The Wave Indicators in the MBoxWave Wyckoff Trading System allow you to see supply and demand in the markets. The markets are a constant battle of the bulls and the bears. Price moves in an up and down direction like a zig zag or see saw going up down up down, up down, etc.... continuously and without end. These movements can be better described as waves. Wyckoff talked about viewing market movements as a series of waves to better understand its movement. Wyckoff stated that when buying waves begin to increase in volume, time, length and the selling waves shorten we should watch out for a change in trend. The same applies vice versa. Viewing market movement as waves filters out a lot of the bar to bar noise and allows one to take a step back and see at a higher level as to what it is going on. In general, we are trying to identify states of market balance and imbalance when considering making a trade. When the market is in balance (supply and demand are met more or less equally) the market moves laterally. When the market is in imbalance we see great movements. The goal is to exploit these imbalances.
Small Waves (MBox)
The MBox shows the smallest wave possible. It shows continuous up movement or continuous down movement. As soon as the direction changes, the box changes. In the example below (Fig 1.1), we clearly see that there are more big red boxes than blue boxes and the price change caused by the red boxes has made a down trend. This correlates to what Wyckoff said about as the selling waves increase in volume, time, length and the buying waves shorten watch out for a change in trend.
MBox - Properties
Box Height – The box height always corresponds to the length of the box. It is a great way to visually show the price change that has occurred in this box, and subsequently the result of the movement.
Box Width – What the box width shows depends on the type of chart you are looking at. If its a time chart, the width shows time. If its a volume chart, it shows volume, if its a tick chart, then it shows the number of trades.
Visually looking at the boxes already tells us really good information.
Big Waves (MWave)
The MWave also shows waves (like MBox) but can show bigger waves. The parameter for how big the wave is can be set in the indicator settings. It shows the up down up down movement in the markets. At the end of each wave is a label that shows 2 pieces of information about the wave. This can be specified. In the example below the big number is showing total volume, and the small number is showing delta volume (ask volume – bid volume).
Wave Indicator Settings
There are 4 core indicators in the Wave Indicators:
MBoxChart – This shows the smallest waves as boxes.
MBoxHistogram – This shows the accumulation of a chosen wave property for MBox.
MWaveChart – This shows bigger waves as zig zag lines.
MWaveHistogram – This shows the accumulation of a chosen wave property for MWave.
The indicator settings for all the indicators are explained in great details on the corresponding indicator settings page depending on the platform:
Each MBox and MWave has wave properties. They show the accumulation of any of the following information:
This shows the accumulation of volume
This shows the accumulation of bid volume
This shows the accumulation of ask volume
This shows the accumulation of (Ask Volume – Bid Volume)
This shows the accumulation of (Ask Volume – Bid Volume) / Total Volume
This shows the length of the wave
This shows how much time it took to complete the wave
This shows the width of the wave
E-mini S&P - 1000 Tick
Crude Oil - 500 Tick
EURJPY - 200 Tick
E-mini S&P - 2000 Tick
ZS (Soybeans) - 200 Tick
E-mini S&P - 1000 Tick
EURUSD - 200 Tick