Wyckoff: Buying And Selling Tests
by Craig F. Schroeder
In the Richard D. Wyckoff method on stock market science and techniques, the fourth step of his
approach is explained thus: Determine each stock's readiness to move, then analyze the vertical line chart
and figure chart of the candidates previously selected by the use of buying and selling tests.
The first three steps of the Wyckoff method are simple and easy to apply. Step four can also be simply
stated. Hidden behind the simplicity in this case, however, is a wide range of considerations to be
addressed, most of which require the use of an element that is much less of a factor when applying any of
the first three steps: good judgment, which must be developed through practice and cannot be learned
from a book. What can be learned are tools that can aid in the development of good judgment. These are
the focus of step four of the Wyckoff method.
READY OR NOT
Whether a stock is ready to move is determined by its current position compared with the previous action
and the kind of action that has brought it there. With few exceptions, positions that appear ready to move
occur at or near the completion of reactions or rallies. A stock will indicate a readiness to rise as it
completes a reaction and it will indicate a readiness to drop as it completes a rally.
The necessarily brief nature of this article does not allow an explanation of all the finer points that must
be considered in the fourth step of the Wyckoff method. But several points can be presented and put to
work immediately with steps one through three: position and nature of action.