Richard D Wyckoff

405 Pages·2012·3.16 MB·English

CONTENTS

Sect. Page
How to Proceed A-B
Foreword 1M 1-2
Basic Law 2M 1-4
Judging the Market by Its Own Action 3M 1-4
Forms of Charts 4M 1-27
Buying and Selling Waves 5M 1-3
Chart Records 6M 1-4
Determining the Trend of the Market - Composite. Averages 7M 1-35
Comparing Strength and Weakness - Group Averages 8M 1-25
How a Campaign is Conducted - Individual- Chart Studies - Part I 9M 1-10
How the Operator's Intentions may be Detected - Chart Studies II 10M 1-13
Figure Charts - Individual Chart Studies - Part III 11M 1-13
Figure Chart Studies - Individual Stocks - Part IV 12M 1-9
Figure Charts - N. Y. Times Average - Chart Studies Part V 13M 1-10
Market Technique - Volume Studies 14M 1-14
Significance of Trend Lines 15M 1-20
Vertical Line Charts - Chart Studies Part VI 16M 1-34
Vertical Line Charts - Chart Studies Part VII 17M 1-26
Selecting the Best Stocks - Position Sheet - Barometer 18M 1-19
How to Determine the Position of an Individual Stock 19M 1-14
Buying and Selling Tests 20M 1-7
Refinements 21M 1-10
The Wave Chart 22M 1-39
Stop Orders 23W 1-17
General Instructions - Cautionary Suggestions 24M 1-18
Market Philosophy - Cautionary Suggestions (Cont.) 25M 1-11
Addenda A1-A7
HOW TO PROCEED WITH THE STUDY OF THE
RICHARD D. WYCKOFF COURSE OF INSTRUCTION

The following is recommended as a plan of study which should facilitate
your progress and enable you to get the most out of this Instruction:

1. Read through the entire Course casually without attempting to study any
part of it. YOU will find numerous cross-references in the text. Disregard
these for the present. Let your, first casual reading be for the purpose of
gaining a general idea of the scope and presentation of the subject matter.

2. Read through the entire Course a second time, again, ignoring the cross-
references. This time, weigh the meaning of each paragraph more care-
fully, but do not attempt to dwell upon any part or section for more than
a few minutes yet. Let the purpose of this second reading merely be to
impress upon your mind more firmly the ideas you absorb as you go
along.

If necessary, read the whole Course through a third time before you begin
to concentrate on any particular part. By these repeated readings you will
find that your memory will retain more firmly the ideas that are
presented in each section. Then, when you do begin to study and analyze
each paragraph intensively, you will have a clear understanding of the
way in which the various parts, fit into, the complete philosophy of this
Instruction.

Bear in mind that everything in the Course is important. Nothing is
superficial. Do not neglect those sections which are necessarily shorter,
than others. Every paragraph is as much an integral part of the Course
as any other paragraph.

3. On your second or third reading, mark any paragraphs that may not be
clear to you.

4. Now study carefully Sections 4M and 6M and practice making vertical line
and figure charts, as explained in Section 4M, until you are sure that you
understand how to construct them properly. Should you have any dif-
ficulty or doubts concerning the method of making the 1 or 3 point figure
charts or the vertical charts, consult our Coaching Staff — that is send us
samples of the charts you have made in accordance with your un-
derstanding of the instructions and we shall be glad to check your work.

5. Next, study and analyze carefully Sections 5M to 25M, inclusive, again
marking any portions of the text which may not be clear to you. Make full
use of all cross-references and - footnotes as you go along. .The cross-
references are indicated thus: "Sect. —, Pg. —, Par. —,” which means that
when you come to one of - these references you should turn to the
Indicated section, page and paragraph and study it in conjunction with the
text in the part of the Course where you are at the moment. Note that
paragraph one begins on any given page, with the first indentation on
that page.

For instance, turn to Page 2, Section 3M. Paragraph 1 begins with the

Copyright 1937 by Wyckoff Associates, Inc. Page A
fifth line from the top of the page, which reads "No one can deny, etc.";
Paragraph 2 begins with the words "Tape Reading and Chart Reading,
etc." The first four lines on the top of the page are the run-over from
paragraph 5 on the preceding page.

In all cases where charts are discussed, follow the instructions given in
Section 7M (Pg. 2, Par. 3) for studying them alongside of the reading
matter in the Course.

6. Review the portions of the text you may have marked as suggested in
items 3 and 5, above. If you still find that you do not understand them,
send us a list of these questions (referring to the proper section, page
and paragraph number) and any other questions, that I are puzzling
you, so we may clear up your difficulties.

7. Next, practice making up a Position Sheet and the Technical Position
Barometer, consulting freely the instructions contained in Sections 18M
and 19M.

8. You will now be ready to test your ability to apply the principles you
have learned from this Course by making a series of paper trades.

9. After you have completed the above steps, one by one, if you have troub-
le, in applying any of the principles, or if your paper trades do not de-
velop according to expectations, you are urged to select a paper trade,
that illustrates your difficulty and submit it to us. Be sure to include a
statement showing when and at what price you bought or sold; where
you placed your stop, the technical position of the stock as you
understood it at the time you entered the trade; and an outline of the
reasoning you employed in arriving at your decision to make the trade.

10. It will be advisable also for you to send us copies of your Position
Sheets and Records of Paper Trades for review and criticism. Please use
the short forms of these records which are furnished you for the
purpose of securing this additional instruction. Do not fail to accompany
these records with full outline of your own reasons for your decisions.

11. As you gain proficiency in the application of this Instruction and ac-
quire experience in the interpretation of market action, you will find an
occasional review of your Course extremely beneficial. As your
knowledge of stock market technique increases, your Course will acquire
increasing value as a reference work. Therefore, do not lay it away —
but consult it often. It not only will refresh your memory of vital
principles, but by constant review will awaken you to the discovery of
refinements and principles that may have escaped your notice on earlier
occasions.

Copyright 1937 by Wyckoff Associates, Inc. Page B
WARNING

Every paragraph - every line – in
this Course is vital - it was put for a
very definite purpose.

Do not neglect any part of it and
do not attempt to operate in the market
by this Method until you have
thoroughly learned the whole of it.
FOREWORD

This is a method of judging the stock market by its own action.
It is intended for investors as well as for traders.
It has been planned and prepared for those who desire to safeguard their
investment capital against, and to make money from, the fluctuations in the
priced of stocks dealt in on the New York Stock Exchange or any other organized
exchange.
It is applicable as well to bonds, preferred stocks and the leading com-
modity markets.
Anyone who buys or sells a stock, a bond or a commodity for profit is
speculating if he employs intelligent foresight.
If he does not, he is gambling.
Your purpose should be to become intelligent, scientific and successful
investor and trader.
This Method is for those who have had either little or no experience
operating in the stock market, or for those who have had much experience but
who have never been shown the real rules of the game.
Out of the very limited number who really understand the inner workings
of the stock market, practically no one has been willing to show the public the
real inside. I believe it is time for someone to step forward and do this.
The appalling losses, in securities, suffered annually by millions of people,
are enough to make the angels weep.
These losses are the direct result of stock market plunging by people,
most of whom do not realize what they are risking, and who have an amazingly
small knowledge of the market.
That the American public needs help in its security market operations
there can be no question. I believe the best way to help people is to show
Copyright 1931 by Wyckoff Associates, Inc. Section 1M Page 1
them how to help themselves; and so I am here offering the cream of what I have
learned in forty years of active experience in Wall Street.
By the methods herein explained, I have made a great deal of money for
myself and my clients and subscribers who numbered in excess of 200,000. By
making this available to those who desire to learn the business or trading and
investing in stocks — for it is a business just like law, medicine, or any other — I
hope to be of still greater service, not only to my former patrons, but to others
who have not had an opportunity to invest under favorable conditions.
After you have learned this Method, you can devote half an hour, an
hour, all day or as much time, as you like, to forecasting the market, selecting
the best stocks in which to make commitments and the best time to buy and sell.
You can learn from this how to develop independent judgment, so that you
need never ask anyone's opinion or listen to anyone's tips, or take anybody's
advice. You can so train your judgment that you will know just what to do and
when to do it. When you are in doubt you will do nothing.
I do not claim that you can be invariably right. No one could. What I aim
to do is to show you how to be right in the majority of instances. This will require
close study and self-training on your part.
I will teach you how to read the market from your daily newspaper; from
the tape of the stock ticker; from your charts, or any or all combined.
I will teach you to plan your stock market campaigns just as a general
plans his battles.
Copyright 1931 by Wyckoff Associates, Inc. Section 1M Page 2
THE BASIC LAW OF SUPPLY AND DEMAND

I had been in Wall Street 20 years when I discovered that it was possible to
judge the future course of the market by its own action. In my book, "Wall Street
Ventures and Adventures Through Forty Years" (pg. 168) I stated my experience
and observations in 1909 as follows:
"I saw more and more that the action of .stocks reflected the plans and
purposes of those who dominated them. I began to see possibilities of judging from
the very tape what these master minds were doing. My editorial work was proving
a most valuable means of self-education. In gathering material that would benefit
my readers, I was actively searching out the stuff that would aid me personally.
While my subscribers were given the best of what I collected, there was much in
material discarded which helped to build up what I might call a code of enlightened
procedure for use in this greatest of all the world's games.
"I had a friend who had been a member of the Exchange and who was well
up on the technique of the market from the standpoint of the floor trader. We
often discussed the difference between reading the tape simply to follow price
changes (as most clients did) and reading the tape in order to judge the probable
action of stocks in the immediate future.
"Starting from the simple ground that the logical, action of a stock was to
decline when offerings exceeded the number of shares bid for and to advance when
the amount bid for was greater than the amount offered, we agreed that the
quantity or volume of stock changing hands in each succeeding transaction was of
great importance. Anyone who undertook to read the minds of the momentary buy-
ers and sellers was able to measure, to a certain degree, their eagerness or anxiety
to buy or sell; also to measure the force of the buying power or selling power as
shown by the number of shares; and to judge of the purpose behind the action,
Copyright 1931 by Richard D. Wyckoff Section 2M Page 1
whether it was to buy without advancing the price, or to force the price up, or to
mark it down, or to discourage buying or selling by others, as the case might be.
"Each transaction carried with it certain evidence, although it was not
always possible to interpret that evidence. All stocks no matter by whom they
were owned, bought or sold, looked alike on the tape. But the purposes behind this
buying and this selling were different and these might be fairly clear to those who
understood market psychology.
"Each transaction, although recorded only once, represented a meeting of
minds; those of a buyer and a seller. This meeting of minds took place at a certain
post on the floor of the Stock Exchange, even though the buyer might be in the far
west and the seller in Europe.
"Not all transactions were significant, but the interpreter must detect those
which were. He must see that some indicated a purpose. Some one or some group
was carrying, or attempting to carry, something through. He must take advantage
of that."
Continuing my studies of the tape, I realized, that the Basic Law of Supply
and Demand governed all price changes; that the best indicator of the future
course of the market was the relation of supply to demand.
The Law of Supply and Demand operates in all markets in every part of the
world. When demand exceeds supply, prices rise, and when supply is greater than
demand, prices decline. This is true not only of stocks; it is constantly being
demonstrated in markets for wheat, com, cotton, sugar and every other commodity
that is bought and sold; also in other markets such as real estate, labor, etc.
I demonstrated this further in a series of articles entitled: "Studies in Tape
Reading" which attracted wide attention as the first of their kind ever published
anywhere, so far as I knew.
My basic idea in this series was that the stock market, by its own action,
Copyright 1931 by Richard D. Wyckoff Section 2M Page 2