Updated: May 10
As i wrote in my previous post, during the last few months, I significantly improved my trading skills by using the Wyckoff Method.
Richard Wyckoff was one of the most influential and successful trader in stock market history, his technical trading strategies & techniques have withstood the tests of over years of changing markets.
The very basic idea of Wyckoff method is understanding the market structure and timing the market.
Wyckoff method is a pure price action trading method.
According to Wyckoff, the market has 4 stages:
Accumulation - The time when the "smart money" is accumulating shares (smart money is money that is being controlled by institutional investors, central banks, funds, and other financial professionals)
Markup - The time when all the crowd is buying the stock and the price goes up
Distribution - The time when the "smart money" closing their positions and going out from the security.
Markdown - The time when the crowd (weak hands) is selling the securities and closing their positions.
Wyckoff method based on 3 Laws:
The Law of Supply and Demand – states that when demand is greater than supply.
The Law of Effort vs. Results – divergencies and disharmonies between volume and price often presage a change in the direction of the price trend.
The Law of Cause and Effect – postulates that in order to have an effect on you must first have a cause, and that effect will be in proportion to the cause.
That's the very basic of the Wyckoff method, in the next post i will talk more about the Wyckoff method and how you can use it to improve your trading skills in every market.
I have experienced a huge improvement in my trading since I use this method and i will definitely share it with you.
If you want to go deeper, https://www.wyckoffanalytics.com/ is one of the best places to learn Wyckoff.
There are en excellent books that teaching the Wyckoff method and all the psychology behind it, i will share them with you in the following post.