.

Division 2 4
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di
A COURSE OF INSTRUCTION -3
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IN \ .
TAPE READING AND ACTIVE TRADING 4
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C O P Y R I G H T 1932

R ICHARD D. WYCKOFF, ON E
Niw York.
 TABLEOF CONTENTS

~. P
-“
1 1 INTRODUCTION

2 1 JUDGINGTHE IMMEDIATETRl#fD
2 3 Buyingand SellingWaves
2 4-A Wave Chart of the Leaders

2-A 1 BUYINGAND SELLINGWAVES - PART II

5 1 HOW TO LINK THE WAVE CHARTWITH THE STOCK IN ‘WHICHYOU

iWE TRADING
3 1-A A VerticalLine Chart and ContinuousLine Chart

4 1 TRM)INGAREASAND HOW TO PROFITBY THNM

4 3-A TradingArea of AuburnMotors

5 1 THE TAPE READINGCHART

5 8-A Tape ReadingChart of J. 1. Case

6 1 HOW TO SPOT THE BUYING AND SELLING POINTS WITHIN A SMALL

FRACTION

7 1 JUDGINGSTR$NGTHOR.W3AKNESS

8 1 HOWTO KEEP PERCENTiiGEIN YOUR FAVOR

9 1 TRADINGON INITIALACTIVITY

10 1 mGING THE MARKETBY TESTSAND RESPONSES

11 1 THE BEST STOCKSFOR ACTIVETRAI)lNG

12 1 STOP ORDERSAND OTHERVITAL POINTS

12 2 Jud@ng XQur Ftficimcy
12 ~ Tradingin UniformLots
12 3 Dow-Jone$Averagefl
12 4 Tradingon Paper
1: 4 Tradeat the Market
12 4 Put a Time Limit cm Your Trades
12 5 Qualifications of a SuccessfulSpeculator
12 6 lhvmrAsk Advice
(“
1$? 7 Fallacyof Averaging
12 8 CapitalRaquired
12 9 How Prc)fitsAccumulate
12 9 Where to Trade
12 10 Choiceot Brokers
12 11 Studyyour Losses

Copyright1934 by RichardD. Wyckoff,Inc.

SEC. P.

12 12 PractiaePersistently

Cs 1 CHARTSTUDIES
w 1 Amwriad Telephoneat Bottomof Reaction
Cs 3 AmericanTelephoneat Top of Rally
Cs 5 AlliedChmical at Bottomof Reaction
Cs 7 Allied Chmicd at Top of ~ly
Cs J. 1. (laseat Bottomof Reaction
Cs 1? AmericanCan Combinedwith Five Leaders
 SUMMARYOFTHE RICHARD D. WUXOFF
00URSEIOFINSTRUCTIONIN TAPE READINGAND ACTIVE TRADING.

J@du Ction. Generalprimiples involvedin tradingto take advantageof

section1. the minor fluctuations.

Basing judgmenton impartialanalysisof avai.lab~e

factg
insteadof ill advisedimDUJPeSa

How to internrettam actio~and learn to make YO1.W OWll

with a high degreeof accuracy.
&Q&3mn cknt d%$cidon~

How to constructend~terrm% a Wave Chart.

The selectionof’stocksthat refli]ct

.loadorshin
and have
LtYL
o=Q~~~~ c CIIWAI.
How to detectthe minor price surgesand estimatetheir
significance.

How to recognizethe symptomsof a reversalof the trend.

UMiM the How to employthe barometricquality of the Wave Chartin

#Mlrt ● judgingthe trend of the individualstockwhordnyou are
section3. trading.

How to operatein harmonywith the Law of Supplyand Dwand.

Trading The general significanceof c,tradingarea and the exception-

&QML% al tradingopportunities it may offer.
section4.
How to judgewhethera stockin a tradingarea becomes
b~~ ish OX’bearish.
How to decidewhen to trade close to the dangerline with
relativelysmallrisk.

Tane Reading Correlationof price movement,volumeand time.

gi&$.i& ~.
How to interpretthe fractionalprice changesand the var-
iationsin volumeduringminor fluctuations.

The logical1imitatims of risk and readjustmentof stop

QZ!@Xk
How to recognizeconditionswhermlnderthe risk maY be 1Lmited
to a $Mlaufr~ction.

cop~igllt1932 by RichardD. Wyckoff

 --2-.

and How to so~.tthe buyingand sellinglevelswithina small

EQJFJdU fraction.

Section6. How the marketis _nun&y 1 Eivinrinformatia~to those

who COIlgoad the ~

a
HoW to avoid over$tx the market.

How to WQ MD Y@+lra d what to do at the turningpoints.

Recognizingthe evidencesof technicalstrengthor weakness.

iiwmiml
or Whet constitutesa normalrally or rco.ction,
and why.
Section7.
How you may @NelQn Your jUMment so thnt accumulatingsymptoms
of strengthor weaknessbecomerecordsof subconsciousmemory
rad resultingd~ciaons are V’htud.lY intuitivcl,

How to ld.mi~,
roducqand elhinatq the risk.

How to Lnsur@Your PM’ its,

How to developa tradingpolicywhereinrisks are consistent

with probableprofits.

The generalsignificanceof incrensedLctivitY.

How to interpretchangesin the degreeof activity.

9.
S63ction
The imnortanc
e of volume wxzes in tradingzonesand
followingth$ formationof an apex.

HOIJthe operatortests the technicalconditionof the market.

section 10. How the individualtradermay secure,withoutexpense,the ben-

efit of the large operators tests of the market’sstrength.

e; how to recoznize them and profit

Lines of resistane
o..ccordingly.

How to observewhen the marketis in an overbou~htor oversold

condition.

How to recognize evidenceof manipul~tion.

The significnnccof the market’sresponseto news items having

the elementof surprise.

Best Stocks How to selectthe best stocksfor fictive

trading.
For Active
Trading, Recognitionof changingleadership.
Section11.
The importanceof uverngeprice r:mge md its relutionto
flo:~tingsupply.

Copyright1932 by Ri.chmd D, Wyckoff

 -3-

The advantage of familio.ritywith the chief characteristics

of leadingj active issues.

Use of HOW and when to use stop orders.

Stop Orders.
Section 12. The scientific location and road.jus+,ment
of stop orders.

Substitutes for stop orders.

Miscellaneous Judging your efficiency.

Vital Points.
Section 12. Consistent trading policies.

h’lh?rr)r~t~t~on of the averages.

Testing your trading ability without monetary risk.

~b~arket
orders vs. limited orders.

Limiting the duration of a trade.

How to avoid the dangers of ill-advised ad~ice and tips.

Dangerou~ pitfalls and kiov~ to avoid them.

HOIWto select your broker and judge his efficiency.

Chart Tape reading charts of leading active stocks and tP.eir

Studies. interpretation.

Typical trading maneuvers illustrated, wiih comentsj

suggestions and explanations.

How to recognize the termination of a reaction, and the

subsequent buying signals.

How to recognize the termination of a rally, and the

usual indication of impending reaction.

How to use the combination trading chart and wave chart of

barometric letadcrs.

Copyright 1952 by Richard D. Wyckoff

t
 TAPE READING AND ACTIVE TRADTNG

For the three to five-point moves

with risk limited to

one-half to one-point

The majority of those who follow our Method devote an hour

day, more or less, to studying and planning their campaigns. But we

have learned that an increasing number wish to trade in the market

continuously, either in their brokers’ offices or in private offices

of their own, equipped with a ticker and other facilities. From these

traders we have received many requests for further detailed information

on Tape Reading; and as the technique of active trading from the tape

is different from that outlined in the first part of our Course, we

have prepared the following to meet the requirements mentioned.

This Division of our Course of Instructionj like the First Divi-

sion, is based on judgment of the technical position: Supply and demand --

support and pressure.

No news, earnings or other corporate or fundamental statistics

are considered; we use only tho~e which relate to the factors: Price

Movement, Volume and Time.

The active trader who is a Tape Reader is concerned only with

Copyright 1932 by Richard D. Wyckoff TR Section 1 Page 1

the immediate*rendof the smallmoves in the murket. This trend can be

detectedby thisMethod soon a.i%er~hc openingof the Stock Exchangeat

ten o~clockdai~g It may changefrom bQUsh to bmrish, or vice versa$

and reverseitselffrom one to three times duringe.wh day’s session.

We instructsuch tradershow to followthese trends,changing

or reversingtheirpositionsas often as the marketaffordstradingoppor-

tunities.

In most instancestradesare closedout the same day they are

made, but i??thereare strongreasonsfor carryingany stockovernight,

this may be done.

Detailedinstructionsare given as to the best stocksto choose

and the exact time to make commitments,based on methodsformulatedand

successfullyemployedfor over twentyyears of tradingand advisorywork.

Stop ordersare placed on every trade,from one-halfto one point

away from the buyingor sellingprice. These stopsmust be constantly

watchedsnd moved as quicklyas the marketpermitsin order to reduce

risk,then protectprofits.

This form of tradingdisregardsthe long trend of the market,

as well iisthe intermediatetrends. It takesinstantadvantngeof the

technicalralliesand reactionsthat promiseto yield a profitin the

same stockmarketsession,on eitherthe long or the short side of the

market.

-M * *

Tape Readingis tho art of determiningthe immediatecours~or

trendof pricesfrom the actionof the marketas it appearson the tape

of the stock ticker. It mims to detectthe mows that are Lik@y to occur

Copyright1932 by RichardD. Wyckoff TR Section1 Page 2

in the next few minutes or hours; gettingin when they beginand getting

out when they culminate.

It requiresactivityand flexibilityof mind; readinessto change

or reverseone’sopinionquickly;slso nerve,poise,decision,promptness,

courageand absoluteindependenceof judgment.

Its purpos~is to derivean averageprofitfrom a seriesof trades.

By keepingthe risk down t~ a minimumand constantlystrivingto reduceit;

by clevermsmipul.ation
of stop orders,a net profitover comiwission~,
taxes

and lossescan be realized.

All commitmentsare temporary-- theirdurntionis usuallylim-

ited to hours. They are intended to take advantage of the small,imm@i-

ate fluctuations.
with this Method you, as a trader, search for your opportunit.ies

(andwork for your profithare and ~-- today. In mo~;tcasesyou will

preferto go home with a clesm sheet -- with no commitments orI either

side of the market. Thus v:hen you start trading nuxt morning your mind

is clearfor new impressions;

your judgmentis unbiasedby reasonof your

neutralposition.

At each mo.rningls
openingyou make a swiftanalysisof the market;

sensethe trend;’
decideon the best stock,and if conditionsare favorable,

you make your commitment. Then you watch the marketfor a confirmationor

contradiction
of the correctnessof your position. il.1.so for the psycholog-

ical. moment for noving stops, closingtrades or crowding stops so close to

the market price that you leave the way open for n furtherprofit,or you

are closedout on stop at a smallfractionfrom the extremehigh or low.

Tradingthus, you are afforded several times as many opportun-

Copyright 1932 by Richard D. Wyckoff TR Sectior~

1 Page 3
 ities in these small swingsw you would have if you wz~ited
for the more

importantswingsof ten to thirtypoints.

If a tradedoes not make good at once,you closeit out, whether

it standseven or at a smallloss. You will never tradewithouta stop,

for your risk must be kept down to a minimum. You will never take a big

loss. You will never be tied up. You can claanhousein an instant.

And you can stay away from the tickeras often tandas long m you wish.

This form of tradingis entirelydistinctand dlffcrentfrom

that describedin the otherMvi.sionof our Method,which aims to secure

profitsfrom the ten, twentyand thirtypoint swings. It meets the re-

quirementsof thosewho wish to trademore or less constantly.

Includedin this Divisionof the Courseis a plan for charting

the detailedtransactions
in certainstocksas they appearon the tape,

by which you can sense the immediatetrend;figurethe exactpointsfor

placingyour stop ordersand where ta move them to reducerisk when the

marketgoes in your favor. It showsyou how to C1OEWyour tradesthe

same day at the most advantageousmomentsby watchingthese Tape Read-

ing Chart indicationsand gettingout near the extremepointsin the

advancesand declines.

Under tlzisMethodyou might take new positionsfrom one to

three times a day, dependingupon the activityof the market. It is

the nearestappronchyet devised,so far as I know, to tradingon the

floor of the StockExchange.

But the most importantadv,ontage

of a combinationof Tape

Reading end tradingfor the longor swingsis that it will aid you in

increasingyour profitsin this way: Sections11 and 12 of the First

Divisionof our Courseshow how to determinewhich stocksshouldmove

Copyright1932 by ~chard D. Wyckoff ‘i%SectionL Page 4

three tc five pointsin a certaindirection. You apply the Tape Reading

Methodin makingyour trade :ltthe most favorablenoment,and the poGi-

tion you then take with a smallrisk of one-halfto one point may later

developinto Position2 on the long side,or Position4 on the short

side,and in{dicute
a run of ten, twentyor thirtypointsin your favor.

By thus tradingwith a fractionor a point originalrisk and letting

your profitrun into the many pointsindicatedin your forecastof the

probabled3.stance
in points,you will greatlywidenyour marginof profit.

For this reason,theseTape Readinginstructions,combinedwith our lcmger-

swingplan will materiallyenhancethe profitpossibilities

in both Divi-

sionsof the Course.

Copyright1932 by RichardD. P?yckoff

,

JUDGINGTHE IMMEDIATETREND.

For this purposewe use a Wave Chart,made up of the price of

five of the most activeleadingstocks. The pricesof theseare added

togd+her,and plottedon a sheetof cross sectionpaper,with the time

scaleat the bottomof the verticallines, and the price scaleat the

left, corresponding
with the horizontallines. Specimensheetfollows.

All movementsin the marketare made up of alternatingbuying

and sellingwaves. We judgethe strengthor weaknessof the market

by the distancein pointsand fractionsrecordedby thesewaves;we

combinethis distancewith the lengthof time each wave takes to run

its course.

In studyingthe distanceand durationof esch wave, if the buy-

ing waves are longerin durationand travelfartherthan the selling

waves,we get an indicationthat the immediatetrendis upward. If

the sellingwaves exceedthe buyingwaves in time and distance,the

immediatetrendis downward. Wheneverthe buyingand sellingwaves

seem to offseteach other ond no material.

strengthor weaknessis in-

dicated,the immediatetrendis in doubt. Our positionshouldthen

be neutral.
Selectthe five leading stocks. At the openingof the market

add the pricesof their first sales,includingthe fractions,which

shouldbe addedin eighths. Put a mark at the price representingtheir

total at the properplace on the price scaleand on the 10 otclockvor-

Copyright1932 by RichardD. Wyckoff TR Section2 Page 1

ticalline. Next wretchfor eithernn upward or downwardswing to ex-

haustitself.When it smns to stop,put u dot on the chartat the

propertime and price leval. Xf the marketthen reverms its direc-

tion this prows that tiw po$$tionof the dot is correct. If it goes

on in the sa@@ direction,chmmgethe dot until the movementagain hesi-

tatesand sh~w~ siguoof a reversal.

Them watch the new wave until it seemsto cam to an end. Place

the dot, TM marketwill confirmcm contradictyour estimateof that

turningpoint. And so on until you are thoroughlyfomilinrwith judg-

ing and recordingthe start,durationand finishof each successivewave.

The ~mmediatotramdis Lndicatodas soan as one buyingand one

sellingwave havo been complwtmd. You then know on which sideis the

most power -. the buyingor the sailingside. And all you have to do is

to go with that tiido.

But you must alwayshe on the lookoutfor a changein this immedi-

ate trad. It is likelyto chmge its directionfrom one to three times

in n singleEMZlswion.
Thio is how you datectthe change: In an up trend,

when the selung wavoa begin to increasein time and distancesor the

buyingwavw mhorten. E$$heror both will be an indicationof a change

in the immediatetrend. Apply the sam reasoningto a dom trend. Watch

closelyfor these chamgesfor they tell you when to buy and sell;when

to get long or short;when to closeyour presenttrade and reverseyour

detailsare on thQ chart,Page 4-A.

position. IhU’ther

Rmmber you have nothingto do with the other trendsof the

market-- d.thar the long trend or tlw intermediateswingsof 10 to 30

points. The latterswingsare the basis of the First Divisionof this

Coursein Sto@kMarket Sci.anca

and Technique. Tradingfor such wings

is .anentirelydiff’orent
proposition,reqwiringless time and attention,

Copyright1932 by Rial%mxl
D. Wyakoff l% Sect&on2 Page 2
 but havh$

uatmg 2 m

Wtv$eC1’kmr’t

AJtht$qgh the buying or tl’m mmdag WLWQB &ay M $nmic$snt on

certaindays to carry the marketin e certaindirectionuntil th~ close,

this does not man that it will eontimm to dc so the next day. And it

do%n not fnmn that yOU $hotidWLmy any tmdtxi overnightfor this rmwn.

Tomorrowf 8 trendwill dofim its~f in the same W~. Lnd it is best not

to go into tommrow~B ses$iomwith any stockson hand unlem threeis acme

extrmrdintqf reason in the action of the market. Such a rcmon would be,

for example,a strongdmmkapmnt of power Mar the beginningof what looks

like an %mportAntbull or km swing,$mlicated~ increasingactivityand

volm in a @ten direction~with scamdy any pointsof llesitntion,

or

ralb$ or reac$im$ ZM the mm may be. In such instonces,a long pmition,

for exmpla$ might be allow$xi

to run with R frequentraisingof stops so
that a tmdo originallymd~ with a half to one point stop might run into

mvmal or many pointsand thu$ ixmrmso the net averageof profiton all

yo@ tra$wlfor the month. Full advantageof such a situationmy be

takenby them who understandcw IWthod of +awUnfg for the largarstings

and cm forecm% the probablemmiimr of points certainstocksshouldmove.

anc$Ba tradeis Xnadoon $dW Str(wagth of dimctiarm hmd.n, and its price

@A$ well may from the startingpoint, and imdicate&,accmding to the

othatMvisim of our Methodsthat it will probabLydmmlop a move of

M to 30 pm!.ntse
the traderU.owflhia profitto run accordingto instruc-

tiOXiS, and lmg#!profitsshouldrm~t.

The Wawo Chart twdwm Tape Reading. Afteryou have used it for

a while,you ~ not need it. Yom aye and brainwill seo and record

Copytight1932 w E4idmrdD. Wgckoff TR Section2 Page 3

the wave CM&t too quicklyand do not mpoct intuitionto come until

you have had long wpmienca and much practice.

***

of tho market.
Tho five leaders$hculdalwaysbe repr~sentative

At timeswhm a leading rail hu~ considerableeffectit shouldbe in-

cluded. At other timesa ut$ll,ty,

like ConsolidatedGas, might coae

to the front;it shouldtak~ the place of somo otherleaderso long as

this ColditicmLmate. Selwtion of tlwse leadersmay btilikenedto ob-

sm’wingtho pullingpower of a &oup of five horses: If you ware driving

t?nwh a groupamd you naticmione horse laggingin tae tr~aeasnd another

alwaystu@.mg ahead of the rw$t,you would at once decidethat the fcx’mr

shouldba r@l.acedand that the Iattw is the real leader. Apply this

roason$ngin Ice@ping your fivm leaders amcmg tho most reprosmtative of

all the stock~in the mark~tin their abilityto influencethe rest of

the list. Keep weiglxtng

the$Q from day to day. Wood out poor ones,

which mmns those that haw lost theirinflucance,

or have becometoo in-

activeto be included.
**-W

Chart of the previousday shouldbe beforeyou when

so that yw get the relationof todaytsmarketto that

of ywterday.

Copyright193$? by Fti.chwd D. Wyckoff TR Section2 Page 4

 \
-4
“
 BUYINGAND SELLINGWAVES

(’IhelVave
Chart-PartII)

In the First Divisionof our Courseof Instruction,Section

4, we presentedPart I on the use of the Wave Chart. The materialin

Part I di~cussasin somowhatgreaterdetailthe instructionsset forth

in TR Section2 of the Second Division;therefore,it may be substi-

tutedfor this last-namedSection. Or, if you prefer,you may remove

Parts I and 11 from theirpresentbindersand place thornin a separate

loose-leaffolder. You will then have a completetext book on the theory

of the Wave Clurt as I have developedand expandedit.

On pages 7 to 9 of Part I, I showedyou how to interpretthe

Wave Chartfrom the standpointof pricemovement,durationof each buy-

ing and sellingwave, and comparf.i.tive supportor pressure. The follow-

ing illustrationwill show in more detailhow to apply the additional

factorsof volumeand activityto your analysisof the smallwaves.

Copyright1934 by RichardD. Wyckoff,Inc. TR Section2-A Page 1.

 In this illustration(Figure1),

it will be seen that volumeand activity

both shrinkto very smallproportionson

the littlebuyingand sellingwaves from

10 olclockto 1:40 P.M. The day starts

with a smallrallywhich is promptlyfol-

lowed by a smalldip. Bulls and bears are

evidentlywell matchedat this point.

After the firstdip (Period2), the bulls

try to put pricesup, but they fail to at-

tract a following,as shownby the failure

<
of activityto increase. Demandpeters

out aroundthe 11:00A.M. top. A small

340

Fl 335

FIG.1
dip in the fourthperiodbringsout very

littlestock on the downside,however,and

thisencouragesthe bulls to try again.

Qncc more they fail to attrscta follow-

ing. Note how the rally in period5 dies

out aroundthe two previoustops. So now, the bears endeavorto break the

deadlockby offeringstocksdown (Period6) until 1 ofclock. This man-

euver meetsno bettorsuccess. Activityfails to increaseon the down-

side, however,and a tentativelybullishsignalis given by the evidence

of supportaroundthe morninglow.

At this point the markethas come to a completestandstill.

Everythingnow dependson the abilityof one side or the otherto rouse

a following,eitherby breakingdown the supportlevel or by pushing

pricesup throughthe forenoontops. When the bears fail at 1 o!clock,

Copyright1934 by RichardD. Wyckoff,Inc. TR Section2-A. Page 2.

it is the bulls~turn to try their strengthagain, This time,dexmd is

a little stronger. Prices rise a littlebit above the previoushighs and

activityincreasesa trifleas they advance.

If we are tradingfor the short swings,this is our cue to pre-

pare for action. If activityfalls off on the next sellingwave,we may

expectthe bulls to becomeaggressive.We do not have long to wait.

Prices sag a bit in the next fifteenminutw but the activitydies out

completelyon the dip. This is the cue we have been waitingfor. It

tellsus that the supplywhich held the bulls back on previousrallies

has been absorbedon the small earlierreactions. Therefore,T7e step in

with confidenceand buy. We are promptlyrewardedby a sharprise in

Period 9.

Any questionas to the validityof thisupwardmove is settled

by the sharpincreasein activityas pricesrise throughthe previous

tops. Shortlyafter 2 o~clock,the bulls rest momentarilybecause,at

this point,the averagehas risen to a level where stocksencountered

supplyon the precedingFridayand Saturday. (Notshown.) Evidently

this supplyhas also been disposedof, becauseactivitypromptlyshrinks

on anothertemporarysell-off, Since there is obviouslyno pressureyet

and few offeringsto be takenat this level,we stay long and wait for

the bulls to push on again as they try for a higherobjective. This

they attainjust before the close.

In this and the exampleon page 7, Part I, we have consider-

ed the Wave Chartisusefulnessprimarilyfrom the standpointof short-

swing tradingoperations. For your analysisof the intermediateand

longerterm movements,you will find it helpful.

to constructa OXV+

Copyright1934 by RichardD. Wyckoff,Inc. TR Section2-A. Page 3.

point figure chartfrom the Tape Readings.

This will permityou to bring all of the principlesset forth

in Sections10-12-14-16and 17 of the Main Divisionof our Courseto bear

upon your analyses of the Wave Chart, The charts,pages 5 to 8, with ex-

planatorynotes,make clearhow this is done.

The additionalillustrations
on pages 9 and 10 show how to mount

the daily Wave Chartsto form a continuousrecordso you may comparethe

actionday by day with si@fica.nt indicationsdevelopingon the one-point

figurechart.

Copyright1954 by RichardD. Wyckoff,Inc. TR Section2-A. Page 4.

 ONE POINT FIGURE CHART OF FIVE
b-----+ ------+ SENSITIVE LEADERS
(AuGuST 28 tO NovEM6EfI 9,1933)
I
I------ B------+ l-c-d
x
~ I n xx
I II
xx x x %X* p,
SUPPLY LINE I XYX xxx% 1
xx x Xxxx xxx I
i
:Xx
fv 46
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15
x
x x Ig)x
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x x %s
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!
p 4io10KMoti
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xx
XK
PPLY LINE PENETRArEO

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INCPEASiMG VOLuME ON
./ 2REAK ‘T H,R9UGH .

( STRENGTH INDKATED 8}’ (Q) fWiLITY TO

SUPPORT LINE
iiOLl) ABOVE Established SUPPORT LINE (b)

DWELopM~NT Of RESISTANCE TCI PRESWIRE FOR

SECOND TIME A_f PREVIOUS CRITICAL SUPPORT

\T~ p~,~..,. -

A ‘ZONbF SUPPLY: WEAKNE5S IN CMCP.TED BY iNABiLITY TO A13som Of fERINGS JUST wuGER fW4GE OF JuLY Tops; f~wfw %3 ff*KE PR12GREss

ON FiERVY vOLUME ; 131

M! N!31-+ING ACT\VITy ON :UCCESSIW @LIflNG W/3VES.

(5EE cONTINUOUs LliW CHART or+ PAGE 9 FOR DETAIL)

B - ZONE osSUPPLY: SE L’. {NG S%NALS SZT by INAB}LITY TO fiBSORB OFFER!NGS AT PREVIOUS CRITICAL 3UPPLY LEVEL.

G-QUCK UPWARD THRIJs T TO ch4TCH SHORTS, bRIEF DURATION CF RALLY To 7HIRD LOWER TOP EMPHASIZES IN CREP.5WG

WERKNESS OF MARKET’S bJH&F- FC51TION AFTEP. D\ S”r RI EWT@N AT A AND b

n’+

x‘“x
..——.-. .-.—— _..
xx

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x

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x
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y
x
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FAiLURE TO RRLLY FoLLY ‘uP TO
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p xx
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SUPPLY LIM STRESSES EXISTING

)
Xxxx
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x I I wEAKNEsS AND CANCELfj TENTATlvE
xx x XX %*X xx xxx x
BULLISH I NIX CI+%YION AT F,
Xxx xxx x%” B%xx xxx %)(
xx24xx@J xx
‘++++1 Swp *
x E
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x I
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I
xxx
MUYMQG POWER Al PREVIOUS I 3%?3 I
x Xxn (JJ :x’
390 SUPPORT LEVEL GIvES T ~ x lxx
xx xx
xxx x
L 379X%
x
Ii

D 6 E ‘ precipitate PACE OF OECLINE wvELOPS VVER-30L0 CoNDITKW Ah10

PROWJ(XS SUBSEQUENT CORREcT}VE RALLIES .TECHNKAL. CHARACTER OF THESE
x
%ALLtES INDICATED 8Y FAILURE TO REACH S!JPPLY t.l~t lEsTA8LiSt+ED AT 417 AND 409.
F- PRELIPINWRY SUPPORT. TWTATIVE BASE FORMf F+G. CQWARE WITH t.JAFtROWER FORf’IATION AT 375.
~ - SWPORT LEVEL - SU5SC@JEWLY CONFIRMED BY RtSE THROUGH SUPPLY LINE AT 372,
h’””’’’””
 l?-

-.
x
xxx
x XXl(%x
xx \
#xx xx
*
XXxx
XXQX XXX &x -*
Xxxxx,xxxx x)(x x-x~ *!

lx x xxxxxx@ x % WA
m 3?’6 3XC?51SE * 3w_a

/xx& E!
\ 1

“~
PENETRATION w SMALL FRACTION AND

-
*LLtNci

LINE
SKiF4AL :

PENETRATED
SUPPORT

.
xxx
Xx%x
3s 5ss
x
~:,NiTuRtoF Xx:(gt
35$s5s.s5.5
xx
0?4

.
LIGHT “vCJLUI% INDICATES PURELY

ii
x x x xx x
xx Xx xxx
-’-aLXxxxxx%”i \
xx

xx xx
.%s45
xx
x
x
xx
Q*
%
H- ZC)W OF SUpPORT . COMPARE WIDTH OF FORMATION WtTH P@ EV~OUS
xx xx
JNEFFECT’lVE SUPPORT LEVELS AT G AND F . % xxx x x xxx x
Bz
J3
8
63
k-i

Sb14Kti OUT
+

I Xxx xxx
l-v-”!
/“
xxx x x xxx
i ~
3yJ7’w

%@
Xx
Xxx xxx
3i5mmXY
xxx
)( )
I
, xx xx@xxx
.1 /- x
32?63
xx
/ x:

xxx xx
XKS XXX

I f’+’xx’$xx
x
% xx)(~x
Xxxx xx xx
)( xx xx
/ x xxx x Xxxx x.x
3$5 + #p5 X.5553

( &
xxx
xxx X@x
&
X63XX
~ Jcx xxx x \
%xXx ;:
3mG60 ‘5a
xx y
x
x x :
K X% x x
WM54545 345
xx xxx “’’”d 3’S
xxx :
xxx x x
xxx

x —xxx
xxx
‘:T3kM ‘x‘x xxx Y%,

xxx
xx
x
x 9“ LINE @ -,@ BY DRAdiNG

933

[ - STEEP F’ITCH OF RISE CREATES OVER - 60WSPT

CONDITION, iNIXJC!NG 30%{ NORMAL) TECHNICAL REACTION W5 TO 350
J - INIL17Y 70 RESUME ADVAhJCE AFTER NORMAL CORRECTIVE REACTIOF+ lNDtCATES WEAKNESS.
( - SUPPORT APPEARING Ri50vE PREVIOUS 330-335 8ASE CONST?7UTES BULLISH SIGNAL AND SPREADS OR{ GINAL BASE
( SEE PAGE IO FOR cONTifVUOus LINE CHART OF ACTION AT THfs POINT. )
w --” .
.

I
FRI. ALJ~.2.~
390
f“lo1’4.
AuG,28

— 385

Tl+u. AuG .24

Illustratingzone of distribution:inabilityto absorb supply

and deveJqment of weakness. (Comparewith one pointfigure chwt at A,

page 5).

Copyright1934 by RichardI).Wyckoff,Inc. TR Section2A, Pnge 9

 o
s’ Cdg;
0. o 0 On

--’-711M

F’”T”z’
1

TUES.OCT.31, 1933
1

WE D.NCIV. I, J933
I
THLJR. NOV2,1933

Illustratingzone of support,abilityto absorbofferingsand

developmentof strength. (Comparewith one point figurechartat K,

page 8).

Copyright1934 by RichardD. Wyckoff,Inc. TR Section2A, Page 10.

 HOW TO LINK THE WAVE CHARTWITH THE

STOCK IN WHICHYOU ARE TRADING.

The Wave Chartbeing based on the actionof the five leading

activestocksis completein itselfif you wish to trade in all five

at once and whenevera turn is indicated. But in the beginningit

isbest to trade in only one stock.

Observewhich of thesefive leadersappearsto followmost

closelythe mings on the Wave Chart;or perhapsthere may be some

other stocknot includedin your five leaderswhich,by observation

and experiment,you find is betterfor this purpose. This will de-

pend upon the kind of stocksthat make up your five leaders. You

might,for example,includeAuburn,which would give the groupa

differentaspectthan if it were not included;or a rail like Union

Pacificwould again chmgc the textureof your averages.

When you find a stock suitedto your purpose,study closoly

its behaviorunder all conditions;watch the characterof its man-

ipulation. Duringthe studyperiodmako differentkinds of charts

of it, such as a verticalline chart,a continuousline chart,(seo

Page 1-A) and a combinationof figureand volume chart,whichwill

be describedin anothersection. Any and all of thesewill aid you

in becomingacquaintedwith the peculiaractienof that stockso

that you can trade in it to betteradvantage.

Copyright1962 byl?ichardD. Wyckoff TR Section3 Page 1

 i

A VERTICAL LINE CHART

and
A CONTINUOUSLINE CHART

?s

I volume in Thousands of shares

‘1 may June

Copyright 1932 by ~Ch&rd D. Wyokoff TR Section 3 Page 1 A

 WMtlm for studyor @real practim, plot its moves on the

Wve Ck% TM price scaleQf this #rtmk shouldbe entmed on the

right side af tha sheet;cm tk left the pric~ male of the five

141MMMPB.

Mow studytk action of your one stockin combintktioa with

the ahangwi b th imwlievte trend as slum on tho Wave Chart.

YOU iwy find that $t is d$##@@m~its trend -Ctly when ti

averagm ckwqe. If this colMJl%MM,you will!know $lst whezlto buy

and add. it. But you may f’iudit is working exactly tha @ppo@it@:

wham the Wave Chart turnsupwardyour stookmy begin to get weak.

Trti@ acmmdimlgky.Or you q olwmm that your 6tcmkraacbeaits

kming pointsbeforeor titer the tivw atoclmIn tkm mmm@s. You

do mot care w)mt it does DO long as you Ieam its habitsand turn

them into profits.

Now thatyou have the idea, it dopmk cm the amuuntof

studyand praaticeyou put inta it. ?lhwtyou see on tha Wave Chart

is the WO-@ out of the h3W Of *PP* and Demand. ‘fk$t(?= ~S

a moving pict~reof a cross sectionof the market,designedby me for

this very purpose-- to help Y($U @ ~~fit~ QUt of **~ * *

tape. Mm tallRo$t of yoqr Oppor’tmiti!m.

TR $eetion3 Page 2
 TRADINGAREASAND MOWTO FROFZTBY THEN.

From observationyou know how ofton stocksget into periods

of mu’row rangesof 3 to 5 points. These are timesof discourage-

msnt for most peGple who um on the wrong side, or who are looking

for Mg profitswhen the marketaffordsonly mall profits. There are

many short swingsto one long one. Let us seo how we can derive

profitsfrom the 3 to 5 point moves.

Keep Q verticalline chart showingthe dailymovementsof any

of the well-khownaveragws,such as Dow-Jones,SthndardStatistics,

?kw Iork l!ime$,

New York Herald-Tribune
.. whicheveris publishedin

ycmr local daily newspaper. Use those to indicztewhen the marketis

in a trading@ea or whetherit is movingto anotherlevel,upwardor

Clownwmd. You do not care which way it goes,or when; but you need

theseavorage$for a broad pictureof the market-- as an indication

of the variouacurrentsend eddies.The currentsare the small,inter-

mediateor lo~g trends. The eddieBam the tradingareas. In streams

th~seare the whirlsor the quiet water betweenrapids.

Your vwtical line chart of theseaveragesshouldalso show the

volumeof the day$s trading— the total salesfor the day. This is

very importat becauseit aids in formingyour judgmentof the prevail-

ing trend. Your individualstock chart should.

also show the volumeof

the day?s tradingin that stock,50 that you may observewhetherthis

volumeinw’emawsor decreaseson the advancesand declines. Increases

W~ght 1932 by R&chmrdD. Wyokoff TR SectiOn4 Pago 1

swve to emph@.ae the bullishnessor bearishness.Decreaseswarn

you of R probablereversalin direction, I could elnborateon this --

mite a b~ok> in fnctjht there it iS iKI ~ nutshell. Do not let its

brevitydisguim its value.

When you see the runn?agcw!

workingback and forthover a trad-

ing area,you till genmnlly find your individualstockdoing the same.

Not always,however. All stocksdo not move alike,ss you know. Your

zavarage~
may be in a tradingzone und other stocksmay have small,medium

or wide wings withoutaffectingthese. Your stockmay not be included

in the+averaga$;whetherit is or not, rememberyou are tradingin q

X and not in the averages.

The upper and lower boundariesof thesetradingswingsrepresent

the points (at the tops) where supplyovercomw demandand (at the bottoms)

where demand exceedssupply. Unless the actionof your stockindicates

(by method$we shall.

explain)that it is goingout of its presenttrad-

ing range,youm purchasesshouldbe mado aroupcl

the bottomsof these

short swingsand your sales~long or shart~around.

the tops. This seems

a simplething,but very few peoplecan do it. That is becau8ethey have

not had the properinstruction,or thqy have not studiedand practiced

it. We will showyou how to do this accordingto our Tape ReXiingChart —

the most perfeatmethodthat, ao far an we know, haa ever been dwised

for thosewho trade from the tape, in an office,or on the floor of the

StockExchange. If one is a mmbcr of tho Exchangeand cun tradefrom

the tape on thtifloor,thiswill be found ,allthe more valuable. It is

qlained in Saction5 of this Divisionof the Ccur8e.

Mmntinc conaidorthe positionof a singlestockwith its move-

ments plottedon the !&we Chart,and in connectionwith its location

Copyright3932 by Riahmd D. Wyckoi3? TR SQctlon& Page 2

in it#3 trading area. lf it it3 0- b@tVJW#Ek 30 @Ud 35 ~ ShC@d

glvs incmcu!k%g atlmtiom to its bwy$mgopportawaitim a$ it approaches

30, and its su~ m it n8arS 35. ‘lhidtdcms not mean that you are
to buy or EoU at or near $hcm paints, Imt that you are to watoh

out for CMUMMM

for profit inticati by the action of your atmk on the

WaveCkrt, ax@ on the Tapa Ramiing Chart referred to above. You nevar

know, when a atmk appmacbw the upper or lower level$ d’ a trading

rangs vkthar, this time, it will go on through; so you do not take a

poaition until you have all the f’mts awmmbhd, i.Q., transferred

frm tha tape to yaur Wave Chart and your Tape Reading Chart.

* * or Mttom is a small turning point, and even a small

one maydevelop into one that is important.

Cop~ght 1932by Ftidmd D. W@koff TRSIWtion~ Page3

 TRADINGAREA
OF AUBURNMOTORS
DURINGMAY AND EARLYJUNE,1952
ILLUSTRATED IN LINECHARTFORM
SHOWINGACCUMULATION
IN PRWARATIONFOR AN ADVANCE.

CONFIRMATION
OF TREND
X INDICATED
BY THE CORRESPONDING
TAPEREADINGCHART

50

APRIL /WA Y ~UfVE

Copyright
19$52
by RichardD. Wyckoff TR Section4 Page3-A
 THE TAPE REAl)UWWART.

It iEltwanty-fivayears since I firstbegan to fmocaW the

owing movemmts of the mrket from its own actionas it appearedon

#* tape of the stock ticker. M&ny mmorendawere mcessary at the

bqinnirig, bwt as I developedef’f’ioimcy

in this art, I graduallyre-

duced q notm and chartsto a minim, wheneverI found sim@ifica-

tim possible.

It &$ one thing to learn to read the tape and to develop

therefromonors $@mnt md intuition,and another to teachother

peoplehow W do it, makingeverythingperfeotlyclear and practical.

I have dooid~dthat tho ~wsiestway form to teachand for you to

learnTape R8adingis by mmns of the Tape ReadingChart whichis

dmw’ibed bdOW.

This Chart CQIUIXLIMW

the three wkttil fttctow PriceMovexmmt,

Vohm and ‘l%m in moh a ww that a tradercan see at a glancejust

what a certa$nstockis doing?howit aats on the rallies and retac-

tions;the valumeof-a; the progressof the advancesand de-

cldmm?;the proportionof tha ralliesad rmotdms to previousswings)

the lines of! mpply and dmand; the best locationfor stop orders;the

M6MUM of d63C$dillgwhen to U!OV9 stops how far, etc. This Chart,in’

fact, combimm, on one page, most of the indicationsrequiredby the

Tape Reader.

It cm be kept on a sheetof cross ewtion paper. If this be

oblomgin -- of th five leadersand of a

(33p&i#rt TR t%ctin 5 PqB 1

single stick-- can be kept on the same sheet,so that a complete

pictureof the marketmay be had in combination with tho Tape Reading

Chart. If severalindividualstocksare charted on separatesheets

in this form, the WavQ Chart can be recordedon a sheetof transparent

paper,half this sire, so that It can be laid over any individualstock

chartin oral@ to see how that stockis actingin comparisonwith tha

five haders.

Let UEIstudy the Canstrnctionof this Tape ReadingChart from

the specimen~heetwhich follows. This dmuld be takenout of the

binderand kid besidethis text in order fully to understandthe ex-

placations. Tho Chart has a price scaleat the left. The full figures

are in one column and the fractionsin the next. The figuresrecorded

in the chartare the totalnumberof sharesdeslt in at each fractional

price, When the price chsnges,the volumeat the newprioe is filbd

in at the proper level on the chart. WNn a prhe is skippeda cipher

is @nt@redat the fract$onwhere thre were no sales. Now watch this

point very carefullybocau$eon it dependsyour gettingthe right start

in makingW9 kind of a chart;it is simpleenough,but ifycnado not

get it clearlyinto your mind your chartwill not be correct. After a

sale at a certainprice,you enter the next sale in the w _ u

#are 18 blank space at the pH3pW level,above or below,in that same

Cohmn. But if that spacesabove or below,be filled,you make the

Imtz’$”at the next vacant space~~-. This will b~ perfectly

clearwhan you go over the folkowingdetailedexplanation.

Your Chart,recordingthe movementsof J. I. Case beginsat

10 A. M. with total saibsd’ ’300sharesat 4.0, This %)0 mi$ht h8Ve

been made up og severallot~; so long aa scalescontinuedat that price

Cqlymq$lt 1932bYRicbiIwd m wpkm TRSecti43m5 Paga 2

thay were added togetherand recordedall at once men the mice than~ed,

Not until tnen do you know that tharewill be no uore salesat that price

for the moment.

The ne$ctsale is 100 at 40-1/4. As thcxwwere no salesat 40-1/8,

a cipheris enteredat the 40-1/8level,and the figure1 is enteredon

tha 40-1/4I.inB.Now you have three figuresin the first column— 9 on

the 40 level;O on the 1/8 level and 1 on the 1/4 level.

The nsdctsale is 40-1/8,only 100 shares;next 200 at 40. These

two figuresmust go in the secondcolumnas the first column5.sfilled

on those two levels;next sale 40-1/8 (100);then 200 at 40-3/8 (O on the

level);then 100 at 1/2; no salesat 5/8; a totnl of 2100 at 40-3/4;

40-1./4

none at i$o-’7/8~ 200 at 41.; norm at 41-1/8;200 at 41-1/4;200 at 41.-3/8.

All these item@ were recordedin the third columnbecausethe advance

continuedstre4.ght
up to 4.3.-3/8
withouta singlefractionalreaction.

The next tremmction is 100 at Q, so in the fourthcolumnwe

must anter O on the 41.-l./4

and 43.-1/8
levels. Next s~.e 100 at U-U8*

As the space above the previoussoleis alrencly

occupiedby u cipherwe

must enter thib in the next column,and when the followingsale takes

pkaca at u it goes just below the previoussale -- in the same column.

with that exphnation as to how to startkt?cping

& chart of’this kind~

which is redly Q l/8-pointfigurechart,combiningvolumeand price

movoment}I WW proceedwith the instructionsas to how this cmt

shouldbe used in actualtradingand forecasting.

On JaKNW’Y19, 1932, Case opens at 40. Our positionis neutral.

We wish to make n trado on eitherthe long or the short side as soon r-s

Copykight1932 by RichardD. Wyckoff TR Section5 Page 3

the stock sham a tendency. Let us as~ume that the indications on the

Wave Chart sow after tlds opining were bullish, but that we wish to

wait until the stock itself has givsn some sign of a definite tendency.

There may be an opening bu%ge M.rt this may not be its true direction,

00 we shall wsit until the indications are definilm enough to promise

a worth while swing. We allow1/2 a point for commissionend taxes,so

it is best not to go into a trade that dots not promisethree to five

points. If we had the backgroundof the previousdsyls trading,we

wouldknow be~terjust whare this stockstands;but startingfrom scratch,

We must wait ~til the stocktells US what it is probablygoing to do be-

fore we make a commitment.

In learningto read these charts,it is best to cQverwith a

sheetof paper most of the chart,sxposingone columnat a time ~

drawingthe sheet“t the right. In this way there is 10ss temdamcy

to form judgmqptson the basis of what alreadyap~)ears

on the chart.

This Methodnqy be followedin a studyof all forms of charts,care

being takennot to see the goncralformationin detailbeforestudy

is begun.

After the opening — 900 Aares at 40-- the tape shows 100

at @-1/~; 100 at l/8; 200 at 40; 100 at 40-1/8; 200 at 40-3/8; 100

at 40-1/2; and a total of 2,100 at 40-3/4. Then 200 at &l; 200 at .

4=/4; 200 at &3/8 -. R rise of 1-3/8 from the opening. Tho re-

actionrecordedby 100 sharessellingat 42.marks for the presentthe

boundaryline of that tradingrange of 1-3/8 for the day so far. We

do not wish to take a positionuntil the stock clearlyindicatesthat

it is goingout of that range. TO tradewithinit might not give us

enoughroom to turn aroundin, and PW l/2-point for overhead.

Comght 1932 by Richard D. Wyckoff TR Section5 Pago 4

 Next the tape records 10(3 at &l-1/8 j 100 at @; 300 at &l-1/8;

300 at 43.;300 at 41-1/8j 100 at 41-1/4;200 at 41-1/8;100 at 41-1/4.

The tradingrangehas narrowedto 1/4 of a point; we are still in doubt.

Next sale is 3000 at 40-3/4-- a sign of weakness, becausetherewere

no salesbetwaen43.-1/4
and 40-3/4;this indicates@ thin market. Next

900 at 40-5/8;800 at 40-1/2;500 at 40-3/8;300 at 40-1/4. Those sales

total 35OO shaxes,all takenwithinthe rangeof 40-3/4down to @-1/4.

Here is same a%rength,but it may mean only temporarysupport. The chart

must tell us what the insidersare tryingto do with their stock. Are

they supportingit becausethey want to sell at higherprices,or do they

r@wXlywant to acquirea lot of the stock? They take 900 at 40-1/2,mak-

ing@ aroundthat level; then 300 at 40-5/8;WO at 40-7/8;and 1000

at 43. That is 6,OOO mhareaon the way down to 40-1/4and up to Q. That

doss not look Mke tnqhg for the sake of accumulation.If they really

wantedthis stockthey wcWd not have bid up for it; they would have put

it down. So here is our indicationthat the pool is tr@ng to sell and

not to buy. We form a tentativelybearishattitudeand wait for the

marketto confirm,cancelor reverseit.

The biddingup proceeds~400 at 41.-l/8;

600 at 41-1/4;1.400at

41-1/2. Now the price stundsat a new high for the day which has the

appearanceof an artificialbulge made by the pool in order to attract

outsidebuying, It required8400 shams to be takenin order to advance

the stockl-1/&points. This is not bullishbecauseof the way they did

it; tkrefore, bearish. Unlessthis stockgoes on upwardand its volume

increasesas it advancos$we are lookingfor a chanceto go short.

The tape next records700 at &L-3/8and 400 at 41-1/2;then

(k)pyright
1932 by RichardD. Wyckd’f TR Section5 Page 5
400 at &b3/8. So far the rise is checked. Tk pool or someoneis

tryingto sell,for tha tape sqm $00 at 41-1/4;then 100 at Q and

400 at 40-7/8, Thisis a half-wayreactiorI

followingthe bulge from

40-1/4 to 41-1/2. Thik reactionconfirmsthe checkingof the rise and

narrowsthe tradingrange to 5/$ -- between40-7/8and 41-1/2. We

shouldgo with the stockwhan it goes out of that range;that is, we

shouldsellit shorton a bulge,andaworing to get as high a price

as possibleso as to keep our risk dowm to a minimum. Remmber that

we are tradingnow with a 1/2 to 1 point stop end it would be betterto

becausethere are plentyof them, than to be so eager

lose opportunities,

to trade that we take an a risk largerthan the dove.

There$s a rallyof 3/8 on a single100 sharesat 41-1/4. It

looksllke a m@c-up ~ the specialist,or an odd lot house My#mg to

Won up. Another100 at 4&l/8, them 600 at Q. The stockis heavy.

W look for a rally on which to sell. This is confirmedby the next

sale 700 at i&3/4, which is lJ8 under the previouelow; then MOO at

40-7/8j200 at Q; 100 at &l/8 -- decreasingvolumeon the rally.

- w a m _ Q M ~d we get & for it. we ~t a l-point

stop at 42 [in$icatedby an S) in the 42 space. 300 sharesmore are

sold at that pkice~makingit 400, followedby 100 at 40-7/8snd 800

at 40-3/4.

The chartnow has a slab-sideddownwardformation,made by sever-

al lemming tops. A rally to 41.1/4 occurs cm lightvolume,confirming

the prwious b$arishindic~tion. Someoneelse tries to sell.300 and gets

Q fox’it, folkowedby 100 at @-7/8. The l/4 point rallywhich follows

at &l/8 is the weak~atya%. Then comes300 at Q; 200 at 40-3/4;100

at i@-5/8-- a now fractionallow on the down ting sinceit made 41-1./2,

Mtt30 dwmnd at the low level. (lhddo the stockis bid up 5/8 snd
1300 shareschangehands at 41-1/4. It looks artificial,particul.mly

when a quick slump to 40-5/8follows. Now observe1/8 point rally to

4&3/4j a returnto the 40.5/8low on 100; anotherweak rallyup to @

(n lower top)3 then t!m real slumpbegins.

When the stockreaches40-1/2we reduceour stop to 41-1/2--

our risk is only 1/2 of a pointnow, for overhead.

Thereis only one rally of 1/8 on 100 sharesat 40-3/8. Then

a new ).OWat 39-3/4;anoth~rrally of 1/8 on 400 shares to 39-7/8;

then a new low at 39.1/2. Note that the volumeincreasedon the down
side. There were only mall lots sold in the upper 40s. More sub-

stantiallots were sold mound 40 and under. Add the salesat 39-3/4

acrossthe page horizontallyand you find they are 4400 shares. But

these takingsare not sufficientto absorbthe supply,as provenby a

dip to a new low -- 11OG at 39-3/8. When this Ocxmrs~-QJ&

* to 40-1/$.

The declinecontinuesanother3/4point with a totalof 2300

at 39, and a low level of 38-5/8,then 200 at 38-3/4;200 at 3~7/8;

100 at 38-3/4;600 at 3g-5/8;then a 1/4 point rally to 38-7/8. Note

that offeringsare gettingvery thin here; that is, the volumemound

this levelis light. When the stockagaindips to 38-5/8,we bring our

stop down to 39, becausewe do not want it to rally even 1/8 above the

38-7/8levelwithouttakingour profit. It is gettingtoward3 otclock

and we must not let that profitget awe.yfrom us if we went to go home

with a clean sheet. Thereis a rally to 38-7/$on 100 shares;then 100

at 38-3/4;@O at 38-7/8and 500 at 39. This catchesour stop emd we

have our profitfor th~ day.

Our initialrisk was 1 point,or 1-1/2 allowingfor overhead.

Copyri@t 1932 by RichardD. Wyckoff TR Section5 Page 7

‘dewere able to reducethat risk to 1/2 point,then reduceit to nothing--

the flat pride (meaningthe price at whichit was sold);then to 40-1,/8

which assureda ‘7/8 grm!$ ptofit;then to 39, which was 3/8 from the

day’s low, at which price the tradewas closodwith a net profitof

1-1/2 points.

There is a littlestockfor sale on the closingrallybut we

get no cue fnom it for the next dayls sassion;M fnctjwe would

rathernot carryany impressionshone with us as we preferto have

am unbiasedopinionwhen the marketopensin the morning.

***

Note: A numberof other chartsand interpretationsof this kind will be

foundin the Chart Studies,followingSection1.2. Additional
studias will be addedlater on. Many detaihd instructionsin
ChartReadingare includedin Mvision 1 of this Course.

Copyri&@t 1932 by RichardD. Wyckoff TllSection5 Page 8

 —. —— —-—-

TAPE READINGCHART

OF J. 1. CASE JAN. 19, 1932

In FigureChartForm
ShowingEach l/8 PointMow i
‘WithVolumeat Each Price

UNIT OF VOLUME= 100 SiARli3

 HOW TO SPOT THE BUYINGAND SELLINGPOINTS

WITHIN A SMALL FRACTION

.

Numerousexampleeas to how this shouldbe done are foundin

the explanations
of the Tape ReadingC!harts.But thereare some

fine pointswhich may be made a littlenioreclear. One of theseis

this: V/emust learn to anticipatethe high and low spotsin the

dayismoves by assemblingin our minds,and from the chart,all the

factorsthat point to a certainconclusion,and if this conclusion

is justifiedat what we believeto be the rightmoment,it becomes

a commandto lx%de. Thus it will be seen that there are two important

steps: makingthe diagnoaisand actingupon it.

The marketis cdnt$nuallygivinginformationas to its tech-

nical.position. It does this throughthe Wave Chart,which fdrmsyour

background,and forecaststho immediatetrend. It givesfurtherin-

formationas to the particularstockin which you are tradingif you

will plot a Wave Chart of that stockon the sane sheetwith tha Wave

Chart of the five leadingstocks. In additionto the above,you get

all the littledetailoif you will keep the Tape ReadingChart of that

stockon the same sheetas the two Wave Charts. With these threeand

your eye on the tape you am well equipped.

Thus fortifiedtherewill be no reasonto buy on bulgesand

sell on wmk spots;for$ in this form of trading,theseare not oppor-

tunities to m&e profitsbut to make lossQs. If you sell on weakness

with a short stopyou increaseyour chances of havingthat stop caught.

Oopyright1932 by MoW D. Wyckoff ‘1’R

Section6 Page 1
But if you form a beariehconclusionand mit for z bulge on which to

tie your position,the chancesfavor a profit. All such technique

must be takeninto consideration.You must mieavor in everymy to

increasethe percantagoin your favor.

Ono of the nest importantways of doing this is to learn to do

your buyingon what I call the drive down; that is, duringa selling

wave end at ju$t about a minutebeforethis wave ands -- while the

pressureis on~ not wha you see it hesito.to,

but a minutebefore

that,beccuscit takesa minutefor your order to get into the crowd

and be executed. (If it ttakos

more than th:.~t
on the average,your

brokeris slow or he has too much businesson hand to give you the

right executions.)

Sellingon the driveup is just as important. Most of the

bulgesin a stackare made by pools, specialists,

manipulatorsand

floor tradersto induceoutsidersto buy. If you lenrn to spot these

play$,you have all thwe interestsworkingfor insteadof againstyou.

Take advantageof the pl,ablicts

tendencyto buy on bulgesand

sell on wwkneas by doing the reverseof this. It is better to get out

too soon than to overstay. The publicusunllyoverstays.

Watch the Y?aveChart for your cue. If you expectto buy, and

the five leadersare showingan up trendfor the time being,wait for

the sellingwave. Look back and see how long the previousdown wave

lastd; judge~ that and the actionon the tape about how far this down

wava will go, Watch the Wave Chart of the individualstockycJuare trad-

ing in, almo the Tape ReadingChart for volumes,comparativestrengthor

weakmss, and 41 the other technicalpointsmentionedin chartinter-

pretation. Learn to combineall thesevariousLndicationainto a sound

Copyright1932 by Fu.cmrd D. Wycdmff Seetion6

‘Ill Page 2
conclusion,and when you hmve made it, time your stroke;that is, the

momentwhen you give the order,just as you time your strokein order

to hit a golf ball correctly.

Watch for the pausesthat mark the end of the buyingand sell-

ing waves. They indicatethat the forces that producedthe wave have

cmhaustodthemselves. For a mouentor two, even in a fairlyactive

market,the tiokeris quiet. These are like periodsat the end of

paragraphs;a naw phase of the tapetsstoryusuallyfollows.

V?hena stockhesitatesit notifiesyou that it has lost its

momentumin the directionin which it has been traveling. YOU should

then quicklymnke up your ruindwhetherit is advisableto buy or sell

or move your stop order. Any halt may be the final turningpoint in

that move. If you have studiedthe First Mvision of this Courseand

know how to judge the distancewhich a stockshouldmove, you are well

fortified;you can more easilydi6tin@sh the haltingplacesfrom the

probableturningpoints. There are more haltingplacesthan turning

points. The periodsof hesitationusuallyindicatea reversalof

temporarytrend. They also oftenmark the beginningof a nsw trading area.

Everymove startsat the end of a previousmove. If thereare

indicationsth~t the comingmove will be important,take advantageof it.

If thereare no such indications,let it pass.

Alwaysbe expectinga change. Be constantlyon your guard and

ready to closeyour trade at the first sign of danger. (Seeillustra-

tionsin the Tape ReadingCharts.)

Even WBen you have movedyour stop close to the marketprice for

your ~tock,t~ to do betterby sellingon a strongspot or buying on

w%ahmas if yow reallydesire to closeyour trede.

Copyright1932 byltiohardD. Wyokoff TR Sectian6 ?age 3

 When am upwardor dawnwwd move is losingaoraeof its forceit

will be indicatedby a shorteningof the upwardor downwardthrustsas

shownon the T@e ReadingChart.

Never Xes,chfor a stock axceptin some caseswhereyou are pyra-

midingand have a substantialprofiton paper. Even at such times there

is frequentlyan opportunityto buy on CLreactionafter a break through

on the up sides or a rally followinga break throughon the down side.

Copyri@xt1932 by Ridmrd D. ?@kd’f TsRSecWcm 6 Page k

 JUDOXNGSl%WWTHORWSAKWWSBY m w WAY
poINTS.

We do not subscribeto the thf30~ that actionand reactionare

equalin the Stockmarketbecausev#Jhave rarelyfoundit to work out

in a prmcticalway. Even if it were trne in the stockmarket,we do not

see how one couldmake any money there~. But thereis advsntageto be

gainedby watchingthe half-waypointson ralliesand reactionsas a basis

for judgingst#engthor weakness.

When a stockadvancestwo pointsand then reactsone point,it

may be calleda normalreaction;but if it reactsless than a point,it

givm us an indicationof strength. If it reactsmore than a pointP

thereis sn indicationof weakness. Used in this ways with the half-

way point as a sort of measuring stick, we can really derivean advantage

This is provenby the numerousexamplesexplainedin the text acccmqmny-

ing our Tape RaadingCharts.

Other signswhich may be includedunder this head are those ex-

treme caseswhere,after a movementof say threepointsin a certain

direction,Q reversemovementtakes place to the extentof all or nearly

A
all of the precedingmove. A stock advancesbecausethe buyingpower is

greaterthan the sellingpower;but if it does not hold this advcwe: if

it immediately reversesand loses all or most of what it has gained,this

tellsus that ~omeoneet once took advantage of the strengthand sold the ‘
stockback to its starting point by offering more shares than the buyers

were willing tO accept.

co-t %932 by FNdMu@ TRSa4#3n 7 Pa&&i1

 The saxw illustration
may be appliedto a raid or drive down

of say threepo$ntsmore or less, folhwsd ~ a recoveryof practically

tie same amount. This iB a sign of strengthbeoausethe reboundshowed

that tharewas more Wam@h than weakness. This sign is more bullish

than bearishbeqausethe sellers,hming spenttheir force,are met and

ovwx%xneby the buyars,who, at the momentof completionof the recovery?

,.,
strongpodtion.
are in a comparatively They have takenall offerings

on the way down and whataverstoodin theirway on the advance. The

floatingsupply~s thus reduced;unlessfurtherofferingsappearhigher

up that they are not MJM.ng to take,the way is then open for a still

further advance.

Study and learn all these technicalpoints. Considereve~-

thhg that appearson the tape as an evidencaof supportand I.Mting

power,or pressureand sellingpower. Continuallycomparethe strength

of theseforces. Use all th~ judgmentand reasoningpower at your

command. Endeavorto improveyour judgmmt by constantstudyand prac-

tice. Striveto lift your Judgmmt from commonplaceto good;from good

to better;from betterto excellent.

When your judgmentha~ becomeexcellentthroughyour own efforts

mkwmbor
that you can carryit to a higherpoint by trainingyour intui-

tion; so that after a whileyou wLLl get the pulse of the marketand the

psycholckgiml momentfor tradingdown to such a fine point that you can

form conclusionswithoutconsciousreasoning. You can learn to act on

theseintuitiveconclusionsamd tha go back and chackup your recsons

in order to find out how good your intuition$@ becoming.

Copyfi$ht1932 by Riehatrd D. Wyckof’f TRs&?ctiom7 Page 2

 MM TO KEEP A PEWEMTAGEIN YOURFAVOR.

This is accomplishedchieflythroughthe IMtation, reduc-

ticm and d.iillh~tiOtl af risk. That swum: (1) You must immediately

place a stop order as soon w eachn~ tradeis executed. (2) You

mast move thie stop to reduceyour risk as soon as the marketwill.

permitwithoutendangeringthe life of your trade. (3) You must

furthermove the stop so as to covor the price at which the trade

was made, end (4) you must move your stop stillfurtherwheneveryou

have a chanceto insure thme~ a part or most of your profit. These

four steps are vital to this form of trading. Unlessyou carry them

out cold-bloodedly
-- withouthope or fear -- and persistentlyand.

with determination,
you will greatlyreduceyour chancesfor success.

Baaed on your intentionof tradingfor the swingsof 3 to 5

pointsthat occurin a dny!s session,or perhapstwo or threedays in

succession,your risk is kept down to a smallpercentageof your pros-

pectiveprofitby placingstop Orders1/2 to 1 point awey;but %fyou

shouldfail to use these stopsin the way indicated,you are positive-

ly incraesingthe percentageof your risk.

At 1/2 point r$sk and 3./2point for commissions and other over-

head?you can bo wrong tw$ceout of threetimes if you realizeon the

third trade a profitof threepoints. Your two losseswould be 1 point

each, or a tdal. of 2 points,includingoverhead;the third trade would

carryan overhoadof 1/2 point, making 2-1/2. Henceyour net profit

would be 1/2 point on the three trades~

On a W30ratical.1 point risk with a 5 point objective,if

you are wrong twicefor 1 point each time, that would be 2 pointslost.

Ii’your profit on the third tradewere 5 points,you would have to d+

duct the two losses (2 points)and the overheadon threetrades,which

would total 14/2 points,making3.1/2 pointsdebit and 5 pointscredit;

a net of 1-1/2 pointson the three trades;or an averageof l/2-point

on each trade.

We do not claim thatyou cen make cut and dried transactions

like this, but we emphasizethe point that you must keep your los~es

plus overheadin such proportionto your profitsthatyou will have a

mar@.nto the good. This whc)leplan for activetradinginvolvosbuy-

ing right and sellingright,and lettingtradesrun in your favoruntil

you observetechnicalindicationsthat they have gone as far as you can

reasonablyexpecton the strengthof your diagnosis. Thus many a trade

whichyou startwith anticipationof a pc~intor two profitmay run into

severalpointsand help your averageprofitfor the week or month.

On the otherhand,your risk is strictlylimitedfrom the start;

it is ~evor increased. It is frequentlydecreased. Many timesyou can

plug a profitwith a stop order so that it cannotget away from you.

Thereinlies your expectationfor success. You aim at n largerprofit

than loss in everytrade. You keep a percentagein your favor.

Rememberthat we have by this methodeliminatedall guessing;

all tradingon tips, hopes,hunches,hearsay,news, information,sta-

tistic; snd that we are tradingon the basis of stockmarkettechnique

which has its rootsin th~ law of suppQ and demand,the only real funda-

mental on which a soundmethodmy be based.

copyright1932w Richard D. Nyckoff ‘J%section8 Page 2

 TRADINGON INITIAL ACTIVITY.

Deciding upon the stock in which to trademay sometimesbe

done tQ adventage by letting the marketitselftell you that here is

an opportuni~.

You watch the tqpe. You have no commitments.Your Wsve Chart

of the five leadersis beforeyou, on a sheetof chart paper. You make

mentalnote of the pricesthat are flowingacrossthe Tape or Translux.

You wait for impressions.

Suddenlyyou noticea certainstockgettingactiveon the up

or down side. If it is movingin harmonywith the trendof the five

leaders,you immediatelytake a positionin it, long or short,with a

stop 1/29 3/4 or 1 point awqy. Then you go back over the tape and make

a Tape ReadingChart of it from the openingor from some r@uonabh dis-

tanceback. Ii’the high and low pricesare on the quotationboardbe-

fore you, you ean mark theseon the left side of your chartas a guide

to the dayts r&nge;then if you have a verticalline chartof that stock

in your collectionyou cen see where it stands;whetherit is in a narrow

tradingrange,or movingout of it on the up or the down side,heading

towarda new level.

Your incentiveto tradeis due to the fact that this stock which

has been idlingalongin a very narrowrange and with smallvolume,is

now becominga~tive. ‘l’his

activitymmn~ that somebodyis gettingbusy
in it and you infer that he may be in pomswmion of informationlikelyto

Copyri$lt1932 ~ RZchmrdD. Wydw)ff !FRSection9 Page 1

M’lLwrm sup$dy m dummd or that its t$dkmiml positionis suchthat
theyWlleve theyc-an
moveAt to aao4#mxMval ad realisea profit.
You, thereforq,hop m th@ etm!kmd Ad% along with whoever iS en-

glnm%ng the Imve. ‘l!hw you hmre him workingfor you. You are tak-

ing a ride, M to spedq m a qmz%al train charteredand pUd for by

mmane @lse.

Your Mpe ReadingGhartwill give you all tie details. You mu

judgenot onl# by what he does but & what he dom not do, for it must

be yuur first precmut$m to see that he is not makinga falsemove %n

the appositedirectiontowmd whid he intendsto melm his P*. That

ia$ he may be pl- a down wing, eo M first bids the stockup a

po$mt or twc in order to attracta followingof buyersto whom he can

13ella largerquantity-- -either

on the my up or beginningat the top

and mZIAng it back. If he intendsto bull tho stockhe may drive it

dawn first so as to CMMII out the stop ozdersbelow ond mcum all the

stockhc can find aroundthe 2017 kvel. Hence you must be on your guard

tith your stop order for it ia ymr only protectionagainsta sudden

revoraaland a big 10SS.

If, hawever,the aperatm is reallybull$ngthe stock (or bear-

ing it, ae the case my be) d raullygoes on with the deal the my he

startedit, your stop order is safe, so long aQ you do not gd it up too

close to the price of the @ock so that you are kickedout on a small

reaction. Keep your stop at a safe distance- on the wl aide below

the bottom of the last dip, and on the bear aide above the top of the

lad rdly$ until the timo uppmmlm for 404ng the trade.

Watchjnmr !l%p Re_g -t, W watch th@ trend of the five

lmdera to mako sure * we not iticatimg a turningpdnt in the dayss

MmYri$kt 1932 by lMh@rd D. WyckMf ~ &3CtiiO13 9 pA&i 2

thn Iwy bwk again
WMIMWlws on the

Y@lM!”Im3aom ttw th$m *8 that the C)permtor will probably not con-

thwl to buy h faaaof indlomt$ons

thatthemarketis about to sell
Cmb on the d@Nrmry,ho wi2Aprdtdity do just what I am tailingym

a~ @W his #tQok a suddan6*; themsell.

Out sll he Carl80 86 to

ZW3UW Ms line and thus providepurohming poworaroundthe low point

of tha! Ooming dip. You follow hi$ IM3W8 closdy and when your Tape
Reading Cha?t #!MlJV3
he $a bW@JI~ th#M bSCk, buy -6 baok.

These paintain tradingare bwed on standardpracticeamong

-pert floort@@Qrs, pml managersand other importantoperaknwwho

knowthe game. If you expectto make money,you mustnot tradothe

way thepublicdoes;yQU mwt wb marelybuy, sit and hope, You must
@ $n and out at th right moments,tradingthe way warlmt tach-

nieiam do.
It mwt be your codxnt aim to refine and poli~ ywr jud~

mont w that you will be able to keep yourulndclearandunbiasedand

firm yet flexible+Hsverbacomoprejudicedin fmm of

tie market, for if you do you will b like a ship that

to &hwQ on high tido and is strandedthere.

vw to pqwxw on initialc&Av-
for tradingopportunities

@t yOUrOQMWUd a k??$erwmborOf V@l%iCC.~

~ine ChWtS

This does not moanthatyou willhaw to make the dmily

Qntriea on a large r’mmbn yartmlf al? through your .cmim?mt, foryow

TR$$wlwm9 lhgs4
JUDGINGTHE WIKE1’BY TEGTSAND RESPONSES.
 Next he tmtw out Steel, Tdepbne or Can in tho sam my. He

gat~ some foULowingin Cam, a littlein Telephoneand nothiiig

much in

Stiel. Them he triesout the utikL~ groupand gets a Mttie more em-

courqp#m@ltOP the bull side,

From $his seriesd? teatshe now knows that he can b~st ad-

out the other stocks

maxwe the marlmtby bullingCan. liefeell?l that

sometimesr~spondti the loadarshipof Can so as to get help or at

laaat supportfrom othor Bectionsof the market. He f2nds a little

mbre rmponse in other industrialsend wlwm he has these sizedup he

gcml ahead and bulls the ones that show the N3st rwqxmse -- Want seem

most to inflw$ncethe rest of the Lh3t.

Olwwre that he followsthe Une of least resistance. He

avoidsbullingthe rails Mcauao he would therehAve to play a luno

hand. He dm$ not want to take big ~OCk8 Of StO&@ I?hi&h standin

his way; Sonmlne elm am 40 that. He advamcss$ha ones that are easi-

est to put up while requitingthe mnlhst purchmes on MS part. After

a while the mnallMl&s which he has producedW MS testingopm’ations,

followed~ the mom activobiddingup of a Mm@@r

numbarof stocks,m-

ccnlrege
floor tradmraand the publicto get in on tho bull aide. Am

ixmwasing mwber of stiochadvame on expandingvolumeand a buU mlmg

of sub~tantialproportionsis under wqy.

The C. O, furtherencowagaJsthis bullishness~ helphg along

wharovorhe O*. If he w#s ca%ain stQckBor groupelsgging,he will

send a brokerinto those crowdsto bid them up. If wealmcssbrwdcsat

anywhere, he WJJJ1give support. As a good generalhe is alwaysemdaam-

ing to hold & $ines agairwt attaok and to advauaehis front Mnes (tops)

as far as he @mm.

@W%@t 1932 by RkWMWd IA Wywoff TR Section%0 Pago 2

 Supptase the bull $vting has now Wan runningfor severaldays and

after d.%ingup the situation~ a swi3s of tests,he finds that the

buyingpowerhas temporarilybecomesomewhatexhaustmd;that is, most

of the peoplewho couldbo influcmcedto go in and buy imve done so;

they csnnotwend that same money twicennd thereis a scarcityof

other buyers to take theirplaces. Demandhas shrunk.

Ho rlOQ#SU@i$?Y Wi’WtWcX’ the marketwill take;hc WIUS fill

ho cxin around the top of the swingand on the way down. If the rise

in the cwra~s has amountedto 10 points,he may keep on sellinguntil

it has declined6 points;then he may begin to buy back what he has sold --

not by biddingup thasQ stocksbut takingthem as they nre offered. Out

of 1,000 sharesofferedat ,atort.nin

pri,cehe may take 600 or ’700 l~i~v-

ing 300 stillofferedsnd the marketunchanged. His reaccumulation

is

not apparent. Tho marketis stillhecvy althoughhe is buyingback on

the reaction.

After a while he absorbsmost of the floatingsupplyat a level

abouthalf way back from the top. The sellingpower is now lessening;

in fact,he is unableto buy back all ho wants; so he drivesseveral

stocksdownwardto weakenthe market so he can completehis purchases

on the reaction. These drivesare also his txxjts.Whilo these stocks

are weak, othorsadvancea littleas a resultof his raisingbuyinglimi-

ts. Thus the averagesare scarcelyaltered. Peoplewho are bearish

point to the few weak stocksand decidethat the marketis goingmuch

lower. They make some ventures on the short side. These help the C. O.

to buy more. He takes theiroffarings.

With the bears makingno progressand no more stockpressing

for sale, the market is now in a position technically’ known as Itsold out!!

Copyright 1932 byl?iiahwd l?. Wyckoff TR Section10 Page 3

 for 12M time being. AU the offerings of thosewho sold on the way back

from the top are now absorbed;h@nce,for the n~t five pointsup -- on

the averages-- thereis littleoppositionto an advance. The C. 0,

thereforeadds to his limos,b@ng as careM.ly as he can, to ae not

to advancepl?iCfi?S.

After the averageshave recoveredabout3 pointsout of the 5

they lost, ha has replacedabout QIl the stockhe wants and beginsa

rapidbiddingup of pricesall aroundthe room. The marketadvances

to the levelof the previoustop. Here R lot of thosewho boughtat

that time ,nndwho held throughthe reactionplace sellingordersso

they can get out even or at a smallprofit. This makes a lot of activ.

ity and narrow swingsaro~d the old top and chartobserverssay: Here

is a doubletop; we shouldsell shorton this. But the C. O. finds

that the long sellingcombhed with the shortsellingis not sufficient

to stop the advanceof the market. Thereis a latentbuyingpower that

appearsto intreaseon advunces. He bids certainstocksup to new highs

in order to emcouragethis outsidabqyingpower.

The strengthspreadsto other issuesand the market goes on

throughthe old high for the averages;bears,findingthey are wrong,

begin to cover; their stop~are caughtin many cases. BUUS who have

been holdingback come in and buy. The bull processionwidensand

deqans -- more buyers,a greater numberof stocksdealt in, a larger

volumeof tradingall throughthe list.

And so the C. 0. continueshis operationson the bull side --

with the characteristics

of the marketin its variousphasesmuch like one

anotherin principlelxztdifferingin detail -- until the bull wave has

Copyri&t 1934by Richard1).Vfyckotf

lusted SO long and atendmd to SO WU’IY stocksand broughtin so many

buyersthat the C. O. is able not otily to unloadeverylust shareof

his long stocks; hat, as his unloading such a large 9upplyovercomf33

the remaining demand,he also beginsto put out a line of shortsall

throughthe &Lst. He keeps on sellinguntil all of the aemandat the

high level i.s satisfied. The marketis now saturatedwith stocksend

thareis no buyingpowm left to lift that tremendousload whi.chwould

have to be movedin order to advancepricesto a new Mgh lavol.

The C. O. sees this situationand knows that tho time is ripe

for a break. He bids up severalleadinghigh-pricedstocksto new high

whiah causesthe publicto say: The nverugcsare up into Q new

levc+ls,

high. We shouldbuy xnora.

Meanwhile he has been sellingso many other ntocksthat their

prices are tmgging under the weight. He keeps on selling,gettingout

of the ones he bid up, and gettingshort of thornalso. No~j~

he is adding

everyhour to the supplyof stocks. The reactionhas broughtthe public

throughthe successivestagesof hesitationto cautionend then into a

stateof fear. That is, they fear the marketis goingdown but they hope

it will racaverenoughto let them out. This emotionalconflicton thb

part of the public causespeopleto hang on and do nothing.

The market goes lower and lowor becausothere are few buyersex-

cept occasionalshortscovering. Pricesare fallingof their own weight.

Supplyis vastlyheavierthan demand. The C. O. has only to wtit to red.ize

a big profiton his shorts,to be sdded to the great profitho has already

gatheredon his longs. And with this vast sum at his commandhe knows that

he can buy a tremendousnumberof stocksat the bottomof the dd.ine, pay-

ing greatlyraducedpricms comparedwith thoseat which he sold.

NOW I hav~ explainedall this so that you will get a clearidea of

..
Copyrightlq~~ by RkdmuwlD. Wyckoff TRS43ctdJ3n
MI Page”5
b
what is goingon under the mrfsce in the stocksmrket. There is no

Compos$teOperator,but tha effectof the cmdxknedoperationsof bank-

ers$ pools,la#$eopm’ators,floor tradersand the pub~c is$ when

bcdhd down an the tape, of the same effectas if it were produoedby

one men’s Opar’htiowl$.

It is importentthat you observethe marketfrom

this standpoint,end that your tradingoperationsare based,not on what

but on the ftuxk

you formerlyNgarded as t~ marketlscharacteristics

meuatal
law of @upplyand dmemd$ which is at the bottomof everymove

that is made i~ eva~ stockin the marketat all times. Tlxislaw is

workingand will continueto work alwaysand forever. There can bQ no

gettingawsy ftom it. It does riotmatterwhetherthe bufingand the

WLling$ or both,are gmuine or artificial;that is, manipulative;

designedfor a purpose.

Study m apply thiB law in the way outlinedhere,by means of

tlw Wave Chartwhich showsthe comparativestrengthof the Supplyand

the Demand;by the Tape ReadingChartswhich are a micro~cop$crepro-

ductionof the sesm Iaw$s operations;and from the actionof the market

as it appearson the tape of the Stock Ticker. All theoecan be turned

to your advsmtsgeif you will followthe methodexplainedin this Cour8e,

con@antly studyingand practicingit so that you will.becomehighly

efficientin due time.

***

The manketis QUJO oontinul,ly being testedby the variousnews

items and developmentsaffeoting$Znglestooks,groupsreprasemtingin-

dustries,the fdmncial or businesssituation,etc. A test of the

stm$ngthor weaknessof my stock,or any kind of a market,is frequently

affordsdby thase. For example, thwe were rumorsin June, 1932, that

Copyrigh%1932 hy RidMWd I).W@coff TR Section10 Page 6

both AlliedChemicaland AmericanCm would pass theirdividends. 30@

stockswere heavy. Allied Chabxl made a low of 43-5/8em hour or so

baforethe divid~d was announced,and whn the reportcame that the

r&piLardivi~md had been declared,therewas a half-heartedrallyto

47, a good pm% of whichwas quicklylost. This affordedQ test of the

timperof the market,which WLM bearish. Bullishnews had only a momentary

effecton Ws stockand littleor none on the rest of the list. The

tape readerl
$ cue wmld have been to sell eitherthis stock,or others

that respondedpoorlywhUe the strengthstillappearedin AlliedChlemical.

One more word abmt these tests$ No matterwho me.kmithem --

the CompositeMan, a pool manager,large operator,or a big floor trader,

the resultof the tewts show immediatelyon the tape. You, sittingat

the ticker,@n observ~at onca whetherthese testsbring a bullishor

lmzrishrespanse;and you are just as free to act upon them m if you

M made th-yourself. Therefore,never fail to observetheseand

othar detaildin Tape Reading. You can never Wll what thay nwy lead

to, or Bighi$. I have darivedsome largeptofitsfrom tape ix@Lca-

tionswhichwst people owerlookad. you CSll dO the Sm% Whi31!l YOU learn

to be hi@ly observant.

copyright1932 ~lMLdW’d D. V@dWM’f

 BEST STOCKSFOR ACTIVETRADING.

For this purposethere are two chiefrequirements:(1) Wid&

daily swings${2) A closemarket-- tit enablesa traderto get in

and out close to the last sale. A third md less importantadvantage

is in a larg# volumeof shareslistedin a stock;this is sort cd?a

guarantee‘tMt wham activitybeginsa largenumber of investorsand

traderswill participatein the campaignand thus aid in maintoAninga

C1OW market.

Wide daily swingsare vital,for withoutthem thereis little

chanceto buy end sell,pay overheadtand.

realizea profit.A stockwith

a daily averageswingof only a point would be of no use for our pur-

pose, for in order to realizea half pointnet profitwe would have to

buy at the bottomeighth,sell at the top eighthand deducta half point

for commissiam, etc. Such stocksshould,therefore,be avoided. As

the daily swingswiden,a stockbecomm more attractiveas a trading

madium.

A clowemarketin a stockis greatlyaided by its activity

becausethis attractsa largenumberof tradersin the officesand on

the floor;competitionis keen; fhor traderstry to get their bids end

offersahead of the rest of the crowd so as to benefitby fractional

moves. AU this keeps the marketvery close to the last sale. By %mrketf?

I mean the combinedbid and askedprice at the moment. The last sale is

not the market;thnt is markethistory.

Copyright193$?by Mdaixrd D, V&ckoff TR Smtion 11 Page 1

 Most of the prinaipa,l dailypapercthroughoutthe countrycarry

in theirMonday editions a completelist of transnctlonsfor tho prevf.ouo

mx!k. Such a table showsquicklywhic!hstockhad tha widest SWin&l and

the grwatestvolumeof trading$ These were the loadersfor tho pretious

mwk. This flheet

cun be premrved as your wdcly recordand the f’iveor

ton leadersn$arked
with a black or coloredpencil.

Leadershipis constantlychanging. Past rtico~ds

aro no guar-

sntee far ths future. It is best to take off’a list of the leaderseach

week in order to hmne them beforeyou for the comingweek but this is

only your background. Tha tape will constantlyt~ll you which stocks

are affordin~the best tradingopportunities.Of coursethere are many

stocksout$iduthe lo:~dera
which have closenarkets. Watch for these.

Belov#isa Wxil@ion of the averagedaily rango (difference

betweenhigh and low) of five l~adingactivestockshatingclosemarkets

duringfour mnnthsin 1932:

!wsdQL AA&4uMu &k?AwL Q#uaAil .Mi!aL

March 3 2-5/8 2 l-3//4 l-3/4

klpril 2-3/4 3 2-3/8 ~ 1-1/2

May 2-1/4 2-3/8 l-7/8 L-718 1-3/8

June -Ma u&%!Q

4Mos. Average 2-3/4 2-5/8 2-1/8 1-7/8 1-1/2

The dtily range of these stockssometimesamountedto from 4 to

7 points,which mnde tradingoperationson thosedays more profitableif

a tradm were on the right side. The dove averageshouldnot be con-

sideredan inucation of the future,but just e.comparison.

Duringthis periodthcuwwem many days on which the nest active

Copyright193$! by RJ.chmd D. V&ckoff TR Section1.1Page 2

of these,Tclaphone,quieteddown to a point and a smallfraction. The

sameis trw af the other $tocks;some at timeswere dovm to less than

a point betweanhigh and low for the day. But on the averagethesefive

gave pbnty of activity-- enoughto enabletradersto get in and out,

oftenmore thqn once on tha same dtny,with a profitabove ovdmad.

Auburnhas not been includedin this groupbecauseit is in a

clast3
by it~ekt. At timesit has a fairlyclosemarkut-- in its per-

iods of preparationfor importantmoves,or in its restingBpells. But

one never can tell whan the next sale is going to be 1/2$1, 2$ 3 or 5

pointsaway fron the last sale. It has the reputationof being a dang@r-

ous stock to tradein. I considerit no more d.nngerous

than any other

if you Understandits peculiarities

and regul.ato
your tradingto fit them.

The stockmerelyrequiresa differmt techniquefrom the other leaders.

Everyone+
is not qualifiedto tradein it. We cannotadviseanyoneto do

so withoutmuch practiceon paper. He will thus bwome accu~tomedto

the erraticchangesin tkds stock. These are clue to its small capit<3li-

ationand extr~melylimitedfloatingsupply. Thosewho are manipulating

it ‘snap the marketwhip’1frequently-- greatlyto the consternation

of

thosewho are endeavoringto grab profitsout of its gymtions.

***

The followingtable indicatesthat 66X of the totaluninterrupted

swingswere 1 ad 2 pointsonly. The swingsof 3, 4 and 5 pointsamounted

to 28% of tha tmtal.

— a very fd.r proportion;nearlyone-third,in fact.

This percentmgamay seem somewhatincreasedby reasonof the wide swings

in Auburn,but} withoutthe latter,it is 27$i!.

Nearlyone swingout of

threein those running from ‘1to 10 pointsconsecutively

affordedan

Copyri$ht1932 by RichardD. Wyckaff TR Section11 Page 3

 tradewith the assurancethat it would go far enoughto

even thoughthis wem not accomplishedin a singlesession,

In a word, 1 permmtige of 3 to 5 point swingsis worthwh?l.le.

After

the tinder 1toks a position,if he estimatesthat Wly Swing shouldfJO

fartherhe 1ladonly to movo hia stop and let him profitrun.

Nmber of wings of from 1 to 10 consecutivepoints,

cm the full figures,withouta 1 point revwmil.,
for abmt sight weeks in May and June, 1932.

Qi$t 2!#QuEMEaikE EMQiwlLik3L!3u

Ei&hli MJaQXwAadaku
Auburn I&) 111 72 43 25 U 11 8 6 k 463
Al. Chin. 6642 2912 3 1 1 - - - 154
Am. can 59 25 1.4 9 4 - - - - - 111
Am. Tel. 58 36 22 12 5 5 3 2 - - U3
con. (MM 47’26 Q 9 5 3 1 - - -lo5
U. S. Steel JiLJL A-JL=LuL~~~ ~Ji4k
Totah @J+ 253 159 91 43 24 16 10 6 4 1030
Approx.%
Ofltc)lo
pt. mhgs K@ 25 15 9 4 2.4 1.6 1 .6 .4 100%

With tie exceptionof Auburn,most of the moves in the five

leadms are interruptedaftm they have run five or six points. This

my be only a J.or 2 point mverm move, and a tabulationof the swings

with one such interruptiontight make anotherinterestingpicture.

For threewho like to tradain a fast moverAuburnis now (June,

1932) attractive;that is$ if their tradingfacultiesare on a hair-

triggmr,and tiqy CUl qmmtii$ withoutfaar of having StOp# caughtfrm

1 to 5 points away from thdx stop pricm. The tmbla shows that in the

Copyright1932,,
by RichardD. Wyckoff TR Section 11 Page 4
1 to 10 point movesAuburntravelledaboutnine timesas many points

as U. S. St@l; four and a half times as many as Can and Con. GM

and three ti#wsas many as Telmphoneand AlliedChemicalduringthe

pwiod mmtibmd. This cmnot alwaysbe expected,forhhiyand June

markedone @ it~ charactml,stically

wide swings.
 STOP OIUERSAND OTHER VITAL POINTS.

QQ$m of ImQQJ@3xsa Stop ordersshouldbe regardedas

inmuranceagainstlarge 10s80s. They shouldbe placedimmediately

after a tradeis made.

We amnnotemphasi~etoo stronglythe absolutenecessityof a

stop order in wary caseJfor this wholemethodof activetradingde-

pmds more om the limitationof risk and the controlof lossesthan on

any other onm factor.

Sto~ can be: (1) placedon the floor; (2) left with the order

clerk,or (3) kapt in your own hands.

A strepon the floor nwms that it will be executedthe instant

a tmnsactio~ is made by anotherbuyer and sellcu’

at your stop price;

your stip thm becomesa marketorder.

If yDu leave a stop with the order clerkin your broker~s

officesyou instructhim to executeit pt thq mwks$ , as soon as he

seeH a tranmction on the tickerat your atop price. This form of

stop is a littleslower,but, in soma cases,may work out more satis-

fadOI’i&. ~ry it and SW.

If you keep the s40p in your own handstt is calleda mental

stop; that is, you decidayou will give the order to the order clerk

whfmlthe price on the tickerreachesa certainfigure. You must deter-

mine to carryout your dmcisionwithouthesitatingfor a moment$for

if you do th$ chancesamyou will Qithtm hed.tatetoo long or you will

1932 by R%chardD. Wyckoff

Cc$pyri&ht TR Section3.2 Page 1
mm ywr mqtal atop MWwr away from the price at whioh you made

tb trade. ?Mt is a fwlamental error in this form of tradtng, tha

whol~ purposq of which is to J&@& and H th risk. If you make

this error yqu will not M Utiting your r%$k, and you will be increas-

ing it.

At the first sign of danger, your stop should always be brought

clooe or tho trade closod out at #o market. If the danger pas$em and

you are kickdd mat, you can always get in again.

Stop# should Mwum room for normal rallies and reactions, so

-t the treds is opm fox furtbr pomible profit~. But if a rally

or mmmtim %$ more than ~omal, ym shmld mmisa your forecmt and

act ao@X’CMn@y.

Hem? carxy a trade overn%ght without a stop. Yma may be de-

layed or be @aken ill the next morning and an adverse market might cause

a 10SH of smtwml points.

Am awtamatic ~top is cm in which you instruct your brokor to

mova it continually within a certain fraction or number of points from

the htghe$t cm lowest mmrltet price remmded.

In6tmuctycmr broker in writing and get his acknowlodgm$nt that

all of’ your atip~ are to M conaidmed good ti&l countermanded.

Wnckrall Conditiqml? play S?lfo. Do not see what chanms you can

telw without ,gmtting caught, but with what mall risk you can trade.

***

The objective in this form of trad-

ing i~ to mak@ a lon$ smies of trades in uniform number of $hmm from

which we dwWa profi.t~ in mcms of losmes. We never know whcmwe make

a tradehow ~t is gcd.ngt@ turn out; we cen but we our best judgment

and continuallytry to imprmw our judgmentso that thsipercentageof

net profitincraams atwlily.

The @mwming stickby which good resultsor bad may be judged

is the perc~tage of profitout of each@O worthof ~

_ That mmM3 this: If you make two trades,one with a net 10ss

of $25 and tlw otherwith a net profitof $75, your percentageof profit

75.
i!!! You add the profitto the loss,making $100, and three-quarters

of your total is on the profitside. By this meansyou judgohow you are

.
pro~aming. Wheneveryou find your percentageof profiton clomd trades

runningdowns or runninglow, go back to paper tradingand studyyour

lossestill your judgmentimproves.

***

All your commitmentsshouldbe for the

samemumborof shar~sin a~ch trade,so that the percentageof profit

and loss will not be disturbmdby tradesin largeror smalleramounts

than your stendmrd.

Whan you increasethe size of your trades,the mm uniformity

shouldbe preflwrved,
for the same reason. Mn.iltsare measuredin points.

Rewordswill hot be accurateunlesothe lots are the same in all cases.

-X--M*

Thaae are now beimg postedin many broker-

The ebb ad flow of pricesmay be recordod

in form similmrto tha Wave Chart in case your attendencoat the ticker

Copyri@t 193E by RichardD. W@mff TR Section

is interrupted.The hnlt’-huurly
prioeswill.not, of course,corres-

pond with tho hngth of thw buyingand sellingwaves, Thorof&e,

thase e,vwrag@I
are not a substitutefor the latter;but th~y have a

cmtain advambge whioh it would bo WCLI.to test.

***

,,
on MWW. When you first begintradingon thisMethod,

do not use m@. mon~y. Trade on paper umtil.

you thoroughlyunderstand

it* When you dwide to mnke a paper trade,write it down

reoordjust a$ if ~ou ware givingan orderto your broker

fair prim, aooordingto the tqe$ at.whichthe ordor shoul~be ox-

@outWI. Give yourselfthe worst of thesa trmsactians,in 03s0 of

any doubt,so that your racordwill be conservativeand youwi.11not

be foolimgyaqrself’.Rememberit is not important

thatyou mdm money
at first;but it is very importantto make a good baginningso that when
you Onoe lwmi how to txvuhand realizenet prof’itn,
you can go on and

inoz%)ase
the #i$e ofyourtredes withoutat enytim jCq3mrdizingyWr

capital,

+++(-+$

yrdiei,lirt ‘M% m . In nearlyevery cam your ordersshould

be at tb marlmt. A limited ordor ehouldrawly be wed.

When W is tim to tako a poaiticmor closo a trade,never

stand 1233
fractions~gti in or out at the market.

why you

copyr*t lWW by Mdmrdl$. w@off TR %ction 12 Page 4

shtmld stay h a iamdowhich does not act right or gotw std.e. Your

po@iti9nw am tdwm on WM$$tratlgth of cC@xLn ln41catiowS and you

tdmld giva them tmta UJEitl!d t$lrw inwhiohtowwkolxt. If’-

?30t mtkh good, YOU Skdd either CMM tlmm out at the market,

fmwd Y* stops up alme to the market ~Z’iC@, thm h!ci?ing the

wqy op43nfop more profit.

indications shown on the Wave

you tit for theme to make

Do mot @i* $hmw end hop#B* OIM,y the tape ● If it %eU@ YOU YOU skuld

h daorti im@tectd M MM’q&#

(get sort 08 a bulge. TM* m trgidmg

$Oidiifh??zjay.

Xtx? mM’d no opition when you are coxuatantly being told what

trodoandwlOyby th~ ?lCt&OXl Of th mmrkd. hd WhOll tw ti~e SQYS

that Sitwlmm M douMfM, clam out all WOB amd eit still in a

***

A maccfMMUL spmmlator poasemes sdf-

courage~ caution amd matal flexibility.

c)wmthimkhgj form your own Con’olwions,

 Never ask advice. The informationyou will durivcfrom the

tape and from your chartsis far more v.?dLu3ble than any that you can

get from any other source.

It ie an old saying: The tape never lies.

Your judgmentshouldbe based on sound prcxnises. You have cdl

the facts beforeyou; assemblethesecnd make your diagnosis. Decide

what the sitw.ti.on

cil.ls
for; then USQ cour:~ge
in actingupon your

decision. Be courageous,and somewhatbold, but with a certainmeas-

ure of prudence-- alertnessand watchfulnesscombinodwith caution,

Allowfor the Unforeseenand the incalculable.

Learn to thinkand act promptly. Your decisionbecomesa

commandto trade. Havingplacedyour order,never fear to reviso

your opinion. You must have flexibility;the mere holdingof a cer-

tain positionis no ruasw for your holdingit; ilev~~ be bullishor

bearishjust becauseyou are in a trade.

The ~rket tellsyou what to do; it continuallyconfims or

cancels its previousindications.It te~.lti

YOLI: Get in. Get out.

Move your stop. Closeout. Stay neutral. Wait for a better chance.

All thesethingsthe marketis continuallyimpressingupon you, and you

must get into the frame of mind whcnwyou.are in re.ditiy takingyour

ordersfrom the actionof the marketitsdf -- from the tape.

Your judgmentwill becomepoorerfrom the very time when

you decidethat you know more about the marketthan the marketic

tellingyou. From that momentyour resultswill be unsatisfactory,

for in this tradingbusinessthe tapo is tho boss. You must l-cam to

oboy its orders,doing exactlywhat it tellsyou. When you can accomplish

this,you are on the high road to successin your stock trading.

Copyright1952 by RichardD. P&ckof.f TR Section12 Pago 6

 When the price of a stockis in approximateequilibrium,

your bid or offor at the marketwill have a tendmcy to raiseor

dqmma the price am ei@th of a point or more. Hence,if your

otieris to $u, you WIU maceive1/8 point less than the price of

the last trde; and if ywr order is to buy, you KU ~ l/8 point

more thmm th~ price of * laat trada. This vazztmtion

in priceis

(Wled the ‘%nvialble E&gbth.

~~ W&n a atookis dxmdlng still,the

prioeis, W, 53+% bid$ cM#Qti at 1/4. 3f you buy, you uswally

have to pay thm offeredprioe Mawe thereis someoneahead of you

biddtng1/8. If you hold it say W au hour and the bid and cmkod

am the WMNBtyou would Mve to ueU it at 5>~8. Tkks combination

of bid and amod ptice is the real m@rkW. Do not Comfwe this With

the I.@stALiBJyou cannottrade at the last sale but only on the bid

and aakod m@k@% ptiO& For theserewnm, it is beat to allow a part

of your overkeadto cover the imvM.ble 1/8.

++**

~ If a tradeonce goes againatyou, it proves

your judgmentwas wrong when you readsit. To averagathe trademeana

thatyou inm$stupon being more wrong than you were in the firstplace.

Co-@t 1932 hy Rl@ard D. Wgckdl’ TR Section 32 Page 7

Your profitd~es net dopkticm any one trade,but on the net aVEWage

of Q long Suqwmim of trades. W average.

***

UnlQssyou have a steadyincomefrom your

busirmss,pruf%ssionor your investxwnts,it is best to providein

advamoeand qot asideyoux livingexpensesso that in trdingyouwlll

not be ccmcenne(i
with thio vitalmutterand your jud~ent thereby

impaired. It is a mistakoto attemptto make money bocausoyou need

it, or Mve $o have it for some specialpurpose,for in such cases

your judgmentis nwar~ 03ways@o biumd by your necessitythat you

do tha wrong thing.

It i8 betterto trade on paperuntil you are in such ftnencial

conditiontJW your mind 2s properlypoised. Itis betterto test

your judgmentwith 10 $harelots of actualstocksratherthan larger

lots if you have to use mqm+y requiredelwxdwre. Allow for the

pcmlbility af sevemiicqsecutive losses.

When you find that you have made many paper tradesand

establisheds successfulrecord,beginin a smellway makingactual

trades,but, If you continueto make real money on these,do not be

misledinto irmreasingtha si%e of your tradestoo soon. You are

buildingfor the future;therefore,make each step with caution,par-

ticularlyin the matterof incrwwing the sizo of your trading.

When you mah monay,do not put all of your profitsinto your

tradingfund. Use only half of thmj with the otherhalf pay yourself

baok your ori~mil capitaluntil your tradingftmd is sll.velvet.

Followthis idea continuallyso thatyou will alwqm have a reserve

over the monqyyou are using as margin.

***

Copyrkght193? My Makrd D. V&@knf’f TRs@ctioll32 Page 8

 QC9W mm’ ts wa~ If you can realizean averageprofit

of $50 on 100 aharcmper d~y, the totalwill amountto $1,000in 20

tradingdays. I mentionthis in order to show that when you are trad-

ing continuously,
you do not need to secureve~ large profitsin

order to make your eftortapay. Eut thereis no reasonwhy you should

come out with wuch a smallaverageprofitas 1/2 per day if you con-

tinue to study,practice,Wain your judgwentend dewlop your intuit-

ion. This ?&Mod gets awqy from the big profitidea and teachesyou

to roll up snwllnet profitsuntil they aggregatea large sum.

The way to increasothe averagesise of your profitswill be

foundin that part of our Courseof Instructionwhich explainshow

to trade for the 10P 20 and 30 point moves. With that includedin

your tradingMnowledge~you can use the presentinstructionsin tuki.ng

your positional.md, whom indicationsfavor,hold thosepositionsfor

the ilnportunt
swings. Your originalrisk of 1/2 to 1 point taken on

the basis of Tape Wading Ohartindicationsmay thus resultin profits

which are Iar@e in proportionto your risk.

When you are able to judge the approximatenumberof points

that a stock @houldtravalin a certaindirection,it givesyou the

courageto go in, ~ramid ad hold on until that stockmalws good,

or warm you ?@@ it will mot. And this one factorof knowing‘thow

fap will do xore to increaseyour averageprofitthan any other.

That part of the Coursealso givesplans for pyramidingat

certainlevelsand under certainconditions,by which you can derive

more net profitsout of some moves than the totalnumberof points

from high to 30W.

WMre,to ,- As soon as you can arrangeit, have a little

privateoffic~of your own where you can installa tickerand a private

oopyright193’2~ M&lsa’dI).WyOkoi’i’ TR Section12 Page 9

tdephane to your brokerl~ordor clerk. It is best not to let your

friendsknow where they can find you so they will not botheryou dur$ng

the day and you cm concentrateon the tape in brder to get the best

results.

If yQu ccnnotdev~teall your time to the tape duringmarket

hours,perhnpsyou can have a young man or woman assistantkeep your

chartsfor yau so that you can go in at convenienttimesduringthe day

and find Wf@@lin~ up to date. You will find this nrr,nmgement

very

helpfulin gattingthe best results.

If tl&eamountof your tradingwarrantsit, your brokerwill

probablybe glad to provideyou with a smallprivateoffice,ticker

and telephonq. If not, you can make a startin his customers room,

end, as you WJd up your accountyou will undoubtedlyfind it profit-

able to get into a sacludodplace whereyou will.not hear the board

room gossipand will not he botheredby peoplewho want to give you

tips and so-aalledin~ormation.Of course,that sort of thingmay not

confhe you but it is a handicapto most people.

Keep as many chartsas your tima will permit,or your assistant

con keep for you. The largerthe numberof’charts,the greaterthe

varietyyou have to selectfrom, and the more opportunities

you can

take advantagoof if you have the necessaryworkingcapital. This is

particularlyadvisablewhan you are tradingon paper. Ten chartswill

give you far more practicoand experiencethan one chart,and one

hundredchartsten timesmore than ten.

***

of broker~
Ch~i(wa Your brokershouldbe able to give you

Copyright1932 by RichardD. Wyckoff TR Sectioq12 Page 10

promptand satisi!a&ry mecu~on of orciem,within one or one and a

half minutesfrom the tisw you place the8e orders. Executionstaking

longerthan this mmtimo$ xwsul.t

from congestedconditionof the floor,

or on wLres w telemos duringvery activemarketswhen everyonewho

Mndkea your ordersis mmmawded with MAness. In ordinarymarkets,

however,a mimte or ao ix time enoughunleusyou huve sufficientcon-

fidencein yaw brokerb let Mm use his judgmnt in waitingfor frac-

WmsUy bettirmkats b@forehe tradesat the bid or askedprice.

Adv5m your Mokor just how you are trading. Let him undm-

standyour raquimmmts. You trade activdy, p&y mauy cmmismions and

am, therefore,worth mora to Mm than sevmal clientswho get in and

Ho shouldbo wiUing to give you specialatten-

out only occqlli#nally*

tion. You cm a&Msa Mm when your ordem come throughby hatingthe

ordain clerkmmtion your wame when ho plmms the order to the floor.

All them litKieS&ran-a will add much to your prcfitsin the long

run.

*2**

All of your tradesshouldbe based on a

line of reaso@ingwhich ia mom or les~ settledin your mind — a set

of reasonsWh&ch have bemn te$tedand tried~ you, so you lmow as a

rule which wQl work and -oh will not. When you find resultsnot

so &md YOU shoulddudy amd loam why; pmhqm you are experimenting

too much with nm ideas. If m, go back to the ones whichyou have

promn.

Controlyour loismaand your profitswill take care of them-

selves. Have a spacein your Recordof Msults showing,in each case

of losingtrmie$,tha causeof that loss.

Copyright193&lby Riohard1).W@koff TR SeCtioll

12 Page 11
 You may, especially in the beginning, or even after you are

well started, find yourself running into a series of losses. Do not

let that discourage you. Go back to trading on paper.

Depend on the law of averages and your well-tried practices

to yield a profit over losses.

Never be concmrned about any one unsatisfactory trade. It is

the net result.that counts, oad after a long series of trades. You

will learn more from your losses than from your profits; those tell you

what not to do.

-% * %-

Practice Persistently. The more time you devote to stock

trading, the more profits you should derive from it. If convenient,

keep your charts in a pocket-size book and study them in spare mo-

ments. Ask your broker for the tape after it comes off the trans-

lux; take this home and study it. It will enable you to review the

dayts trmsactions, and to observe small details that you might have

missed.

Practice on paper With other stocks than those in which you

are trading. Dull markets give ample opportunity for this. Con-

tinually absorb all the information you can on this subject. Read

all available books for valuable sidelights.

*%’*

Copyright 1932 by Richard D. Wyckoff TR Section 12 Page 12

 CHART STWIHS.

Amer&mn Tdephone & ‘Ie@raph

At Bottom d’ ReactionJuno 2, 1932.

Note: In theso@x@Q@es~ wa will $14u@rat@ what CS31 be done with

avera~eJudgmwmt,Qmo with 6wuxUleatjudgmant. No one can
tell just what we would have donq~undm th~ ciroums$sncss~
but ~ damonstrat,i~g wbt might have been done, we can learn
how, @ *o* ctndsantpractic~inareaseour efflcienoyo

This Tape RqadingChsrtbeginsabout2:30 P. M. on Jum lst,

with the StOfJk at %-3/8 m the downwardswingfrom 91-3/8on the

prewiou~day. The ahart @Iowsthat thereis littlesupportfor this

stock. ht US assumethat we have a shortpofiition

snd carryit over-

night. At W close ther$is a rally of only l/4point at &5-1/8.

On June 2md the stickopwmd with 3100 sharesat 84,-1/4

--

down 7/8 of a point ovwn$ght. Thereis not so much stockpressing

but thero still seemsto bo lack of support. Two riil.lies

of 1/8 point

each are the only onos until the price hits 83-1/4;then there are two

of l/4 each ~d a line indicatingslighthesitationat 83-3/8.

Anotbwrdeclineta 82-7/8end a 3/8 point rally occurs. The

and 83-1/4. The

trading*one $.snow confinedto tb 3/8 between$2-7/fl

stockbeginsto get a little~upportthere. MOO is taken at 83, then

300*ML Two smalldips on light volumeand 1700.83 100.1/8 600.83

3oo.1/4 700.34! 600.!s3100.1/8. At and under 83 we find trsnsac-

tionshave totalled6300 @harew. The stockhas twicerei%sedto go

below 83$ and the sale at WAJ,/4gave the up signal. Stop on our short

Copyright193$!byl?ichardIl.I&oknff TRs’ecti@nC$ Page 1

stock (if any) shouldnow be broughtdovm to 83-3/8 and a long position

takenif the price touchesthat figure. That mums a doublebuyingstop at

83-3/8. The price touches83-3/$. This coversour short stockand puts us

long at that pricewith a stop 1/4 under the low of 82-7/8;ViZ. , 82-5/8.

Telephonenow workflin a 1/4 point rangein smalllots Cxcopt

1,400.83-l/2.
The supportline is now 83-1/4and only smalllots come

in at that. FollowingUXL83-1/2,
-. the stockbreaksthroughon the up

side end makes 8A. W3 raise our stop to 83--1/8. Soilingis clear to

84-3/4,then a littlereactionto 84. Supportjust above Q is much

strongerthan pressure. The sellingdriesup again and the stock pops

up to 85-1/4. Meantimewe have raisedour stop to 83-3/4.

At 85-3/4therois littledemandand a reactionsets in; a 5/8 dip ,

to 85-1/8,then a rally of 1/2 to a lower top, 85-5/8. This formation

above 85 does not indicateany seriousdecline. A recoveryof nwu’ly~

pointscalls for about 1-318 reaction,but it falls 1/8 shortof this and

the dip ends at 84.-1/2.Pressme on the decl&e is neitherlightnor heavy;

it is a normalreaction.

The reactionwears itselfout. Demandovercomessupply. The

stock soon sellsabove85 and continuesstraightup to 86-1/2. ThiS

is new high ground;we raise our stop to 8&l/4 .cndawait furtherdevel-

opments. The 1600.86-l/2bringsa 3/8 dip to 200.1/8. On the next upward

surge the stockonly gains 3/4twith 500.86-7/8.The upwardthrustsare

shortened,incticating
anotherrcnction. So we pushour stop up to 86-3/8.

Addingthe sal~sabove that figurewe find that 10,000 shareshave come

into the markethere and as we are in the last hour of the trading,we may

decideto Bell.at the market. If we do not, our stop is caughtend we have

the followingnesult: Bought83-3/8. Sold 86-3/8. Profit3 points~loss

1/2 point overhead;2-1/2 pointsnet for the dtay.

Copyri#lt1932’byRichardD. Wyckoff TR SectionCS Page 2

 Amrkcan Tel@phone& Telegraph
At !fO~ Of Rally Jum 1%%6, 1932*

This @hartbeginsat 86-1/4on the upward swing from 81 On

June gth. our Wave Chart at the opening gave us an upswing. Me do

nothing until the chmrly WMwd U.M of supportunder the light

pressureat $&5/$ and 3/4 tells us to go long dth a stop 1/4 to 1/2

below #Q bot$m of the dip to 86-5/8. If we put our order in when

the stockis ~t or close to its low, we probablywould pay 87 for

it, and mm stop dmild, therefore,be made 86-3/8-- a risk of 5/8.

The stockworks out of this rangeon the up side and on a

raactionto 87-1/2meets mppart amouutingto 2500 shares. On the

further1/2 p~int bulge to 88, observe the increasein supply--

1400.8793/4 300:7/8 1700,88. The ga$n over the previoustq at

87-3/4iB only 1/4 point,@d the remtim to 87-5/8i~ 3/8 with

1000.87-5/8at the bottomof that dip. A rully of 3/8 to 88; another

l/4point dip? highersupport;then a snap up to 88-1/2on very light

volumewith 5(M)at the top and an immediateracemion of 5/8.

The tmdimg zone i# maw 87-7/$to 88.1/2. On tho last dip

1100 came in at 88-1/4;threw WQSno demandat 1/8 or $8. Weakness.

Vh now push our stop up to 87-5/8for we are suspicious Of t~ long

side,and we decideto sell on the next bulge,or raise our stop

further. The next bulgeia to $8-1/4. We raise our stop to 1/8 under

the last low, whi.chwas 88* ad when thereis anotherbulge on light

volumeto 88--3/8,
we raise the stop to 88-1/8and doubleit; that is,

we #en twice as much as m are long. This givesus a shortposition

at 88-1/8. m immediatelyput a 1/2 point stop on our shortwhioh EMIMS

copyright193ZIby ~Ch&Pd ~. Wyckoff TR SectionC6 Pa$e 3

the 8tOp 88-5/$. Net profiton long trade,5/8.

The volmmei,snow very light,and a tebnical reaction at least

is indicated.

There is a dip to 8“?-1/2j

anotherto 87. The ralliesme frac-

tioml at fir@j 12hm a 3/4mUy from 87 with Voltiepeteringout at

the top. A 5/@dip and a 1#4 ri%ly have the stockat 87-3/8with 800

sharesat the &osel and as the indicationsare bearish,we lower our

etop to 88 amd mrzy the tradeovernight.

Next dqgls opening,June 16th, is at 87-1/2and the stock

imdiately redumm its decline. The very light volumemakesus suspicious

of & rally ao m tell our brokerto cover on a 1/2 point rallyfrom any

new low. At %6-1/4a rallyof 3/8 follows;thm later extendsto 3/4 and

catchemour S*.

All but l/8 of this rallyis soon lost, but highersupportappecrs--

at first 1/8 atmve the previouslow, then at 3/8 above. l?ohm!iS light.

It looks like a furtherraUy. We do not go lang becausethe indications

are beari~h. Wm merelywish to sidestepmore of a rally and pmh.apmget

a new and high= rollingpoint. We wish to see how the stockacts on the

next bulge -- whetlmrit haa power to go through, well above 8!3, orif

supplytill ommcocnedmand agein above that figure. OUr #JtOpthat W~S

caughtat %-’?figave us 1-4/4 point grow prof!kt.

Volumeincreasesslightlyon this furtherbulge:600.88 400. L/8

200.8$ 700.87-7/8. But itis now 2 PM mdtith the tradingquieting

down, it seemsunlikelythat therewill be activityenoughto give us

a good swingin the next hour. So we Btmd pat for the day, with 3/4

pointnet to our credit. We might have covereda littlelower on that

second morning dip from 87-1/8 to 86-1/2, or pushed our stop down further

ao as to gain an additionalfraction.

Cop@@t 3932 by Ri@m?d D. Wyckoff TR Section CS Page 4

b

!!
w
.
*

Open
close

I ‘-”-w
Down

on dune 27
 Allied Chmical

At Bottomof’Reaction June 2, 1932,

This stockhas come down from 51, and at 2 P. M., June lst, it

standsat Q. It dips 3/S below that,and jumps7/8 point on one sale

of 1200.48-1/2.‘hen some 1/4 point Wrigglesbet~eexl

1/2 ~d 3/4~ a

dip to 600.4.#-l/8,
and a rally on smalllots to 48-7/8where it closes.

The opening,June 2nd, is 1-1/4wints down,~th 1300at 4’7-5/$;

then 900.l/2 400.5/8 UOO.3/g 100.l/4 500.llg 400.47. A rallyof

3/8 and a dip to 47 mskes a 3/8 tradingrange. We retch to see wMch

way the stockwill go out of this ranget The first signalis bullish--

100.47-1/2,3/3 higher. Next supportat 47-3/8;anothergain of 1/8;

stillbullish. l/4 point range3/8-5/8Sthen a l/4 point ~P be~.~~

that to 47-1/8;higher supportthan the formerlow. If it does not

go on through47, this indicationis bullish. 500.47-1/4 100.1/2

makes a gain of 3/8 after 1/2 point dip -- stillbullish.

When the price recoversto 47-1/2,we have a forecastof a

breakingout of this range and decideto go with it eitherway. We

place ordersto go long cm stop at 47-3/4or shortat 46-3/4.Our long

stop is executed;this cancelsth~ sclllngstop. We immediatelyenteran

order to sel$ 100 on stop at 1 point down, which happensto be also at

46-3/4. Thie is intendedto limit our risk on our long trade to 1 point.

The break throughon the up side makes 48-3/8. AU but 1/8 of

this recoveryis lost, but anotherrally startsfrom 47-1/4.There have

been frequentskipsof 1/S to 5/8; these coming at the bottomof the re-

(hpyright 1932 by RichurdD. Wyckoff TR Section C.!S Page 5

cemt decline3Mic,ntea lightening pressure. ‘l%isis bullish. From

47-3/4the n=t sale is 500.48-7/8,then 400.1/4 100.1/2.

Now look back over the past few swingsand note that the last

bottomwas rntade
on 100 shares3/4 point down from the previoussale

end the followingdip wus 400 at 5/8 down. Then after1/2 point rally

on 100 share lots tharoiH anotherdip of 200 $haresat 3/4 down from

the last sole, Someone is evidentlytryingto mark this stockdown

in order to bring out fresh selling. This means tha~ t!aeywant the

stock. Buyingis betterthan the selling.

There is a bulge to 49-3/4and a dip back to 49 where 1300

share~are taken. Than the price snaps straightup to 50-1/4,then

50-3/8. we raise our stop to 48-3/4on both lots. Volumeenoughcomes

in to bring a reaction to 49-5/$but the stockclosesstrongat 50-1/4

within1/4 of its top. Inoreadxqjindicationsof strengthhave led us

to carrythe trade overnight. Our stop is raisedto 49-3/8assuringa

profitof l-5~8if the stop is executedat that exactprice. Of course,

thereis never any assuranceof this,especiallyin a stocklike Allied

ChemicalWhiCki, M the chart shows,has numerousskips,indicatinga market

that is not at all close. The activityof this stock,however,compensates

for this additionalfactorof risk.

Copyright1932 by Richardt).Wyekoff TR SectionCS Page 6

 Allied Ghernicu7
A-L Bottom Of Reaction
dune 2, /932

— —.
5/
Up to 53~ Ju77e 3-- f

50

-— -,-.

T
3 25
620
000/0/0

4t3v

-.
) 00 ,’s Lonfg

Copyright 1932 by Richard D. Wyckoff TR Section CS Page 6-A

 AlliedChmical

At Top of RaUy June 15-16,1932.

On June 10th this stockmade a low of 4“/,then ralliedto

54-1/2cm Jwne Uth, reactedto 50 on June 13th and closedat 53 on

June I-4th.It opensJune 15th at 53-3/4. Our positionis neutral.

The first Mying wave in this stockamountsto 5/8. The next down wave

wipes this all out. Then an up wave of 3/4 and a norml half way dip

of 3/8. ‘l!h@
pictureis bulli~hso far, becausethe stockhas worked

out of its 3/4 point range on the up side. We give an order to buy

smd get it at 54-1/4. Our stop iS 53-1/2.

Next a rally to 5&5/8. The upward wing is not very vigorous.

It is a driftingupward;littlepower under it. The gains are slightand

the volumeis small. Above 55, the formationbecomeshorizontal. A

1/2 point CUP to 54F3/4bringsin a little support;it indicatesauaother

bulge,and the stock runt up to 55-1/2jwith two 900 sharelots at 1/4

and 1/2. On two sales100.55-1/8and 200.54-3/4the stockloses nll the

rally-- n sign of weakness. We must get out on the next bulge. Then

1.200.5570iU/4 200.3/8. We @ve an order to reverseour position

(i.e., C1OSQ out our long commitmentand sail shortan equal quantity,
)

and get 55 for one and 5%1/8 for the other. We place a 5/8 stop at

55-3/4on our shorttrade. The formationis now pointedlike an arrow-

head. The stockhas coma to a balancewith 55-1/8formingthe point.

It shouldpass out of that rangeon the down side,unlessit contra-

dicts its sign of weakness.

The tradingrmgo narrowswhen the stockdips to 54.7/8and

Copyright1932 by RichardD. Wyckoff TR SectionCS Page 7

mllies to 55-1/4, Note the dip of 1/4 point belmw the critical

55-1/8level and tlm ral.~ of only 1/8 above that. This delicate

wile shows that the bnlame of pmmr i~ stillon the down side.

A furtherdip to 54-3~8and l/2 poht rally;then the stock.

sdd.fi at !$4 m two mlo$. It x?all$mtQ 54-9/$;th~ tie$ a trting

rtmgo 54-1/4-5/8. Hem we bting w stop down to 55-1/8(our sell-

ing price)amd carrythe $mde ovmxlght. Havingrd.liedfrom 47 on

200.54the formatiomlmxmes wmdgs-$haped,

with the point around54.,We

bring our @tip down to ~-X/4 as protectionagaimt a rally and this stop

is oxeoutedat 54-1/2- & net profitof 2/8. Now we am neutm+l,aweit-

The ml,ly contixnum to buildup end we watoh to see whetherthe

up swinghas power enoughto go in%o new high ground,above 55-1/2. Two

rallies,the first to 54-7/8ml the secondto X&l/4S =e betiate~

wiped out -- weaknessagain. Mow we look for a chanceto sell on a bulge.

On the next Upwardsurgeit mkec$ 55-114 tigain, tbn reactsquioklyto

54-3/4. Supplyis greaterthsm tm demmd. We put in a short selling

order snd get 5&l./2for %t, Our stop is 55-1/2. The steadydecline

continuesand the stock closeswithinl/8 of the dayts low, tith 500.53-5/8.

WQ bring our stop down to our Bellingprice (54-1/2)and carry the short

The mall sectionof the VerticalLine Chartindicatesthe sub-.

sequmt actianof the stook,which declinadto 43 on June 27. The action

on the two as dmcr$bed in tho Tape ReadingChartwas, therefore,a

fair exampleof a turningpoint for a normalreactionwhioh developed

into a substmtial dQwn swing.

Copyright1992 by RichardD. l?y~koff IT’SectionW Page 8
 ,.4
56 — ‘.

Per 4!ict37 line Chart

##17ied ~hemicu?
S how~ngthe Tip *
At Top c3#’ RuhJ
Detuiled Z3elou.
dune /.5- /6, /932

32 z
 J. I. CASE

Reactionof!darchJJ$,1932.

This stockopens at 37-1/2,declinesto 37 and immedhtely

recoversall but 1/8 of the decline. It then dipo to 37-1/8and the

next sale i~ 37-1/2. All this is an indicationof $Wx@h -- first,

tbo abilityto recover;next, the 3./4Pint dip ad ~.~ recovew to

the openingprice. Thereis more streqgth* weOkn@WOW

W @ long at 37.3./2
with a atop at 36-3/4. A tr~.ding
zone

37-1/2to 3/4 is @stabli#h@d,and after a dip of 1/3, the price moves

up to 37-7/@,1500 being taken there. Another1/8 dip and 1300 mcm

are taken at 37-7/8,followedby a straightrun up on substantial. volume

to 38-3/4. A reactionof 1/8, than one of 1/4; 1/8 rallyand another

dip of 1/4, makinga tradingacme 38-3/8to 3/4. Note the dullnessbe-

tweenU A. M. and noon -- a bcwlsh sign on a rally. As the trading

stringsout to the righton the chart,we find that Q con~iderablevolume

is comingin on this bulge. Adding the transactions

horizontally,
wc

note that 8400 shareschangehanda at tho 38-3/8level and above.

On the first run up we *we movod our stopup to 37-1/8,then

to 37-3/4. Wo now cbngo it to a doublestop at 38-1/4,for if this

8600 share~is not followedup ~ furtherpurchases,we expectthe price

to decline. And if it bxwks even 1/8 below the 38-3/8support,we want

to get out of our long stiock

and go short.

The prico touches38-1/4,which givesus a not profitof 1/4 on

our long stock and puts us shortat that figure. Our stop on the short

tradeis 39.

Copyright1992 by Richard D. Wyckoff TR &@iOKk CS Page 9

 In a t%w mlos nfterthat, the entiregain for the day is lost;

the price touthos37, the low point of the qmning clip. This iS 1-3/4

down from the top and cane for a 7/8 rd.ly; but the rally falls l/8

shortOf half wqy. TM volumeis light-- bowiah. Our stop is first

mowad down to 38-1/&,axM3When the rally beginsto fade out, we make

it 3’?-7/8.F~m thmt timelon,there is a succ~ssionof naw lows and

weak rallie~, We keep movingour stop down -- first to 37-3/8;then to

363/4; Ih%n 36-1/4; then ?5-3/4 and finallyto 354/4. Nothing that

has Mppened $o far has cmumd us any uneasinesson this short sale.

After the 3/4 rally from 3’7, not~ thut the subseqwnt ralliesare as

follows:l/4P3/4, 3#$, l/4fi 1/4, 1/$, 1/8, 1/2, l/4, 1/411/8. NOW

the stookis j&L/4, S@ at that pricewe are 4 pointsto tha good on

paper,with a stop at 35-1/43so at least 3 pointsare assured.

We may’ho smartsmugh to coveron the declinewound 2 P. M.,

or to shoveour Htop down withinl/4 of the bottom$becausewe can’t

expectit to go ri@t on down withouta rally. But the rally of 3/4

to 35 wttrns ua that th~ stickia meetingmore resistance~%low there

and when it ~ps again to 34+’2 we give = order to buy it at the

marketand cancelour #top. We have to pay 35* which give~us a @?oss

profitof 3#& points,or a net of 2-3/4. We standpat for the rest

of the dq.

TR SectionCS Page 10
 AMERICANCAN

Cmblmd with fivo leaders

Juw@ 3.4-15-16-17,
1932.

ThisITapeReadingChmt of AmcmtccnCan is combinedwith a Viave

Chart of’fivo Ieaders@ of which Can is me; the otlmr four am Anncon&,

Gmeral ElecWc, Oemml Motoroand Steel. It is rmmkable how closely

Can f!ctlbws the five leadms. Pmdlapethis is becauseit wa6 at that

the more doWmnt in its marketmovawats than the othersamong the tivu;

but this is just what we am lookingfar — n stock that can bo plotted

wuttha @W $n which the ~&Vf5 (hart aids we in im~qmb$ the Tape

Rmd$ng Gharlj.‘PhuaWQ cm antkaipatethe moves ad trudewith profit

in the one stick.

!h qmning of Can, June 14th,is 200.38-l/8. Them ia a quick

declineof l@ pointsto 37; thm a mlly of l-1/2points,whkch shows

that the greatestpowm in Can is on the W side. The Wave Chart mm-

firm this by’advana$ngusar~ twioe as much as it declinedfrom the open-

ing. Follow@g the straightupming of l-1/2 pointswe expecta decline

of 3/4, but the dip 18 only 5/8 —— a mmfirmuthn of strength.

On Ws dip W* go long at 3$, tith a stop at 36-7/$. WMn the

price goes tq a new high, 38.-5/8,

we move our stopup to 37-5/8. When

aftera l/4 @oint tradingrange,Can touchesthe high point againwith

200 sharesat 38.5/8,we raise the stop to 38-1/8.

A fux!thar
bulge end n new high is made -- 1000.39-1/4. The Wave

mmf$rmed the bullishness,but the down swing from

Charthas hetietofore

that point,tihefourthfor the My, is a littlelongerthan the third

down swing,and we got ready to cell cm the rally,unlensCan goes on

Copyright1932 by RichardD. V~ckoff TR SectionCS Page Xl

throughto a mm high with considerablevoluue.

Can SItOpS agdn with 900.39+4. W+ bring our stop tightUP

under it to 39 and mko it Q doubh stop, &o that whm the pric~ rG-

cedm againm@ .nreout of our long with a gros~profitof 1 point and

are shortat 3$)with Q stop at 39-1/2.

After touching38-7/8, there is Q wcmk rtily to l/8 lower thnn

the previoustop, and the Wmo Chart recordsa fmcticmnll,ylo~7ertop,

whichis a cotiimation that the short sido is the right one.

(Mm d$clinm to 38.1/2,rallies1/4, then bcicks

up to 38. Our

Stop is moved dOWn to 39. The ViaveChart has been bemish, but the

followingral~ in th~ Wave Chartis longerth.m tho previousone, and

th@ dip whimh followsis shorterthan tha previousom. This is our

warningthat d ralil.y
is coming. We cover our shortat the marketand

which is 5/8 gross, or 1/8 not. Added to the previous

get it at 38-~/13,

profitof 1 paht gross,OX’l/2 net, xmhs 5/8 mt profitfor the day.

The olo~ingpniceis 38-1/4.

From now on, we suggestthat studentsuse this comnbimtionchart

for workingout correcttradesbqed on instructionsgiven%n this md

otlm’CM@ SQudiescontainedin this Divisionof the Course. Also that

the rwult of theirpaper tradingbe sent to w in writing so that we can

go over and ci%mkprogress and correcterrors. This will give us both an

opportunityto see wlwthertheseTape ReadingInstructionsand examplesare

being fullyunderstood,and in case of any misconceptj,on

or departurefrom

pmpm pmcedulm, we shallbe able to make corrections.

Copyright1$)32by RichnrdL).Vyokoff
\/
 ‘“, --%

--4 . .

$?
ii
8
4?8