the price down and yet the price
does not commit below the level of the

support, quickly recovers.

And the same happens on the next
reaction, increase in effort and

the result.

So that's a disharmony.

And when we think about what has
happened here, the way how we translated

price into the volume signature, because
in both cases we said there's going to

be an increase in the volume.

Well, why do we say this? Because we see
the increase in spread to the downside.

we see increase in spread to the upside
so there is a lot of volatility

suggesting that both selling and buying
active selling and buying is happening

in this area the same happens on the
next rally and that suggests that the

volume spike is going to be in place at
this spot and right away we understand

that with the increase of both selling
and buying

Volume will increase, meaning that the
effort is going to increase as well, on

both sides, by the way, not just to the
downside.

And by the result, we judge what kind of
effort we could possibly have at that

spot.

There could be some other, maybe less
evident points of where the same

law of effort versus result will play
in.

So, for instance, on the upside, we
could note that

maybe an upthrust like this would have
an increased

effort, which is local, not necessarily
a huge volume spike, but still higher

than what we've seen before.

And then that does not produce a big
result over the previous

resistance.

Something like this, maybe.

Not this, like this.

This is definitely more climactic, so we
would be expecting some volume

signature here. So a lot of effort to
try to push up, and yet does not go

higher.

Something like this, with a more local
increase in the volume signature.

Something like this where short term we
are expecting that there's going to be

an increase in the volume signature.

So effort goes up and the result is not
really that much. It's just a

low that touches the trend line.

And then at any of the spots where you
have like... small increases in volume

signature, something like this, and then
there is stop in action. That would be

your effort versus result.

Okay, great.

The second question was about action and
test.

So action and test as a concept could be
interpreted in so many ways in the

Wyckoff methodology.

For instance, you could be thinking
about action as the price goes up on

one bar, and then the next a bar is
going to be the test of that action so

have had the bar where the demand has
increased and the price has followed we

are expecting that the test is going to
be a continuation of that move of that

momentum and if that test fails then
there is something wrong with

with the whole picture and we would be
expecting a reaction here.

We could also think about action and
test in terms of the swings.

We could have a swing as an action and
then a reaction as a test.

And we would be looking at the
characteristics of high lows.

This is a structural characteristic of
lowering supply signature. This is an

effort characteristic in order for us to
make a judgment about the test.

So the test here is successful.

We have a reversal as a confirmation of
that test, and therefore we are

expecting a rally.

The rally comes as an action, and it
just doesn't have

the same type of momentum behind, and
there is only temporary

commitment. So we could think that if
this is action, what is the

test? Well, the test is such that it
shows that there was increased

and yet the test to this flow right here
shows a favorable scenario.

We also could be thinking about phases
in the range, and we would be thinking

that phase C, for instance, we

could be saying that in phase A,

volatility was slightly increasing, but
not as much as in phase B.

So if phase B is an action on
volatility,

then phase C is that test.

If phase C is an action in terms of
volatility and how it unfolded, then

phase D could be a test.

There could be also some local tests in
phase C, right? So action test

is a concept that you could apply
probably to

anything that you could think of when
you're comparing one thing over another.

You could also think about, let's say, a
volume signature that suggests some

bind, and then the subsequent decrease
of that volume signature on the reaction

that follows.

One is an action, another one is a test.

So there are quite a few ways of how we
could use the action

and test concept in our analysis.

So just use it.

predominantly with the bar -by -bar
analysis.

Use it predominantly with the swing
analysis.

I would concentrate on that.

But understand that you could definitely
use it in so many other ways.

All right, great. So we are at 20 to 5.

Excellent. Now let's talk about our
theoretical material today.

For those of you who were students in
the most recent InHammer,

series of the WTC, we have not talked
about the significant bars in extension.

So this is why we're coming to this
material.

Practicum is becoming also the class
where I'm teaching as well.

So each class there's going to be some
kind of material, either new material or

something that we're going to repeat,
and maybe there's a new twist that I

to talk about. Today we're going to talk
about points of entry and exit, and

specifically significant bar concept.

Significant bar concept is a
confirmation of the swing reversal.

We want to understand if phase C ends,
that it ends with the reversal.

If phase D backing up action ends, we
want to find that reversal and so on and

so forth.

So let's look at this.

Theoretical representation of where
exactly we would be coming in into the

position and getting out. So let's go
through this step

by step. In the accumulation,

we would be seeking to enter.

initially in phase c and then phase d
and early e

these are the areas of where we would
want to get in into the position

it allows us to get in into the position
at four spots

So instantly, I'm thinking, when I'm
thinking about four spots, I'm thinking

that, for instance, if I'm in an
institution and my total risk is 1 % of

portfolio, then I'm probably going to
divide that into a probe position,

which is going to be 25 basis points.

And then position number, so this would
be one. Position number two.

Another 25 basis points.

And this is going to be my sign of
strength rally.

Number three, another 25 basis points.
And number four, another 25 basis points

on the backing up action.

And the total of that would be that 1 %

for total risk.

Okay, so...

Where are those points of the entry?

Well, we want to start probing after
what we think is phase C, right?

So the price temporarily commits.

And before that, we could look at the
characteristics of how the reaction is

going down. And that's why cannabis
stocks are somewhat appealing in the way

they came down.

And then we want to have a local
confirmation.

where we have some kind of retest of the
previous flow.

And on the reversal of that test, this
is where we want to go in.

So we want to see some kind of reversal
bar with the close committing above

the previous bars, above the highs of
those bars, and this is gonna be our

position.

If it doesn't work, We are only down 25
basis points.

Not a big deal.

But if we are correct, then we want to
increase our size.

And the next opportunity for us, once
the price breaks out of a local

intermediate high, is going to be on the
sign of strength bar.

Why are those sign of strength bar so
favorable for us to enter the position?

It's because...

There is a lot of momentum and therefore
a lot of institutional buying that

happens on those bars.

And with that, they are pushing the
price up and the close is such that

is far away from the low or the open for
that bar.

So if we move the stop loss, towards the
law of that bar, it shouldn't be

touched.

Institutions have bought through this
price, and if the price would start

down, they probably would buy more.

Because if they are buying like this
with 25 basis points or kind of

building their positions, they wouldn't
mind the price to go down on the idea

that they like.

So therefore, if the price goes down,
they start buying again that supports

price and pushes the price up that's how
it works on the way up so we would open

second position here and then we would
wait and the reason why we would wait

after we've acquired your second trench
in at one half of the trading range is

that we're actually going into the area
that is not favorable for

opening the position

unless we have the confirmation of the
availability of the supply at

the back -and -up action.

So in other words, we need to experience
another test at the higher level before

we have the conviction to increase our
position size.

Plus, if we're opening on the way up, we
know that the back -and -up action

structurally will expose us to the short
-term weakness on the reaction.

And in a lot of cases, we're going to be
nervous.

Emotionally, we're not going to be there
because the price is going to go down.

And some of us are going to close those
positions, and definitely we don't want

that.

So wait for the sign of strength to
happen. You're already in these two

trenches.

Once the backing up action is being
confirmed, and imagine if it's not, then

price goes down and you're down 50 basis
points and not your whole risk that you

would usually put.

But once the backing up action is
confirmed, add on the reversal of the

up action.

And then after that, add on the breakout
out of that backing up action.

We've discussed a lot that breakout.

It's not favorable, again, for us to
open the position on the breakout

of a sign of strength rally.

Why is that?

Well, because sign of strength rally by
itself creates an

overbought condition.

Overbought condition attracts mean
reversion traders, and they sell

that condition in anticipation that the
price will come back

to the mean or even to the support
level.

And also what happens in the overbought
condition is institutional types

are taking profits.

These two groups would produce a
temporary change of character of the

action that automatically suggests an
increase of the supply and also an

increase of the reaction.

Therefore, our stop loss could be in
jeopardy if we're opening the positions

away here or especially after the
resistance.

There are nuances to when we could
actually open on the sign of strength

breakout.

Those are usually gonna be situations
where volatility has been exhausted

into phase C to such point that we
anticipate a quick acceleration.

A really good example of this is the
movement of the gold lately, since

the actually late of last year.

Okay, so what's next? How do we actually
put the stop losses?

So our original probe position will have
the stop loss just below this spring.

We could be aggressive with our second
point of entry because if this is a true

sign of strength bar, the price should
continue going up and we shouldn't

encounter any resistance.

But my preference is usually to be
conservative when I'm establishing the

position. and then to be aggressive when
I'm trying to get out of the position,

and that is with the stop loss.

So I would just still keep the stop loss
in the original place, and then when we

have a sign of strength, I would
probably move it and put it closer to

in the middle of the range, slightly
below.

I want to allow the backing up action
reaction not to take me out.

out of my position because I want to
build the position.

Okay, well, once we have this reversal
confirmation, we have a couple of

choices. We could put the stop loss for
that trench number three right below,

and let's say that our first two
trenches could have maybe like a

profitable position for us based on the
stop loss.

That's scenario number one. The second
scenario is just moving all of the stop

losses right away.

My preference, again, would be to be
more conservative. We don't know how the

backing up action is going to develop.

Would it have a spring?

Maybe a shakeout? Maybe a deep LPS in
phase D?

So all of those possibilities would
probably keep my stop loss still

slightly below one -half of the trading
range.

I don't mind that because I'm here for
the whole run.

I don't want to be shaken out at the
beginning of the move.

But once we have the breakout out of the

backing up action, the backing up
trading range, that's when I would be

aggressive with the stop loss and I
would move it right below the backup.

Why? Well, because the price committed
to the upside and now...

You know, we're expecting a continuation
of the move.

And then every time the price creates
the high and that high is being violated

with the price movement on the upside,
that's a timing signal for us

to move the stop loss.

And we would be thinking of moving the
stop loss, like I've said, two support

levels away.

And it makes a lot of sense that it's
two support levels away, because in a

of cases, we might have something like
this, where we have maybe a reaction

that is being followed by

subsequent reaction that could take us
out,

and then the price is going to continue
its movement in the previous direction.

So what we want to see is we want to
give the price and the trend some room

to grow and to have the short -term
volatility,

especially in the backing -up action
here where still supply is present.

But every time there is a commitment to
the upside, that's when we're going to

move the stop -loss, and we're going to
move it.

two supports level away, and going into

the end of the campaign, our points of
exit are gonna be

the definition of the buy -in climax,
some elements of the climactic action.

And sometimes it's really hard to find
those because sometimes the volume

signature is actually not gonna be
climactic.

especially in stocks.

So what do we do with that?

Well, we need to look at the price
action.

So in the instances where we see that
the price spread is

increasing, where there are some gaps
happening, we could assume that this

momentum indicates the excitement by
weak hands, and that leads into the

conclusion of the climactic run.

If we don't see even that and what's
happening is that demand is diminishing

and therefore we see a slowing of the
momentum, that type of kind of buying

climax, like a rolling over buying
climax, then here we would be relying

on trend line analysis and we would be
looking at some overbought condition or

with the slowing of the momentum
sometimes we have the conditions that

price does not reach an overbought
condition, so showing that failure.

And that's just different type of buying
climaxes that we can experience.

I'll be talking more in extension in
this cycle of the W2C about that. Once I

have that material, I'm gonna bring this
to your attention, guys.

And here, After the buying climax, let's
say that we are getting rid of our

first trench.

25 basis points is gone, and we are
thinking, okay, well, we're seeing some

elements of the distribution, maybe a
high volume signature suggesting that

supply is coming in. We got out.

Then we're seeing that the next selling
produces a change of character bar.

Usually that bar is going to be a big
downspread bar on a high -volume

signature, and we're still relatively
close to the top.

So this is actually quite an efficient
place to get rid of some of your

if you're finishing your campaign.

The reason why it's efficient is because
you don't have to wait to close out

that position throughout the volatility
of the whole trading range.

If you're really confident about your
read on the climactic action and on the

subsequent change of character bar, then
I would say go for it.

But if you're late, then your next
possible exit is going to be after the

automatic reaction.

The tendency and the mistake in the exit
is usually such that we are exiting on

the way down.

And that's the mistake.

We are eliminating a lot of the
unrealized games that we sweated out on

up.

We want to wait for the price to
rebound.

And the price usually would rebound
here. Why would it rebound?

Think about weekends.

What's their sentiment at this low? What
are they thinking?

They are thinking that they did not
participate.

in the previous run, so they feel
regret.

And then automatic reaction gives them a
point of value.

As an example, imagine minus 10 % on the
stock or

even more that they wanted to play for a
long time.

So now they see that value, so they're
going to come in, and they're going to

apply this, and that's what's going to
produce that rally.

So we know that after the first
reaction, there's always going to be a

So we don't have to stress about not
selling at the same price.

The exception to that is going to be
your hypodermic formation, where you

basically don't have this opportunity.

there is a lot of aggression in selling
on the way down because there is an

urgency to sell.

And this urgency to sell is going to be
quick selling, very aggressive.

And then also from the same family of
the distribution, a TP formation.

That is not going to have the first
initial good.

The second one will be better.

But in terms of the efficiency of where
you exit in the price, it would be still

better to exit on the change of
character bar or into the selling by

the contrarian investor into some
supply, emergence of the supply.

Well, let's imagine that we were
accurate and we actually got rid of our

trenches, and we're still keeping one
just to see, you know, what the bias is

going to be.

We were somewhat excited on this
upthrust rally, and then it just failed.

And whenever it fails, this is probably
the last point of conviction that you

should have, where you're going to say
that, okay, I'm done.

This pattern has failed. There was an
attempt to go up and commit above the

resistance. as a continuation of the
trend, and it didn't happen. It failed,

I'm out.

Okay, well, let's quickly look at the
example.

We've used this in the WTC course, for
those of you who have taken this

previously, not in the last cycle.

So look at the original range.

This was in 2008, 2009.

So right away, think about the market
context at the time. The market was

down, yet the price of the stock was
almost horizontal, slightly downsloping.

We had our points of entry exactly where
we've discussed on our schematic.

First, after the spring on the test, on
the sign of strength before the next

resistance point.

on the reversal of the backing up action
and on the breakout of the backing up

action. Our first campaign could have
been closed out by the same rules that

we've outlined on the schematic that we
had on the previous slide.

We want to identify climactic action.

Okay, well, here is a bar that has that
climactic characteristics.

We probably could even miss this one.

and we probably would be thinking that
the next bar, as a change of character

bar, and look at the size of this bar.

Compare it to all of the down bars that
we have on the way up.

Probably this one would be in line, but
that's basically it. Everything else is

much smaller, so it looks like after the
momentum run,

This is a change of character bar.

So at least a change of character bar
gives us a very clear indication of

we could potentially exit the trade if
we are done with this timeframe.

If we are long -term investors, we still
would be keeping this.

The reaction to the downside as in
today's bias game was not as pronounced.

It did not break the previous level of
the support and suggested that even in

phase A, we are thinking that this is
the reaccumulation.

For the long -term investor, that's a
very valuable tool. Again, I don't want

you to underlook the change of
characteristics

that would suggest a potential bias.

And that's how we're looking at that.

Okay, well, the next rally that goes up
with the higher highs suggests that this

bias is confirmed.

The next higher low, confirmed.

The next higher high, confirmed.

The next higher low, confirmation again,
and so on and so forth.

Absorption, momentum, and then the last
speculation.

And as we got rid of our position, you
know, the next...

as a reaccumulation element, we will be
thinking about finding a phase C,

reversal in phase C, sign of strength
bar

where we could add to the position,
reversal of the backing up action, and

breakout of the backing up action. A
little bit kind of condensed here with

all of the bars, but hopefully you guys
could see this, that I'm picking up the

reversal bar on the backing up action
that is a test

to the action point that has a lot of
supply.

So we needed to have the test to this
action.

Okay, and then if we're long -term
investors, we would be thinking about

Again, a very simplistic identification
of the climactic action, which was this

bar. Why this bar? Well, because any
other previous up bars were not that

impressive after the momentum bar. So
this looks like the end of the move and

has this big, quick movement to the
upside. So climactic action, that's exit

number one. Second exit on the next bar,
change of character.

when we look at all of the down bars
since where we open the position let's

somewhere here this is a definitive
change of character and then

after that we would be selling here
after the secondary test rally

and then the last exit is going to be on
this bar so let me just do

this one two three four And we are done.

Okay, so that's an example. A question
here from Mitri. Why did you not enter

gap significant bar in the
reaccumulation?

Which one?

You have four entries in the
reaccumulation by zone. Yes.

One, two, three, and four.

This one right here?

Oh, I see. Yes.

Yeah, this is a good point.

It could have been an entry.

yeah absolutely the only problem here
with the gap is i'm thinking that this

probably some earnings so we're
anticipating some supply coming in after

especially a bar like this so we still
want to have more testing you know to

this action with the supply so that just
more

context to their supply emerging all
right great

Where are we?

503. Okay, let's talk now about
significant bar.

We want to understand how we could
manage the trade and how we could

stay with the trend. So therefore, we
want to develop trend following tools

will allow us to stay in the trend for
the duration of the majority of the

trend. I remember...

When Ed Secorda came to Golden Gate
University for one of the classes and he

talking about trend analysis, he said
that his goal is to take between 50 % to

80 % of the trend and to be consistent
about that.

And if you can do that over a long
period of time,

then you're going to be extremely
successful.

And you're going to have a very high
perfectibility if you're repeating this

over and over again. So we want to take
these portions,

something like this,

of these trends.

And we want to go through the trend and
not get out.

with all of the reactions that the trend
has.

So we want to find the tool that will
keep us in this position and yet would

define also the dominant theme

by the institutions.

Are they sellers or are they buyers?
Because if they're sellers, we're going

see that in the price action. If they're
buyers, we're going to see that in the

price action.

So what is a significant bar?
Significant bar is a big bar.

It's the bar that has an expanding
spread.

It's also a bar that indicates the
direction of the current bias.

And we would see this by the location of
the close.

Usually a bullish close or a bullish
significant bar would have a close above

one half of the spread.

And then the bearish significant bar
would have

a close below one half of the spread.

Also, the significant bar will have an
element of the result not

only in the close, but where the close
is happening relative to the

most recent support and resistance
levels.

So for instance, we could see here that
our initial swing is

to the upside.

A big significant bar shows the
commitment to the upside.

We are assuming that there is an uptrend
and

it only will be reversed in our eyes
when this bar is

being reversed.

So we need to see some kind of close
below the low of this bar.

So we define the low.

And then we're looking for that bar
that's going to commit to the downside

the close.

And it's right here.

And usually the close, the last 30
minutes, is all institutional, where

rebalancing their portfolios,
rebalancing the ETFs.

where they're committing, you know, for
the positions for the next day.

And even though, you know, Gary Fullett
always says that the close is

not as important right now, I probably
would disagree with this.

By the way, for those of you who are WMD
subscribers, Gary is going to be a

guest tomorrow on the WMD show.

So definitely check him out. He's going
to have the first 20 minutes unless he

has something else.

Coming back to the significant bar, here
is the commitment that we have below

the low of the last commitment to the
upside that is significant.

And then after that, what we are
basically saying here is that there is a

reversal, a confirmation that the
upswing is done.

the last bar that had the significant
commitment to the upside has been

reversed, and now the swing has changed
from up to down.

And this means that we could even open
the position here. Imagine that we are

opening the position here, and we would
be thinking, well, where is our stop

loss? Would be naturally above the high.
That's number one.

That's a conservative stop loss. And
then secondly, above the high of the

commitment bar.

Because if there is a commitment to the
downside at this point, shouldn't the

price never reverse here if we're
expecting a downswing?

So it shouldn't go through the level
which should be defined either by the

of that down spread bar or...

by the previous close if we have a gap
to the downside.

So imagine that we have a stop loss here
and we've entered the position at the

close, kind of like what we've done with
the sun power.

So then how would we move the stop loss
and how would we protect the profits

that are being accumulated?

Well, we want to see some kind of up bar
that is gonna be a significant bar

closing above the commitment level that
was defined by the high of

the of the down bar where we entered and
it seems like there is an

attempt to do exactly that here is this
green bar it's a significant bar it has

a big spread the close is above one half
of the range but

there is one thing missing from this
significant bar, and that is the

above a significant level.

So it's almost like as if the effort is
increasing, but the result is

decreasing.

That's what that bar is showing us.

So that is still in line with the
downtrend that was identified by the

entry bar.

And then on the next bar, which is
significant as well, We see that there

attempt to commit to the downside, and
this is where we know that institutions

are continuing to sell, and we should
just move the stop loss above that bar

and wait for the continuation of the
downtrend, which comes next after

a short period of a consolidation where
the stop loss would not be moved at all.

It's until the next commitment to the
downside.

where the close commits below multiple,
multiple lows,

that we would be thinking about moving
the stop loss,

so we would move the stop loss somewhere
here.

Then next significant bar, stop loss
here.

Then next significant bar, stop loss
here.

The next attempt to go, or not attempt,
commitment to the downside and

Significant bar, and here is our
commitment level.

And then on this bar right here, we see
that there was a commitment above

this thought loss level.

So our trait is gonna be this.

Point of entry, point of exit.

And please note, we are probably taking
what? We're probably taking 50 % of the

move about.

And this is a downtrend.

Let's see what we can take in the
uptrend. And the rules are going to be

same. We're still looking for the bar
that has reversed the last significant

to the downside.

We had that condition.

Now we are...

Looking at the stop loss, it's either
going to be conservatively here under

low or more aggressively under the
significant bar itself.

And then we're looking for the next
commitment on the significant bar.

This looks like more semi -significant,
but this one is definitely a significant

bar, so we would move the stop loss
here.

Next bar, or a series of bars, we can
combine some of the bars together,

and we would just move the stop loss
like this.

Next two bars that are committing to the
upside.

This is an interesting bar because it
has a gap, so the true range of this bar

will be the difference between the high
and the close of the previous bar.

with that this is a very big significant
bar so we would move the stop loss

there then there is a series of non
-significant bars and then a huge

significant bar that we probably would
divide into half and we would move the

stop loss first below the low and then
below the one half

next significant bar and next
significant bar and this is the bar

we would get out

this is our exit so here's our trade

please note that

we bought about seven at about seventy
dollars we sold

at about 210 dollars

times three and these are i

believe

month monthly yes monthly so this is one
two

three four about four years so

you are making times three in about four
years this is this is a

somewhat of a good speed to make money
and um you can see

how

the significant bar helps us in two
ways.

First, it shows us where reversal
happens, that's number one.

And secondly, it also acts as a trend
following tool because it allows us to

move the stop loss and it also allows us
to exit.

And that's basically the whole idea
behind the significant bar.

Okay, well, we still have some time, so
we have like about 15 minutes.

Let's go through the exercise, and I
will need a volunteer.

And here was this exercise. What we want
to do is we want to talk about where we

would possibly start thinking about the
entry into this talk and how would we

use our significant bar.

definitions to stay within the trend.

Okay, so let's go to Dmitry.

Hi, Dmitry. How are you doing?

Hey, can you hear me?

Yeah.

Cool. All right. So this looks like a
very long -term campaign.

and the original range out of the IPO
price has been formed between

$15 and about maybe $7.

So let's look into this range, and I
want you to give us your perspective as

where potentially you would be seeing a
good point of entry for us.

I wouldn't be too excited about the
first automatic reaction.

Just because it's an IPO and there isn't
much data on it yet.

But on the second test in June, July, I
would probably start looking there

personally. Okay.

In terms of an S -bar popping out at me,

I'm going to look at – I like the one
right on August with

the volume.

I do see a little supply tail, but it
seems to be the

biggest spread to the upside in that
current rally. I like the volume. It

shows some interest.

Well, even if we have a supply tail, I
mean, look at the close.

It didn't really close below one half of
the spread, right? So we know that

there is a supply present.

It probably could be related to this
action right here. Actually, throughout

this whole level, we see that some
selling is happening, even on the IPO

So there is an expectation that we're
going to have some kind of resistance.

It's what happens next that's
interesting, because if we're expecting

supply is going to come, in all of the
cases, we go down, we go down. Here,

we're just horizontal.

So we are anticipating supply to come,
and we want to see

what kind of test to the emergence of
the supply we're going to have as an

action, emergence of the supply.

And so we could, when we look at this
bar, it

could add both as a point of entry and
also as a...

short -term climactic action and we
could anticipate some kind of reaction.

So would you be entering right on this
bar right here or somewhere else?

If I was buying just stock and not
options, I probably would consider an

there. Now, given what you said,
reminding me about the climactic action

high volume definitely makes me think
twice. But if I was to be honest with

Yeah, I probably would consider a pro
position.

Absolutely. Okay, so now where our stop
loss would be?

I would place, this is my personal risk
tolerance, I would place one half stop

loss at the low of that bar and another,
the second half stop loss on the

bottom of the mid -June, yes, right
there.

Okay. I think this is a good, solid
strategy.

Next question.

When is the next time when you would
move the stop loss?

Right at the end of October, I see

some demand coming in.

I would have to look closer.

I would probably move the second one
-half stop loss, the bottom stop loss,

make that – after that bar at the end of
November, I would move my full stop

loss to the first one where it is. Okay.
So the bottom of the August bar.

Okay. So on this bar right here, we
would move this stop loss, right? So

somewhere here?

Right. Exactly. Okay. And then – On the
commitment, this is a commitment to the

upside, so the same idea.

Once you see the commitment, this is
where we could move both of the stop

losses, maybe somewhere here, below this
low.

Okay, when is the next time when you
would move the stop loss?

The next time I would move the stop loss
is...

I like the bar right on the beginning of
2017.

I can see that although the price is
declining right before that, the supply

signature is also declining.

There's less volume.

And I don't know. Yeah, I see that. And
then a little spike in the demand comes

back. I like that personally.

So I would move the stop loss.

To the top of the previous trading
range, try to find

a good area of support on the top of the
trading range there for the full stop

loss.

I'm sorry, say again, at the top of the
trading range, right somewhere here?

Yes, right there, yes. Okay.

All right, well, there is a commitment
to the upside.

It's not a big significant bar.

But it's like a semi -significant bar.

So probably would, you know, as long as
you're doing this one half and one half,

I would agree that, you know, one of the
stop losses should be slightly below

the resistance level here, somewhere
here.

Maybe the second one should still stay
at the same place.

Just if we're thinking about the
causality, we're thinking about a much

price.

and we're just at the resistance level.

So we want to give the room for the
price to go outside of the trading

Okay, this is a very interesting bar.

Because it commits to the upside above
the resistance.

And we know that we are in some kind of
sign of strength rally.

And it does look climactic with all of
the characteristics.

Now, this is a very interesting
question.

So I want you guys to think for a second
about this. I'm going to ask this

question right now.

And write down the answers.

If this is a climactic action, then
where is the trading range?

Because after the climactic action,
shouldn't we have the sequence of?

Change of character, which leads to the
automatic reaction, phase A,

and so on and so forth, and then we go
through phases.

Where is our trading range for that
climactic action?

Mitri, what do you think?

Well, I would say I personally would
label it as the boundaries.

Phase A kind of determines the trading
range there. So we have the buying

as the top of the trading range.

And then the automatic reaction would

be the bottom of the trade. Okay, so
this is the trading range.

Okay, great.

Any other ideas, guys?

What else do you see?

I also see that...

line you drew um that goes to the highs
of you know mid 2016

that happens to be you know a support
for the automatic

reaction that takes place right there in
early 2017 so that is another reason

why probably we and and it's one half
the around one half the uh

the spread of that large s bar You have
right there. Yeah.

Okay. That's all valid. All of those
observations are valid.

So the logic here that I'm thinking
about is this.

We know that definitionally a sign of
strength is going to be a commitment

the line of resistance that was created
in phases A and B by the highs.

Usually a sign of strength rally will
have a culminating move at the end of

rally. it's going to look like a climax
with the increase in volume signature

and increase in price action. So this
bar suggests that this is the climax.

Then usually we would experience the
backing up action as a horizontal range,

and then out of this range we are going
to have a resumption of the uptrend.

Let me ask you this as a question, guys.
So we have traveled from,

what is it, about eight and a half

to about

17, $18.

So we have made what? We have made about
120%.

It's a high momentum stock.

It just shows us that there is so much
strength.

And then we look at the volume signature
and we see how institutions are

actually getting into this position.

So the reaction that we are anticipating
might not necessarily be a horizontal

reaction or a downsloping reaction.

Remember that there is another type of
reaction that we could have. We could

have a reaction that would have an
upsloping structure

to that.

And then, you know, if we were thinking
that this first leg

was the momentum leg,

where institutions are getting into the
position.

Then the second leg of the uptrend
usually is gonna be associated with a

slightly high volume signature because
at this period of time, there's gonna be

some profit taken.

So it's gonna become something like
this. Supply is gonna increase, then

is gonna increase because With the
increase of the supply, what it does is

produces a reaction, and this reaction
produces short -term value for

institutions and they buy.

So it's almost that through this area we
are absorbing supply

on the way up.

Vertical absorption is happening.

So instead of a horizontal range or
downsloping reaction, we might have an

upsloping reaction like this. And then
the phase C is going to be defined by a

local volatility.

Here it is.

So here is our area of absorption, which
should have been...

reaction like this but because of the
strength it's just up sloping now would

have the same characteristics that I've
described yeah look at this supply is

coming in on the bind climax and on the
change of character

then supply comes in on the way to the
upside and then in potential

phase C Now, it's a little bit
counterintuitive to what we have studied

schematics because usually it's
horizontal.

And I don't advise to label this or to
show you guys, to show to anybody that

you're labeling this.

I still would prefer you to say that
this is an uptrend.

But as a concept, I want you to
understand the process of what is

Some of the institutions have bought
throughout the IPO trading range. Then

the way up.

some of them are profit taking.

And usually it's either an upsloping
range like this or it's gonna be a

horizontal range where they're taking
the profits and that produces a stop in

action at least temporarily.

And once we are done, the third leg

is gonna have characteristics where
supply

Why supply is low? Well, because they
took all of the supply in the IPO

range, so value buy.

Then they took it on the way up. We see
a lot of emerging demand signatures.

So this is our momentum and trend
following buy.

Then they took some profits.

profit taken, and they observed whatever
the

supply came with this profit taken. So
we have observed the supply three times

now in three areas.

In one area, horizontal area, and in two
upsloping areas, uptrend areas.

So by the time that we go into this
speculative phase, supply is so

that there is nothing left.

And that's what produces that quick
movement.

Think about the value of this
information, because if we know that the

absorption on the momentum happened, and
then the absorption with this profit

-taking phase has happened as well, we
could anticipate a very quick move up,

much faster than, let's say, first two
phases, and therefore we should use

specific strategies.

Those are going to be much shorter
strategies, and our stop losses are

be much more aggressive.

All right, well, with that, now let's
come back to Dmitry.

So what is going on next?

We have moved the stop loss on this bar
to where?

To right below, right at the low of that
bar.

of that bar okay where is the next bar
when we're gonna move the stop loss next

bar i would say would be in right in may
the beginning of may

okay so this bar right here okay so
where where is the stop loss right below

or somewhere else um i would like to i
would probably put

It's not a huge bar, so I would probably
put the stop loss at one half of the

range of the previous significant bar.

Okay, somewhere here.

Which coincides with the bottom of that
trading range.

Okay, next bar. Probably this one?

Yeah. Okay, so stop loss somewhere here,
right?

Below that bar.

Okay, next bar.

Stop loss somewhere here.

Right, yes.

Okay.

Next bar, probably this one. Stop loss
probably somewhere here or slightly

Yes.

Next two, we could combine these two.

We could have the stop loss maybe
somewhere here.

Now think about the speculative phase,
what I said. Here you want to be...

more aggressive with the stop loss
because on the speculative run, you want

take as much money as you can and don't
give up a lot of the

grounds here, right? So we would
literally just go like step by step,

something like this.

And that would get us out on the change
of character bar right here.

And that would be a really good trade.

Now, if we entered here, another
question that I have here, Dmitry, is

let's say we're staying in this trend,
we're enjoying it, and so on and so

forth, but the biggest problem with the
winners for advanced traders, and I'm

experiencing the same type of problems,

is to where accumulate more. So let's
identify appropriate places that are

efficient places for us where we would
add to the position before we exit. So

where do you think those are?

I would not add to the position on the
next

up bar.

Hold on a second. Next up, which bar?
Give me the time step.

So it would be the 2018 bar.

Hold on a second. We are talking about
just one cycle here. So this is a point

of entry for us.

Oh, okay. This is an exit.

So we are not discussing what happens
after the exit.

What I would like for us to do is...

If we're just opening one position,
that's a waste of a trade, wouldn't you

I mean, if we're just opening one trend,
that doesn't make sense with this type

of trade.

You have to be a pick here because this
is a high flyer, so you just

want to load up at the correct places.

So when is the next correct place for us
to add to the position after the point

of entry?

Probably right before the November.

Yeah, late October.

Okay, this bar. Okay, great.

Where else could we add to the position?
Literally the next step. Think about

our theoretical schematic where we were
discussing the points of entry.

2017 bar, right in the beginning of
2017.

Okay, 2017, what would this bar be
associated with?

Is this a stepping stone trading range,
phase C?

This would be a, well, I see it would be

actually, no, maybe not because it's
right at the resistance from 2016.

Yeah. Look at this resistance. We
probably would be hesitant to open on

because it goes right into the
resistance.

So we're probably still thinking this
range right here.

I think this is a really good bar. It
comes after phase C.

And then before the resistance,

We probably have a combination of these
two bars where we could still add to the

position. So I would add here.

Look how there is still some room before
the resistance cluster.

And then we are relatively close to one
half of the trading range. And then I

would stop. I would not do anything on
this bar because how close it is to the

resistance and it's just touching. So
you would anticipate that some kind of

supply is going to come. There's going
to be some kind of stopping action.

But the way how the price is behaving
here suggests that supply is low,

and we want to identify that phase C by
local volatility, so somewhere here.

So probably I would be inclined to think
that out of phase C, because of the low

volatility, we could enter this
position, so somewhere here.

All right, so what's the next point
where we could add?

to the position, Mitchell?

I would try to follow that same logic
for the next trading range.

Okay.

Look for it maybe in an intraday basis.

Well, this is a weekly, so maybe look at
the daily chart.

See if there's a phase C opportunity
that I could take a stab at there.

Low volatility trading ranges.

So they kind of allow us to go in and
establish this position as the price is

phase C or on the way out in phase D.
Okay, so where else?

Then that bar right

in the middle of May and June.

It's a nice S -bar.

High volume, but not too high, so it
doesn't seem like a climactic type of

for me.

Okay.

Right there. Out of this area right
here. Okay.

Look where we established our positions,
by the way.

I don't mind this entry, by the way, but
probably after that, I'm going to stop

until a certain point. What is that
point?

Well, when we look at all of our...

that we've done, we see that they come
out of some kind of formation, right? So

formation, formation, and those are low
volatility.

I think this is okay because we're
relatively close to the breakout.

We're still anticipating momentum to
continue.

But I would be looking for this type of
the reactions, right? So this looks a

little bit smaller.

I would probably looking for either this
or this or like a combination of this.

Maybe like this as one more pronounced
same type of

magnitude reaction.

So we want to make sure that we invest
and we add at the same

magnitude reaction as number one or

quickly right after the breakout. That's
why I don't mind this entry because

after the breakout, it happens almost
right away.

But then after that, we're probably
looking at this area right here as our

buy.

Oh boy, my Siri is hearing me.

Okay, so and that's probably where we're
gonna...

Oh, my goodness.

Hold on a second.

Apple

technology.

So these are probably all of the places
where we would go in and add with the

reasonable expectation that there's
going to be some kind of continuation

on the momentum of the long -term trend.

Point of entry number one, two, three.

four, five, six, and seven.

So we would have a meaningful position
going into last speculative round.

And this bar definitely gives us that
change of character type of feeling

because it has all of it.

And hopefully, guys, you are exiting
just on the idea of the speculation

itself.

And you are moving those stop losses
much, much faster and more aggressively

the speculative phase, and you're
getting out early on at around 45.

That would have been a great trade. Now,
if you're still holding on to this

trade, there are quite a few bullish
scenarios right here.

You know, we would talk about this, but
we're already, you know, way, way beyond

the class time.

So with that, we're going to stop here.
Dimitri, thank you so much. That was

really good.

Thank you.

All right.

And, guys, as usual, the homework.

Let's come back to we're going to do two
homeworks. So one is an anatomy of the

trade. Please analyze.

The symbol is SPWR.

That's assignment number one.

Then you have a bias gain.

That's assignment number two.

And then for those of you who have time
and you guys want to listen to this

recording again and make notes and you
want to send those notes to me, please

so. I always love to look at your notes.

And this is a really great exercise.

So with that, really good class, good
participation.

Thank you for volunteering.

You know, as usual, this is the class
where we are trying to go into a lot of

details on the analysis. So let's just
get into the habit of volunteering and

just going through the exercise.

Good job, guys, and thank you so much.
I'll see you next week.

Bye -bye.