.

Division 2
,

..

2
9
.

di
-3

A COURSE OF INSTRUCTION

\ .

IN
TAPE READING AND ACTIVE TRADING
j . ^

C O P Y R I G H T 1932

R ICHARD

D. WYCKOFF, ON E

Niw York.

4
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TABLEOF CONTENTS
P
-

~.

INTRODUCTION

2
2

1
3
4-A

JUDGINGTHE IMMEDIATETRl#fD
Buyingand SellingWaves
Wave Chart of the Leaders

2-A

BUYINGAND SELLINGWAVES - PART II

1-A

HOW TO LINK THE WAVE CHARTWITH THE STOCK IN WHICHYOU

TRADING
A VerticalLine Chart and ContinuousLine Chart

4
4

1
3-A

TRM)INGAREASAND HOW TO PROFITBY THNM

TradingArea of AuburnMotors

5
5

1
8-A

THE TAPE READINGCHART

Tape ReadingChart of J. 1. Case

iWE

HOW TO SPOT THE BUYING AND SELLING POINTS WITHIN A SMALL

FRACTION

JUDGINGSTR$NGTHOR.W3AKNESS

HOWTO KEEP PERCENTiiGEIN YOUR FAVOR

TRADINGON INITIALACTIVITY

10

mGING

11

THE BEST STOCKSFOR ACTIVETRAI)lNG

12
12
12
12
12
1:
12
12
12
1$?
12
12
12
12
12

1
2
~
3
4
4
4
5
6
7
8
9
9

STOP ORDERSAND OTHERVITAL POINTS

Jud@ng XQur Ftficimcy
Tradingin UniformLots
Dow-Jone$Averagefl
Tradingon Paper
Tradeat the Market
Put a Time Limit cm Your Trades
Qualifications
of a SuccessfulSpeculator
lhvmrAsk Advice
Fallacyof Averaging
CapitalRaquired
How Prc)fits
Accumulate
Where to Trade
Choiceot Brokers
Studyyour Losses

10
11

THE MARKETBY TESTSAND RESPONSES

Copyright1934 by RichardD. Wyckoff,Inc.

SEC.

P.

12

12

Cs

1
1

w
Cs
Cs
Cs
Cs
Cs

3
5
7
1?

PractiaePersistently
CHARTSTUDIES

Amwriad Telephoneat Bottomof Reaction

AmericanTelephoneat Top of Rally
AlliedChmical at Bottomof Reaction
Allied Chmicd at Top of ~ly
J. 1. (laseat Bottomof Reaction
AmericanCan Combinedwith Five Leaders

SUMMARYOFTHE RICHARD D. WUXOFF

00URSEIOFINSTRUCTIONIN TAPE READINGAND ACTIVE TRADING.

J@du Ction.
section1.

Generalprimiples involvedin tradingto take advantageof

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 selectionofstocksthat 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
#Mlrt
section3.

How to employthe barometricquality of the Wave Chartin

judgingthe trend of the individualstockwhordnyou are
trading.
How to operatein harmonywith the Law of Supplyand Dwand.

Trading
&QML%
section4.

The general significanceof c,tradingarea and the exceptional tradingopportunities

it may offer.
How to judgewhethera stockin a tradingarea becomes
b~~ ish OXbearish.
How to decidewhen to trade close to the dangerline with
relativelysmallrisk.

Tane Reading
gi&$.i&

~.

Correlationof price movement,volumeand time.

How to interpretthe fractionalprice changesand the variationsin 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
EQJFJdU

How to so~.tthe buyingand sellinglevelswithina small

fraction.

Section6.

How the marketis _nun&y

who COIlgoad the ~
a
HoW to avoid over$tx
How to WQ

MD Y@+lra

Eivinrinformatia~to those

the market.
d what to do at the turningpoints.

Recognizingthe evidencesof technicalstrengthor weakness.

iiwmiml

Whet constitutesa normalrally or rco.ction,

and why.

or

Section7.
How you may @NelQn Your jUMment so thnt accumulatingsymptoms
of strengthor weaknessbecomerecordsof subconsciousmemory
rad resultingd~ciaons are Vhtud.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.
S63ction
9.
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 benefit of the large operators tests of the marketsstrength.
Lines of resistane
e; how to recoznize them and profit
o..ccordingly.
How to observewhen the marketis in an overbou~htor oversold
condition.
How to recognize evidenceof manipul~tion.
The significnncc
of the marketsresponseto news items having
the elementof surprise.

Best Stocks

How to selectthe best stocksfor fictive

trading.

For Active

Trading,
Section11.

Recognitionof changingleadership.
The importanceof uverngeprice r:mge md
flo:~tingsupply.

Copyright1932 by Ri.chmd D, Wyckoff

its relutionto

-3-

The advantage of familio.ritywith the chief characteristics

of leadingj active issues.
Use of
Stop Orders.
Section 12.

HOW and when to use stop orders.

The scientific location and road.jus+,ment
of stop orders.
Substitutes for stop orders.

Miscellaneous
Vital Points.
Section 12.

Judging your efficiency.

Consistent trading policies.
hlh?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
Studies.

Tape reading charts of leading active stocks and tP.eir

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 Division, 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 days session.

We instructsuch tradershow to followthese trends,changing
or reversingtheirpositionsas often as the marketaffordstradingopportunities.
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
Copyright1932 by RichardD. Wyckoff

that

are Lik@y to occur

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 reverseonesopinionquickly;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 usuallylimited to hours. They are intended

to take advantage of the small,imm@i-

ate fluctuations.

with this Method you, as a trader,

(andwork for your profithare and ~--

search for your opportunit.ies

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

your judgmentis unbiasedby reasonof your

is clearfor new impressions;
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
ical. moment for noving stops,
the market price

for the psycholog-

closingtrades or crowding stops so close

to

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 requirementsof 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 Reading 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 poGition 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 lcmgerswingplan will materiallyenhancethe profitpossibilities
in both Divisionsof 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 buying 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 indicated,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 exhaustitself.When it smns to stop,put u dot on the chartat the
propertime and price leval. Xf the marketthen reverms
tion

this

prows

that

tiw

its

direc-

po$$tionof the dot is correct. If it goes

on in the sa@@ direction,chmmgethe dot until the movementagain hesitatesand 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 judging 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 immediate 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
position. IhUther
detailsare on thQ chart,Page 4-A.
Rmmber

market-- d.thar

you have nothingto do with the other trendsof the

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 .anentirelydifforent
proposition,reqwiringless time and attention,
Copyright1932 by Rial%mxl
D. Wyakoff

l% Sect&on2 Page 2

but havh$

uatmg 2 m
Wtv$eC1kmrt
AJtht$qgh the buying

or

tlm

mmdag

WLWQB &ay

$nmic$snt

on

certaindays to carry the marketin e certaindirectionuntil th~ close,

this does not man that it

will

eontimm

do%n not fnmn that yOU $hotidWLmy any

Tomorrowf

trendwill dofim

to

dc so the next day. And it

tmdtxi

overnightfor this

its~f in the same W~.

rmwn.

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
volm

swing,$mlicated~ increasingactivityand

in a @ten direction~with scamdy

ralb$ or reac$im$ ZM the mm

any pointsof llesitntion,

or

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 instructiOXiS,

and lmg#!profitsshouldrm~t.
The Wawo Chart twdwm

a while,you ~

not need it.

Tape Reading. Afteryou have used it for

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.

***

Tho five leaders$hculdalwaysbe repr~sentative

of tho market.
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-

smwingtho 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 fcxmr

shouldba r@l.acedand that the Iattw is the real leader. Apply this
roason$ngin Ice@ping your fivm leaders
all

amcmg tho most reprosmtative

of

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 inactiveto 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 substitutedfor 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 buying and sellingwave, and comparf.i.tive supportor pressure. The following 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 promptlyfollowed 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 attract a following,as shownby the failure
<
of activityto increase. Demandpeters

Fl
335

FIG.1

340

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

dip in the fourthperiodbringsout very
littlestock on the downside,however,and
thisencouragesthe bulls to try again.
Qncc more they fail to attrscta following. 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 maneuver meetsno bettorsuccess. Activityfails to increaseon the downside, 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 prepare 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 considered the Wave Chartisusefulnessprimarilyfrom the standpointof shortswing 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.

b-----+

ONE POINT FIGURE CHART OF FIVE

SENSITIVE
LEADERS

------+

(AuGuST

28

tO

NovEM6EfI

I------

xx

x
x
x

xx

fv

:Xx
xx
x

46
15
%x
x
Xxxx
x
%s
xx

%X*

Xxxx
xxx
x Ig)x
Xxx
m w 4{5
,

xx

xx

xx
%x

Xxxxxxzx

xx
xxx%

II
p,

xx
xx
4X?

Xx xxx

xxxxxxxxx@x
XXxx%
xxx

4io10KMoti

n
XYX

LINE

9X

SUPPLY

l-c-d

B------+

9,1933)

xxx

xx
XK
PPLY

RALLY W3?$AL COI+?Nl$?E@ ~y

INCPEASiMG VOLuME
ON
2REAK T H,R9UGH .

./

SUPPORT

STRENGTH

LINE
iiOLl)

\T~

A ZONbF

SUPPLY:

WEAKNE5S
ON

FiERVY

(5EE

B - ZONE osSUPPLY:
G-QUCK

UPWARD

WERKNESS

OF

THRIJs
MARKETS

IN CMCP.TED BY iNABiLITY
vOLUME

cONTINUOUs

SE L. {NG

S%NALS

TO

TO A13som

131
M! N!31-+ING

LliW
SZT

ch4TCH

bJH&F-

LINE PENETRArEO

CHART
by

PAGE

INAB}LITY

SHORTS,

FC51TION

ACT\VITy

or+

TO

bRIEF

AFTEP.

Of fERINGS
ON

FOR

:UCCESSIW

wuGER

@LIflNG

INDKATED

Established

DWELopM~NT

Of

SECOND
p~,~..,.

A_f PREVIOUS

fW4GE

TIME

OFFER!NGS
CF RALLY

D\ Sr RI EWT@N

AT

To
A

AT

RESISTANCE

7HIRD
AND b

LOWER

TO

(b)
FOR

SUPPORT

OF JuLY

CRITICAL

TOP

LINE

TCI PRESWIRE
CRITICAL

Tops;

f~wfw

%3

W/3VES.

PREVIOUS

8} (Q) fWiLITY

SUPPORT

DETAIL)

fiBSORB

DURATION

JUST

ABOVE

3UPPLY

EMPHASIZES

LEVEL.

IN CREP.5WG

ff*KE

PR12GREss

n+

xx
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.-.
xx
x

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x
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x

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$5

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xx

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xx
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B%xx xxx
xx24xx@J
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++++1

1-

SUPPLY

wEAKNEsS

1
TO RRLLY FoLLY
LIM

STRESSES

AND

CANCELfj

uP TO
EXISTING
TENTATlvE

I NIX CI+%YION AT

F,

E
I

TO l) EVELOP

G----+

I
FAiLURE

BULLISH

x
!NABtlJTY

I-----

:60

xxx

MUYMQG

390

POWER

SUPPORT

Al

LEVEL

PREVIOUS
GIvES

x
x

3%?3
Xxn

(JJ

xx

xx

x
379X%

xxx
L

D 6 E precipitate

PACE OF OECLINE

PROWJ(XS

SUBSEQUENT

%ALLtES INDICATED

F-

PRELIPINWRY

~ -

SWPORT

8Y FAILURE

SUPPORT.

wvELOPS

CORREcT}VE
TO REACH

TWTATIVE

LEVEL - SU5SC@JEWLY

VVER-30L0
RALLIES

CoNDITKW

.TECHNKAL.

S!JPPLY t.l~t

Ii

OF THESE

x
lEsTA8LiSt+ED

BASE FORMf F+G. CQWARE

CONFIRMED

Ah10

CHARACTER

BY RtSE THROUGH

WITH

AT

:x

lxx

417 AND 409.

t.JAFtROWER FORfIATION

SUPPLY LINE AT

372,

AT 375.
h

l?-

-.
x

xx

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XXxx
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Xxxxx,xxxx
lx
x
xxxxxx@

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-*

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LINE

SKiF4AL :

PENETRATED

SUPPORT
.

PENETRATION

xxx
Xx%x

3s 5ss

SMALL

FRACTION

AND

~:,NiTuRtoF
0?4

LIGHT

vCJLUI% INDICATES

PURELY

Xx:(gt

x
x

xx
--aLXxxxxx%i

x
Xx

35$s5s.s5.5
xx

ii

x
xx x
xxx
\

xx

xx

xx

.%s45

xx

H-

ZC)W

OF SUpPORT

COMPARE

WIDTH

JNEFFECTlVE

OF FORMATION

SUPPORT

LEVELS

WtTH

Q*

xx
%

P@ EV~OUS

AT G AND F .

xx
% xxx
x

xx
xxx

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J3
8

63
k-i

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xxx

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x

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LINE @

-,@

BY DRAdiNG

933

[ -

STEEP

FITCH OF RISE

J -

INIL17Y

( -

SUPPORT

70

RESUME

APPEARING

CREATES

OVER - 60WSPT

ADVAhJCE

Ri50vE

( SEE PAGE

AFTER

PREVIOUS
IO FOR

CONDITION,
iNIXJC!NG 30%{ NORMAL) TECHNICAL
REACTION
NORMAL
CORRECTIVE
REACTIOF+
lNDtCATES
WEAKNESS.

330-335

cONTifVUOus

8ASE
LINE

CONST?7UTES

CHART

OF

ACTION

BULLISH
AT

THfs

SIGNAL
POINT.

AND
)

SPREADS

W5

TO 350

OR{ GINAL

xxx
3i5mmXY

xx
xx
x.x

345

xxx
xxx

xx
xx
Xxxx

X63XX
Jcx xxx
%xXx
5a

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XXX

f+xx$xx
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xxx

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xxx

BASE

)(
/

)
x:

--

FRI. ALJ~.2.~

390
flo14.
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
FTz
1

TUES.OCT.31,

1933

THLJR. NOV2,1933
I

WE D.NCIV. I, J933

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 depend 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 manipulation. 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

A VERTICAL LINE CHART

and
A CONTINUOUSLINE CHART

?s

may
Copyright

volume

in Thousands

of shares

June
1932 by

~Ch&rd

D. Wyokoff

TR Section

Page 1 A

for studyor @real practim, plot its moves on the

WMtlm
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
YOU

th

trend as slum on tho Wave Chart.

find that $t is d$##@@m~its trend -Ctly

iwy

averagm ckwqe.
and add. it.

imwlievte

when ti

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

But you may fiudit is working exactly tha @ppo@it@:

wham the Wave Chart turnsupwardyour stookmy begin to get weak.

Trti@ acmmdimlgky.Or you q
kming

olwmm

that your 6tcmkraacbeaits

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
studyand praaticeyou put inta it.
is the WO-@
a moving

out of the h3W

Of

*PP*

Mm

?lhwtyou see on tha Wave Chart

and Demand. fk$t(?=

~S

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

this very purpose-- to help Y($U @

tape.

cm the amuuntof

tallRo$t

~~fit~

QUt of **~

of yoqr Opportmiti!m.

TR $eetion3 Page 2

TRADINGAREASAND MOWTO FROFZTBY THEN.

From observationyou know how ofton stocksget into periods
of murow 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,intermediateor 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 prevailing trend. Your individualstock chart should.
also show the volumeof
the day?s tradingin that stock,50 that you may observewhetherthis
volumeinwemawsor 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 trading 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 presenttrading 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 movements plottedon the !&we Chart,and in connectionwith its location

Copyright3932 by Riahmd D. Wyckoi3?

TR SQctlon& Page 2

in

area.

it#3 trading

lf

it

it3 0-

b@tVJW#Ek

30

@Ud

35 ~

ShC@d

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

m it n8arS 35.

30, and its su~

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
WaveCkrt,

inticati

ax@ on the Tapa Ramiing Chart referred

know, when a atmk appmacbw

rangs vkthar,

this

poaition

you have all

frm

by the action of your atmk on the

until

time,

to above.

the upper or lower level$

it will

go on through;

the fmts

awmmbhd,

You nevar

d a trading

so you do not take a

i.Q.,

transferred

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

Copyright
19$52
by RichardD. Wyckoff

~UfVE

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,

duced q

bwt

as I developedeffioimcy
in this art, I graduallyre-

notm and chartsto a minim,

wheneverI found sim@ifica-

tim possible.
It &$ one thing to learn to read the tape and to develop
md intuition,and another to teachother

therefromonors $@mnt

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

dmwibed

bdOW.

This Chart CQIUIXLIMW

the three
Vohm

wkttil

fttctow

PriceMovexmmt,

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

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

tions;the valumeof-a;

and

retac-

the progressof the advancesand de-

cldmm?;the proportionof tha ralliesad rmotdms to previousswings)

the lines
M6MUM

of!

mpply and dmand; the best locationfor stop orders;the

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
oblomgin
(33p&i#rt

kept

on

a sheetof cross ewtion paper. If this be

-- of th five leadersand of a
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
haders.

five

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 explacations. 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
#are

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

if that spacesabove or below,be filled,you make the

Cohmn.

But

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$ctsale is 100 at 40-1/4. As thcxwwere no salesat 40-1/8,
a cipheris enteredat the 40-1/8level,and the figure1 is enteredon
tha 40-1/4I.inB.Now you have three figuresin the first column 9 on
the 40 level;O on the 1/8 level and 1 on the 1/4 level.
The nsdctsale is 40-1/8,only 100 shares;next 200 at 40. These
two figuresmust go in the secondcolumnas the first column5.sfilled
on those two levels;next sale 40-1/8 (100);then 200 at 40-3/8 (O on the
40-1./4
level);then 100 at 1/2; no salesat 5/8; a totnl of 2100 at 40-3/4;
none at i$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 ofthis 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 JaKNWY19, 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

stock

the

sham a tendency.

Wave Chart sow

wait until

after

tlds

Let us as~ume that the indications

opining

the stock itself

were bullish,

but that we wish to

has givsn some sign of a definite

There may be an opening bu%ge M.rt this

may not be its

00 we shall

are definilm

wsit until

the indications

on the

tendency.

true direction,
enough to promise

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

it

is

best not to go into

points.

a trade that dots not promisethree to five

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 before 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 sheett the right. In this way there is 10ss temdamcy
on the chart.
to form judgmqptson the basis of what alreadyap~)ears
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-at @-1/~; 100 at l/8;

200 at 40; 100 at 40-1/8;

at 40-1/2;

of 2,100 at 40-3/4.

4=/4;

and a total

200 at &3/8

-.

R rise of 1-3/8

the

tape

shows 100

200 at 40-3/8;

100

Then 200 at &l; 200 at .

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
Comght

1932 by Richard

D. Wyckoff

for overhead.

TR Section5 Pago 4

Next the tape records

10(3 at &l-1/8

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

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,making@

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. Wyckdf

TR Section5 Page 5

So far the rise

400 at &b3/8.

is

checked. Tk pool or someoneis

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

and

followingthe bulge from

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

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
lose opportunities,
becausethere are plentyof them, than to be so eager
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.

W

The stockis heavy.

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
-

w a

m _

Q M

-- decreasingvolumeon the rally.

~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 several 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

foxit, folkowedby 100 at @-7/8.

at &l/8

The l/4 point rallywhich follows

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 substantiallots 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
days 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 interpretations

of 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
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$nuallygivinginformationas to its technical.position. It does this throughthe Wave Chart,which fdrmsyour
background,and forecaststho immediatetrend. It givesfurtherinformationas to the particularstockin which you are tradingif you
will plot a Wave Chart of that stockon the sane sheetwith tha Wave
Chart of the five leadingstocks. In additionto the above,you get
all the littledetailoif you will keep the Tape ReadingChart of that
stockon the same sheetas the two Wave Charts. With these threeand
your eye on the tape you am well equipped.
Thus fortifiedtherewill be no reasonto buy on bulgesand
sell on wmk spots;for$ in this form of trading,theseare not opportunities

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

1R
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 trading in, almo the Tape ReadingChart for volumes,comparativestrengthor
weakmss, and 41 the other technicalpointsmentionedin chartinterpretation. Learn to combineall thesevariousLndicationainto a sound

Copyright1932 by Fu.cmrd D. Wycdmff

Ill
Seetion6

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 selling 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. (Seeillustrationsin 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 pyramidingand 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. ?@kdf

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 halfway point

as a sort of measuring stick,

we can really

derivean advantage

This is provenby the numerousexamplesexplainedin the text acccmqmnying our Tape RaadingCharts.
Other signswhich may be includedunder this head are those extreme 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
were willing

co-t

starting

point

by offering

more shares than the buyers

tO accept.

%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?
,.,
are in a comparatively
strongpodtion.

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 practice. 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 intuition;

so that

psycholckgiml

after a whileyou wLLl get the pulse of the marketand the

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. Wyckoff

TRs&?ctiom7 Page 2

MM TO KEEP A PEWEMTAGEIN YOURFAVOR.

This is accomplishedchieflythroughthe IMtation, reducticm 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 prospectiveprofitby placingstop Orders1/2 to 1 point awey;but %fyou
shouldfail to use these stopsin the way indicated,you are positively 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.
Iiyour 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 activetradinginvolvosbuying 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,statistic; snd that we are tradingon the basis of stockmarkettechnique
which has its rootsin th~ law of suppQ and demand,the only real fundamental

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. Iithe high and low pricesare on the quotationboardbefore 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. lhis
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

sup$dy m dummd or that its t$dkmiml positionis suchthat

MlLwrm

theyWlleve theyc-an
moveAt to aao4#mxMval ad realisea profit.
You, thereforq,hop m
glnm%ng

the Imve.

th@ etm!kmd Ad% along with whoever

l!hw

iS en-

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$m to see that he is not makinga falsemove %n
the appositedirectiontowmd whid he intendsto melm his P*.
ia$ he may be pl-

a down wing,

eo M

first

That

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

stockhc can find aroundthe 2017 kvel.

Hence

all the

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 bearing it, ae the case my be) d
startedit,

your

raullygoes on with the deal the my he

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
the bottom

aide below

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

lad rdly$ until the timo uppmmlm

Watchjnmr !l%p Re_g
lmdera to mako sure *

-t,

for 404ng
W

the trade.

watch th@ trend of the five

we not iticatimg a turningpdnt in the dayss

MmYri$kt 1932 by lMh@rd D. WyckMf

&3CtiiO13 9

pA&i

thn

Iwy bwk

again

WMIMWlws on the

Y@lM!Im3aom

ttw

th$m *8 that

the

thwl

to

Cmb

on the d@Nrmry,ho wi2Aprdtdity

a~

buy h

@W his

C)permtor

will probably

not

con-

faaaof indlomt$ons
thatthemarketis about to sell

#tQok

a suddan6*;

do just what I am tailingym

themsell.
Out sll he Carl80 86 to

ZW3UW Ms line and thus providepurohming poworaroundthe low point

of

tha! Ooming dip.

Reading

Cha?t

You follow hi$

IM3W8

closdy and when your Tape

#!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,
@

$n

You must

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

for tradingopportunities
on initialc&Av-

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

~ine ChWtS
This does not moanthatyou willhaw to make the dmily
Qntriea

on a

large

rmmbn

yartmlf

al?

through

your .cmim?mt,

foryow

TR$$wlwm9

lhgs4

JUDGINGTHE WIKE1BY TEGTSAND RESPONSES.

he tmtw

Next
gat~

out Steel,

Tdepbne

or Can in tho sam

my.

He

some foULowingin Cam, a littlein Telephoneand nothiiig

much in

Stiel. Them he triesout the utikL~ groupand gets a Mttie more emcourqp#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

his way; Sonmlne

elm

am

40

that.

followed~

StO&@

I?hi&h

standin

He advamcss$ha ones that are easi-

est to put up while requitingthe mnlhst

a while the mnallMl&s

Of

purchmes on MS part. After

which he has producedW MS testingopmations,

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
Ho
ho cxin

to take theirplaces. Demandhas shrunk.

rlOQ#SU@i$?Y

WiWtWcX

the marketwill take;hc

WIUS

fill

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 raisingbuyinglimits. 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

Copyright

1932 byl?iiahwd

l?. Wyckoff

technically

known as Itsold out!!

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

buyersthat the C. O. is
his

stocks;

long

able

SO

WUIY

stocksand broughtin so many

not otily to unloadeverylust shareof

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
levc+ls,
whiah causesthe publicto say: The nverugcsare up into Q new
high. We shouldbuy xnora.
Meanwhile

prices

he has been sellingso many other ntocksthat their

are tmgging under the weight.

He keeps on selling,gettingout

he is adding
of the ones he bid up, and gettingshort of thornalso. No~j~
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 buyersexcept 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, paying 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 Page5
b

what is goingon under the mrfsce in the stocksmrket. There is no

Compos$teOperator,but tha effectof the cmdxknedoperationsof bankers$ pools,la#$eopmators,floor

tradersand the pub~c is$ when

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

one mens Oparhtiowl$.
It is importentthat you observethe marketfrom
this standpoint,end that your tradingoperationsare based,not on what
you formerlyNgarded as t~ marketlscharacteristics
but on the ftuxk
meuatal
law of @upplyand dmemd$ 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$creproductionof the sesm Iaw$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,groupsreprasemtingindustries,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@

Allied

stockswere heavy.

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,

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@Lcationswhichwst people owerlookad. you
to be hi@ly observant.

copyright1932 ~lMLdWd D. V@dWMf

CSll

dO

the Sm%

Whi31!l YOU

learn

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
guaranteetMt 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 purpose, 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 fiveor

ton leadersn$arked
with a black or coloredpencil.
Leadershipis constantlychanging. Past rtico~ds
aro no guarsntee far ths future. It is best to take offa list of the leaderseach
week in order to hmne them beforeyou for the comingweek but this is
only your background. Tha tape will constantlyt~ll you which stocks
are affordin~the best tradingopportunities.Of coursethere are many
stocksout$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

2-5/8

l-3//4

l-3/4

klpril

2-3/4

2-3/8

1-1/2

May

2-1/4

2-3/8

l-7/8

L-718

1-3/8

June

u&%!Q

-Ma

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 consideredan 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 periods 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@rous 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 marketwhip1frequently-- 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,
permmtige of 3 to 5 point swingsis worthwh?l.le.
After

In a word, 1
the tinder 1toks

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
I&)

Auburn

111

72

Al.

Chin.

6642

Am.

can

59

25

1.4

Am.

Tel.

58

36

con. (MM

4726

@J+ 253

25

11

463

154

111

22

12

U3

-lo5

2912

U. S. Steel JiLJL
Totah

43

~Ji4k

A-JL=LuL~~~
159

91

43

15

24

16

10

4 1030

.6

.4 100%

Approx.%

Ofltc)lo
pt. mhgs

K@

25

2.4 1.6

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 hairtriggmr,and tiqy CUl
1

to

points

away

from

qmmtii$

thdx

withoutfaar of having StOp# caughtfrm

stop pricm.

Copyright1932,,
by RichardD. Wyckoff

The tmbla shows that in the

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 activetradingdepmds 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
fadOIi&.

a littleslower,but, in soma cases,may work out more satis~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

Cc$pyri&ht
1932 by R%chardD. Wyckoff

hed.tatetoo long or you will

TR Section3.2 Page 1

mm

ywr

tb

atop MWwr

mqtal

trade.

?Mt

away from the price

error

is a fwlamental

in this

whol~ purposq of which is to J&@& and H

this

error yqu will

not M Utiting

at whioh you made

form of tradtng,

th

risk.

tha

If you make

your r%$k, and you will

be increas-

ing it.
At the first
clooe

sign of danger,

or tho trade closod

your stop should always be brought

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
-t

the treds

is opm fox furtbr

or mmmtim %$ more than ~omal,

pomible
ym shmld

and reactions,

profit~.

But if

so

a rally

mmisa your forecmt

and

act ao@XCMn@y.
Hem? carxy a trade overn%ght without
layed or be @aken ill

a stop.

Yma may be de-

the next morning and an adverse market might cause

a 10SH of smtwml points.

Am awtamatic ~top is cm in which you instruct
mova it

continually

within

a certain

the htghe$t cm lowest mmrltet price

In6tmuctycmr
all

fraction

of your atip~ are to M conaidmed

telw without ,gmtting caught,

or number of points

from

remmded.

broker in writing

Wnckrall Conditiqml?

your brokor to

play S?lfo.

and get his acknowlodgm$nt that

good ti&l

countermanded.

Do not see what chanms you can

but with what mall

risk you can trade.

***

The objective
ing i~ to mak@ a lon$ smies
which we dwWa

profi.t~

of trades

in mcms

in this

form of trad-

in uniform number of $hmm from

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

_

That

worthof ~

If you make two trades,one with a net 10ss

mmM3 this:

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

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 brokerThe 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,correspond 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 profitn,

you can go on and

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

jCq3mrdizingyWr

capital,
+++(-+$

yrdiei,lirt
be at tb

M% m

marlmt. A

limited

In nearlyevery cam your ordersshould

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

po@iti9nw

tdmld
?30t

stay

am

a iamdowhich does not act right or gotw std.e.

on WM$$tratlgth of

tdwm

giva them tmta

mtkh good,

fmwd Y*

YOU

t$lrw inwhiohtowwkolxt.

UJEitl!d
Skdd

stops up

cC@xLn ln41catiowS

Your

and you
If-

either CMM tlmm out at the market,

alme to the market

~ZiC@,

thm

h!ci?ing

the

wqy op43nfop more profit.

indications
you tit

Do mot @i* $hmw end hop#B* OIM,y the tape

h

daorti im@tectd M MMq&#

(get sort

If

08 a bulge.

shown on the Wave

for

it

theme to make

%eU@ YOU YOU skuld

TM*

trgidmg

$Oidiifh??zjay.

Xtx? mMd no opition

th~

trodoandwlOyby

that Sitwlmm

when you are coxuatantly being told what

?lCt&OXl Of

douMfM,

th

clam

mmrkd.
out all

hd

WOB

WhOll

tw

amd eit

ti~e

SQYS

still

in a

***

A maccfMMUL spmmlator poasemes sdfcourage~ caution

amd matal

flexibility.

c)wmthimkhgj form your own Conolwions,

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 certainmeasure 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 certain 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

more thmm th~ price of *

l/8 point

laat trada. This vazztmtion

in priceis

(Wled the %nvialble E&gbth.

~~ W&n a atookis dxmdlng still,the
prioeis, W,
have to

53+%

bid$ cM#Qti at 1/4.

pay thm offeredprioe Mawe

biddtng1/8. If you hold it say W

am

the

WMNBtyou

3f you buy, you uswally

thereis someoneahead of you

au hour and the bid and cmkod

would Mve to ueU it at 5>~8.

of bid and amod ptice is the real m@rkW.

Tkks combination

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,particularlyin 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&@knff

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 trading 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 continue to study,practice,Wain your judgwentend dewlop your intuition.

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

fap

will

you ?@@ it will mot. And this one factorof knowingthow

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

oopyright1932~ M&lsadI).WyOkoii

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 numberofcharts,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.
***

Ch~i(wa
of broker~

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 sufficientconfidencein yaw brokerb let Mm use his judgmnt in waitingfor fracWmsUy

bettirmkats

b@forehe tradesat the bid or askedprice.

Adv5m your Mokor just how you are trading. Let him undmstandyour raquimmmts.

You trade activdy, p&y mauy cmmismions and

am, therefore,worth mora to Mm than sevmal clientswho get in and

out only occqlli#nally*
Ho shouldbo wiUing to give you specialattention. 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

so &md

YOU

will not. When you find resultsnot

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 themselves. 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 moments.

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. Continually 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
snd carryit overstock. ht US assumethat we have a shortpofiition
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
trading*one $.snow confinedto tb 3/8 between$2-7/fl
and 83-1/4. The
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 trsnsactionshave 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

TRsecti@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 nwuly~
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 furtherdevelopments. 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#lt1932byRichardD. 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.

nothing until the chmrly

WMwd

U.M

Me do

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 fractioml 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

!!

w
.
*

Open

close

--w

Down

on

dune

27

Allied

Chmical

At BottomofReaction 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 47-5/$;
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

(hpyright

TR Section

1932 by RichurdD. Wyckoff

the bottomof the re-

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,
that

the chart shows,has numerousskips,indicatinga market

is not at all close. The activityof this stock,however,compensates

for this additionalfactorof risk.

Copyright1932 by Richardt).Wyekoff

TR SectionCS Page 6

Allied

A-L

Ghernicu7

Bottom

dune

Of

Reaction

2,

/932

5/
Up

to

53~

Ju77e 3-- f

50

- -,-.

T
3 25

620

000/0/0

4t3v

)
-.

00

Copyright 1932 by Richard D. Wyckoff

,s

Lonfg

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
pictureis bulli~hso far, becausethe stockhas worked
of 3/8. l!h@
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 arrowhead. The stockhas coma to a balancewith 55-1/8formingthe point.
It shouldpass out of that rangeon the down side,unlessit contradicts 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,
54-3/4. Supplyis greaterthsm tm demmd.

tbn

reactsquioklyto

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

ITSectionW

Page 8

56

~hemicu?
At
Top
c3# RuhJ
dune
/.5- /6, /932
##17ied

32

Per 4!ict37 line

S

Chart

how~ngthe Tip *

Detuiled

Z3elou.

,.4
.

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
tbo abilityto recover;next,

the 3./4Pint dip ad ~.~

the openingprice. Thereis more streqgth*

W

-- first,
recovew to

weOkn@WOW

@ 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.
to

volume

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 dullnessbetweenU 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
horizontally,
wc
is comingin on this bulge. Adding the transactions
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 37, not~ thut the subseqwnt ralliesare as
follows:l/4P3/4,

3#$, l/4fi 1/4,

the stookis j&L/4,

S@

at

1/$, 1/8, 1/2, l/4,

1/411/8.

NOW

that pricewe are 4 pointsto tha good on

paper,with a stop at 35-1/43so at least 3 pointsare assured.

We mayho smartsmugh to coveron the declinewound 2 P. M.,
or to shoveour Htop down withinl/4

of the bottom$becausewe cant

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 offivo Ieaders@ of which Can is me; the otlmr four am Anncon&,
Gmeral ElecWc,
Can

the

f!ctlbws

Oemml

the five

more doWmnt

Motoroand Steel.

It is

rmmkable how closely

leadms. Pmdlapethis is becauseit wa6 at that

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 byadvana$ngusar~ twioe as much as it declinedfrom the opening. 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
Charthas hetietofore
mmf$rmed the bullishness,but the down swing from
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~ rGcedm 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,
Stop is

moved dOWn

to

39.

then bcicks
up to 38. Our

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
get it at 38-~/13,
which is 5/8 gross, or 1/8 not. Added to the previous
profitof 1 paht gross,OXl/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
otlmCM@

SQudiescontainedin this Divisionof the Course. Also that

the rwult of theirpaper tradingbe sent to w in writing

go over and ci%mkprogress

so that we can

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

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