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Welcome back fellow Wyckoffians! In our introductory blog (Starting with the ABC’s), we talked about some basics of a trading system/methodology and began our search for the role(s) scanning can play. We also introduced rigorous requirements that any element of trading plan/methodology must pass to be “on the team”. We have also advanced our Wyckoffian Trading Thesis.
Let’s look at some definitions as we being to integrate scanning into our Wyckoffian Trading Thesis.
A dictionary definition of scanning might look something like this:
Courtesy of Google Dictionary.
Indeed, when we “scan” something, we are looking at an object or data set for some purpose: “to detect some feature” or “identify relevant information.” For example, one can scan the financial news for stock candidates or review the stock tables for “relevant information.” In the good old days, many traders only had a pencil, pad and stock tables to find the next big thing.
Today, there are thousands of instruments to trade and as many databases that contain information. In modern financial parlance, we are submitting a query (a fancy name for a question) to a database when we scan.
For our purposes, we can define scanning as follows: scanning is a process of formulating database queries that seek to detect a feature of or identify relevant information about a tradeable security.
In order to scan tradeable securities, you need access to a data set through some sort of user interface. Any website that advertises a free stock screener is letting you know it has a database that you can scan. Fidelity, TD Ameritrade, Finviz and Stockcharts.com all provide access to databases that can be queried by permitted users. Generally, the level of query and data manipulation allowed is dependent your membership level: you only get so much for free.
For our purposes, Stockcharts.com is the chosen platform to develop scanning mastery.
After you have access to a database, you will need to format and submit a “query” to the database. The query must be in a format, with words and/or symbols, that the scan engine can recognize and process. Arranging words and symbols in recognizable scanning form is referred to as syntax.
Stockcharts.com has a wealth of resources to make scanning part of your Wyckoff experience. There are plenty of lessons, preformatted scans, technical indicators with suggested scan syntax and an extensive help library, with the option to contact support personnel in the event you get stuck. There is an extensive library devoted to “Scanning Resources”, including Scan Engine Documentation, Scanning Tutorial, and the Advanced Scan Library. Truly a great resource.
Stockcharts.com offers some basic predefined scans for free. To gain access to the more advanced features, a membership is needed.
The more advanced features of Stockcharts.com allow members to search for almost any data point of which you can think: moving average cross overs, highest (maximum) or lowest (minimum) price or indicator values over a time period, divergences, and ranges of values.
All developing Wyckoffian scanners are urged to use the resources available at Stockcharts.com to develop their knowledge and skill set. Stockcharts.com does a much better job at explaining its scanning capabilities and we will not repeat that in the Wyckoff Structural Scanning Blog.
Our focus will be to study Wyckoffian principles of price movement and translate those principles into scanning opportunities. We will develop a series of price movement ideas and then see if we can extract scannable elements from that price movement. Once the scannable elements have been analyzed, we can move on to scan writing in our search for a perfect Wyckoff trade.
Coming up.
In the next installment of the Wyckoff Structural Scanning Blog, we will look at some basic aspects of price movement in order to write and launch a simple scan.
See you next time.
Scan well, trade better!
John Colucci, Jr.
Trade with (not against) institutions!
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