Many who are well versed in trading literature would agree that much of the best material ever published in this subject area was not published recently, but many years ago. The period in the 1930s is often referred to as the “Golden Age of Technical Analysis.” The works of the legendary traders of yesteryear, such as Gann, Livermore, Baruch, Dow, Elliott and Wyckoff, are considered essential reading for those truly interested in learning the best and most effective methods of trading.

The writings and teachings of some of these individuals have been readily accessible through the years. However, those interested in learning the highly respected methods of Richard D. Wyckoff have been limited, for many years, to his renowned stock market course, which has, in recent years, been available only as a mail order course costing hundreds of dollars and taking several months to complete.

Before undertaking such an expense and making such a commitment, one would certainly want to have an understanding of Wyckoff's principles taught in the course, as well as an overview of them.

Fortunately, there is an excellent, inexpensive source of such an overview in Charting the Stock Market: The Wyckoff Method, which is a well organized, comprehensive presentation of Wyckoff’s principles and methods.

The Wyckoff Method is presented in three parts, each written by an expert well versed in his ideas. Jack Hutson, publisher of a well known publication devoted to technical analysis, authors the first section, which is devoted to an overview of Wyckoff’s main principles. The essence of his approach (which may be applied to any active market) is to learn how to read market action and gauge the relative strength of supply and demand to form a market opinion.

The reader is taught Wyckoff’s charting method in detail, which includes the “vertical” (bar) chart, the “figure” (P&F) chart and the “wave” chart. Wyckoff was a strong advocate of using a “stop” with every trade, and the book shows specifically how to use stop orders to protect capital and maximize profits.

Also addressed, along with many other topics, are the emotional and psychological elements of trading, which Wyckoff wisely felt was “half the battle”. The reader is shown, in great detail, how to interpret trading volume and to use it to forecast future price action, another very important element of Wyckoff’s technique.

The second section, authored by David Weis, is titled “The Wyckoff Method in Action.” It is a hands-on, close-up look at how the principles learned in the first section could actually be applied in real-time interpretation and intraday trading of T-bond futures, using 45-minute price bars. This is a practical and very useful lesson in the application of Wyckoff’s principles to a popular trading vehicle and should be of great interest to traders of the mini futures markets as well because the principles may also be applied to those markets.

The third section, authored by Craig Schroeder, teaches the five basic steps that are the building blocks of the methods taught, termed by Wyckoff the “Five Steps to Success”:

1. Determine the present position and future trend of the market.
2. Select, as trading candidates, issues showing relatively greater or weaker strength than the general market.
3. Identify specific issues with substantial potential, as judged from figure charts.
4. Determine those issues most likely to make an immediate price move.
5. Time trades to coincide with a trend change in the general market.

Each step is examined closely and explained clearly and is well-illustrated.

Those interested in learning about Wyckoff’s principles need look no further. This well written, inexpensive book is a valuable resource and should be on every trader’s bookshelf.