Swing Trading For Beginners – Wyckoff Trading Method & Swing Trading Strategies 🔥🔥


– [Presenter] Welcome
to another video on swing trading strategies. In this video, we will learn about advanced
price action trading with Wyckoff Trading Strategy. I will show you how to apply
this on Nifty, Bank Nifty, and individual stocks. By the time you finished
with this video, you will have learned how to
use this Wyckoff Trading Method for swing trading and how to
apply this trading strategy to identify high
probability trades and to time your
trades to perfection with well-defined entry,
exit, and stop loss. Wyckoff Trading
Strategy discussed here can be used to trade in stocks,
futures, and in options. I have covered swing
trading in great depth. And in case you have landed
directly on this video, do watch the remaining parts of Swing Trading
Strategy series. Link to all those
videos is given in the description box below and will come up at
top end of your screen. So if you look at this
Wyckoff Trading Strategy, you will find that there
are five distinct phases in a range as categorized
by Richard Wyckoff. Those phases are Phase
A, Phase B, Phase C, Phase D, and Phase E. Now with these phases,
there are terminologies used for various price action
scenarios, as well. I have included those
price action points, which are valid for our markets and have explained
those in detail. For ease of understanding, I will take up each phase
individually in detail and will then explain the
various price-related terms marked here on chart. The most common problem
with trying to trade a range is that traders don’t
spend enough time trying to understand the
details of price action within a trading range. With this Wyckoff
Trading Method, I can guarantee you
that your way of looking at trading ranges
would change forever. Do watch this video til the end as I will be showing
applications of same on Bank Nifty futures. Now credit to this method
goes to Richard Wyckoff and Jim Forte for the
schematics used above. I have added few things
based on my own experience. If you want some resources
on Richard Wyckoff and his way of
trading, do let me know in the comment section below
and I will name a few resources for the same. Apart from a simple chart,
you don’t need any other tool in this method. Charts can be accessed for free from TradingView.com
and Investing.com. So before we get started,
there are some key terms I will be using in this video and let me explain those
in less than 30 seconds. So when I say narrow spread,
it means range of the candle that is difference between
high and low is narrow. A wide spread candle
with high volume would mean that candle
is wide in nature and has high volume. A narrow spread
candle with low volume would mean that candle is not
wide and has less volumes. Also, a wide spread candle
with high volume signifies strength of the candle. I hope all these basic
terminologies are clear. I have tried to
explain everything in
a very simple manner, but I will still recommend
you to watch this video two times today and then
one time again next day. I always recommend this
as this is an enhanced way of learning a new concept. And do not miss out on
this Wyckoff Trading Method because it will change
the way you trade simple price action pattern. So the first phase that we
will begin with is Phase A. So main characteristics of
Phase A are as following. So, prior down move
exist in the market, this is on back of
strong momentum. Structure of lower high and
lower low is clearly visible without any regions
of consolidation. During this phase, first
sign of preliminary support shows up that is marked as PS. Now, PS means
preliminary support. I will be using this term
throughout the video. So this support is typically
in a form of a bullish candle that is high on volume
and has a wide spread. Candles during PS phase
usually have long tails. So this is the first sign
that down move may be ending. So second sign of
down move ending comes with the selling
climax, which is marked as SC. Now these are the
days when volume spike is clearly visible along
with the bearish candle. So this day typically gives
a feeling of more selling to come in near future and
sentiment is clearly negative on such days. So third sign of down
move ending comes with automatic rally,
that is marked as AR, which is this point of a range. Now during this, price
actually rallies higher to form top end of
this trading range. Price movement is very swift and is on back of
strong momentum. This more or less extends
to the region of PS, that is preliminary support. So take a note of selling
climax as strength of down move on selling climax day aids
overall recovery of price. The more intense the
selling pressure is on the selling climax
day, the more likelihood of lows holding out in market
over the next few months. So the next phase that
we will study is Phase B. Now during this phase, you
can spot secondary test where price test the
supply near the region of selling climax that
we saw in Phase A. Volume during this
test does not expand and range of candle
is limited in nature. If bottom is indeed formed in
Phase A with selling climax, then secondary test
should confirm this with average volume and
average price range. The panic that
existed during Phase A when the selling
climax was underway would be absent
during this phase when secondary test happens. This is a key
differentiating factor and this should
be taken note of. During this Phase B, price
faces resistance near the region of preliminary support
and automatic rally phase. Now, role of Phase B
is pretty significant for overall range to develop. During this phase,
price is in balance and there is equal
demand and supply that exist in this phase. As Phase B plays
out, volume subsides and so does range of candles. At the start of Phase B,
volume is usually high along with wide range candles. So let us now take
a look at Phase C. Now in this phase,
we usually get what is categorized as spring. This is when price
violates the low formed during selling climax
and then propels higher towards the resistance
region of range. This phase is also when price
retests the resistance level formed during preliminary
support and automatic rally. Now, once a spring is spotted,
it is possible for price to do one more secondary
test before heading higher. This is a shake-out
phase that occurs during the end of
the trading range. Volume activity during
spring and secondary test should be on the lower side. If volume starts picking up and range of candle
starts expanding, then this usually signals
further down move in price. So do not forget this
important aspect. Now Phase C is the region
where bears get trapped as price makes a new low. So this is where those who are
short add to their positions thinking price would
head further lower. But as price reverses
and heads higher, short covering in some ways
helps price even further. This is what causes price to
move up with further momentum. Now there will be times when
spring part would not play out and instead, you would
just get a secondary test. Such occurrences are common
and should not be ignored. So let us now move to Phase D. So the first thing that
you will spot in this phase is marked as jump. So jump is when price will move
above the resistance region of the range with volumes
and range of candles seeing a noticeable pick up. Now at times when this
range is breached, volumes won’t expand. But in general, always look
out for spread of candle to widen and for
volumes to pick up. This would actually
signify strong presence of buyers within the system
who are participating when the price is breaking out. The second thing that you
will spot in this phase is marked as SOS. Now SOS means sign of strength. So once price moves
above this range, you will now see price propel
higher with wide range candles and increasing volumes. This is, again, a
very important point. So the third thing that
you’ll spot is LPS. This is also known as
last point of support. So this is where
price pull backs into the previous
resistance region to test demand and supply
before resuming its move on the upside. This pullback should
happen on low volumes and spread of the candles
should not be wide. This is also the region where
one must be looking to go long as price has moved out of the
range and exhibited strength, and then it has retraced
one time more to test if any supply exists around
the previous resistance level. So this level that is LPS is
a very low risk entry point and we’ll be discussing
more about this when we start the section on
entry, exit, and stop loss. So this is phase E, which is the last phase of
this Wyckoff Trading Method. During this phase, you see
sign of strength by price, along with last
point of support. Now Phase E is crucial as it
repeatedly signals to trader about the underlying
strength of price, which in turn can help
trader be with trend til it finally gets over. Through last point of support, trader can assess
previous resistance levels turning into support, and hence, can mark out
relevant pivot points in order to assess whether the
trend is going to continue or to spot signs
of trend reversal. Now assessing the strength
of trend in this phase is extremely crucial. Take note of three
things mainly. Number one, range of candle. Number two, closing of
candle towards the high point of the day. And number three, tail
section of candle. All these are subtle
signs of demand and one must pay
attention to these in order to determine the
probability of trend continuing. If you spot lot of sign
of strength candles along with last point
of support price action, then odds are high
that up move has begun and price will move
higher with momentum. Pay attention to the
angle of price rise and element of momentum. If angle of price move is
greater than 60 degrees, then odds will be high
for this trade to be a 1:3 or 1:4 risk/reward trade. Important thing that
you have to consider is that there are
many variations of this Wyckoff Trading range
that may occur on charts. You will have to
adapt as range forms and make use of your notes
to label various phases in a range. I hope this particular
aspect is clear. So now that we have
basic understanding of Wyckoff Trading Method, let
us now get down to specifics of how to enter, how to exit,
and how set a stop loss. Stay tuned as important
aspects of this strategy are coming up. Now entry in this method
is very straightforward. You need to enter on
signs of first LPS, that is last point of support. Now this is a low
risk entry point because this is where test
of up move has happened and then price prepares
for further up move. At times, you will see that
LPS does not form immediately after breakout of range, and this is mainly when
momentum is exceptionally strong and price takes off
in a vertical manner. To avoid such instances, you
can enter 50% of positions once the breakout has
happened on expanding volumes. This way, you would not miss out on any momentum-oriented move. Now remaining 50% of
positions can be added when last point of
support is tested. I hope this particular
aspect is clear. So let us now move to
the section of stop loss. Now once entry is taken,
stop loss for this method can be set in two ways. If you spot spring in the range, low of spring would
be your stop loss. If spring is absent,
then in most instances, low of selling climax would be
the stop loss for the trade. If both spring and selling
climax are present, then exit 50% when selling
climax low is breached and remaining 50% when
spring low is breached. So let us now move
to potential up move once range is breached and
all conditions are fulfilled. Now the main advantage
of this method is that you usually get
one 1:3 or 1:4 risk/reward with this method. I have tested this method
across Nifty futures, Bank Nifty futures, S&P
500, and some key stocks, and findings are
pretty consistent
across all instruments. Now, 1:2 or 1:1 risk/reward is the base minimum
that you get, and this is when
volumes won’t expand on breakout from range. Now if this range
represents 100 points, then you should expect
minimum of 200 point as reward and more often than not,
300 to 400 points on trade. This does depend on underlying
market cycle, as well. And also on volume and range
of candles post the breakout. Now do take a note of this
point as this is crucial in assessing strength of
entire trading pattern and will help you to
potentially identify where to sell in a swing trade. If volumes and range of
candle expands after breakout, and price has an angle
greater than 60 degrees, then odds are high for 1:3 to
1:4 risk/reward for the trade. I hope this aspect is clear. So let us now come to the
application of this method. I will explain this
with Bank Nifty. I won’t go back too
much in history. Example taken is of
October 2018 to 2019. Now there are two things
I will recommend here. Number one, take screen
shots of all the slides. And number two, while
watching the video again, take notes on your chart. In September to October 2018, Bank Nifty was heading lower with exceptionally
strong momentum. Volumes were rising
as price was falling and making a structure of
lower high and lower low. So the first sign of
preliminary support came in at this point, where a
bullish candle formed with long tail on high volume. Remember one thing,
you have to draw out a line from closing of
preliminary support candle as potential top end of range. After few days then,
you get a selling climax on high volumes. Volumes was highest
at this point. Look at the candle on this day. Sentiment is clearly
very negative signaling continuation
of down move. Couple of days later, you
also got a secondary test. Look at the volume here,
clearly on the lower side. From here on, price then rises and forms automatic
rally region. Now this pauses at
the resistance line drawn from the preliminary
support region. Excess found here marks
the second range line. From here, price again retraces
and forms a secondary test. It’s important to know that
spring stage does not form here and price instant forms
secondary test stage. And then it takes off
to form the jump stage where price pierces the
range on the upside. Now some variations,
therefore, will exist and your main aim is to
adapt to how this plays out. If you see while breakout,
volumes have not expanded either and hence, you should avoid
taking trade right away. You should wait for the last
point of support to form and then take entry. Post this, sign of
strength emerges in form of strong candles
and gap up price action. There’s a second last
point of support that forms to test out this region here, and then price moves above
with momentum exhibiting sign of strength. So there are a couple of
variations that have played out. Number one, lack of
volume while breakout. And number two, spring
stage was absent. Such variations
are not uncommon. So range of price
was 1,200 points, that is from 24,200 to 25,500. Approximate movement
was 1:1 risk/reward as price moved from
25,500 to about 27,000. This was mainly because there
was no expansion of volume that was seen when price
broke out from range. This was something
that we covered in the risk/reward section. These principles of
Wyckoff Trading Method can be practiced on any
instrument of your choice. If range is formed over
two to three months, then risk/reward is much larger. Also note that if prior down
move and momentum-oriented, then again, this impacts this
pattern in a positive manner. This method of identifying
accumulation in range works really well
and do include this in your trading arsenal. If you want pointers on which
timeframe to practice this and which stocks to target
for high probability trades, then do let me know in
the comment section below and I will guide
you in this aspect. Kindly consider
hitting the like button and sharing this video
if you liked the content. Thanks a lot for watching
this video, guys. Take care and be safe.

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