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, 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.


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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