The Wyckoff Method in a nutshell

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 4 market stages

Wyckoff method based on 3 Laws:

  1. The Law of Supply and Demand – states that when demand is greater than supply.

  2. The Law of Effort vs. Results – divergencies and disharmonies between volume and price often presage a change in the direction of the price trend.

  3. 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.


Cheers,

Disclaimer: This site may include market analysis. All ideas, opinions, alerts and/or forecasts, expressed or implied herein, are for informational purposes only and should not be construed as a recommendation to invest, trade, and/or speculate in the markets. Any investments, trades, and/or speculations made in light of the ideas, opinions, alerts and/or forecasts, expressed or implied herein, are committed at your own risk, financial or otherwise.

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