Junior Rigidio

I. INTRODUCTION

Presentation of the origin of

WYCKOFF method

II. THE THREE LAWS OF WYCKOFF

Law of supply vs Demand
Law of cause and effect
Law of Effort vs Result

III. WYCKOFF CYCLE

Phases of the Wyckoff cycle
Accumulation/Reaccumulation
Distribution/Redistribution

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The Wyckoff Method was developed

by Richard Wyckoff around
1930s. Wyckoff dedicated good
part of your life teaching and your
work has a great impact on the use of
technical analysis (TA)modern. The Method
Wyckoff applies both in us
futures markets as much as stocks.
Much of Wyckoff's work
were inspired by the methods of
trading of other traders well
happened (especially Jesse L.
Livermore). Currently, Wyckoff has the
same recognition as others
great names like Charles H. Dow and
Ralph N. Elliott.

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Law of Supply and Demand

The first law states that prices increase.

when demand is greater than supply and falls
when the opposite happens.

Demand > Supply = Price Increase

Demand < Supply = Price decrease
Demand=Supply= No change
significant of
the price will likely move sideways.

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example

Demand > Supply = Increase in

price

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example

Demand < Supply = Decrease

price

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CAUSE AND EFFECT

The second law states that the

differences between supply and demand
are not random. Instead, they
appear after periods of
preparation (RANGE) after
some type of weather event (high
trading volume in a range
of price. According to Wyckoff,
a period of accumulation (cause)
eventually leads to a trend
high (effect). On the other hand, a
distribution period (cause)
eventually results in a
downward trend (effect).

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example

cause effect

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example

Note that after the high volume of trading

has marked the end of the upward movement, the price
did 3 demand tests before the movement
of decline, characterizing the cause that was the high
volume and the effect of price action.

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EFFORT VS RESULT

The third law of Wyckoff states that the

changes in the price of a good are the result
of an effort, which is represented by
financial volume. If the price action is
in harmony with the volume, there is a good
chance of the trend continuing. On the other
side, if the volume and the price show a
significant divergence, it is likely that the
market trend breaks or changes
of driving.
.

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example

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example

In example 1, we see a situation of effort.

versus result not only in financial volume
and in the number of sellers, we can
note that there are many more sellers than
buyers in the two legs in question,
but these sellers cannot
shift the price efficiently and thus
characterizing an excessive effort to
little result

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example

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example

The next day the movement

reverted

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A cycle composed of 5 phases

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Meaning of the acronyms

(PS) preliminary support

climate sale

Automatic rally

(ST) second test

SPRING /MOLA

last support point

(SOS) leap over the river

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A cycle composed of 5 phases

Phase A:It is marked by a decrease in strength

saleswoman and a significant increase in
volume, this indicates that the price is
finding demand in a (PS) support
preliminary, it is already the first sign for us to stay
Attention. Soon we will have the (SC) selling
the climax 'climatic sale' is generally marked
due to a price increase from sales in
panic of the weak market participants and
quickly absorbed by buyers. After
the strong drop the price reverses in (AR) rally
automatic that is marked by an aggression
of buyers showing first signs of
strength. Thus forming support in (SC) and
resistance in (AR) for a possible
position mounting (accumulation)

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A cycle composed of 5 phases

Phase B:Phase B: in this phase already with a strong

support and strong resistance is where it happens
positioning assembly. The strong possessors
they test the levels of support and resistance already
defined what we call (ST) second
test (remembering that more than one can occur
test). After the tests are successful the
big players accumulate the maximum of assets
possible within this marked area.

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A cycle composed of 5 phases

Personal observation: After many hours of

studies and screen time we realize that
most of the time these (tests) are
very AGGRESSIVE causing traps
(traps) that reach to violate the levels
of support not only for testing, but
accumulate more assets at prices
minors (we call this process of
liquidity search). These traps have
as characteristics an increase
expressive in volume.

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A cycle composed of 5 phases

Phase C:SPRING / MOLA / TRAP with the

market already in this phase we can
main characteristic or trap (trap) final
ensuring that the offer dried up at this level
of price and that accumulated everything it could. And
as mentioned in the observation above, these tests
tend to break the support levels for
we will keep some players stuck in
market funds that ended up believing
in this false breaking and when the big ones
players agree on the market with a START of
movement someone got stuck at the bottom of the
the market starts to unwind its positions and
this helps boost the market for
top.

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A cycle composed of 5 phases

Phase D:To simplify and provide a better

understanding phase D, we have as
representativeness the (LPS) last point of
support, characterized by the formation of new
supports with a good volume of aggression and
providing training on the price of tops and bottoms
ascendants showing us a sign of strength. This
The phase makes it clear to us one of the laws of WICKYOFF.
cause and effect.

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A cycle composed of 5 phases

Phase E:Final phase of an accumulation cycle

(SOS) jump over the river, sometimes the asset can
open on a gap up (it's not a rule), already
leaving the sold ones in bad condition, the
forcing to close your positions (who
sold will have to buy) boosting the
market up and bringing more
buyers (causing demand) starting
an upward trend.

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A cycle composed of 5 phases

Notes:it is worth noting that not always

we will find this cycle completely
perfect, as the market is a flow of orders
the constant and its dynamics change all the time

moment.

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Example of an imperfect cycle where

we can take advantage of identifying it.

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Example of an imperfect cycle where

we can take advantage of identifying it.

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Example of an imperfect cycle where

we can take advantage of identifying it.

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Distribution cycle

Bull markets
they are born from

pessimism, grow
in skepticism,
they ripen in
optimism and death
in the euphoria." Sir John
Templeton

Sir John Marks Templeton (29 of

novembro de 1912 - 8 de julho
from 2008), was ainvestor,
bankerfund managere
British philanthropist born in
United States created the
Templeton Growth Fund, that
had an average growth of
more than 15% per year for 38
years.

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Distribution cycle

Distribution cycles occur when the

big players notice a certain decrease
of the demand supported by the large mass
that keeps the upward trend by buying
increasingly expensive. After identifying this
it's time to make the money change hands
hand and put profit in the pocket, the trades
beginners, euphoric and courageous are
willing to enter the market at the forefront
buyer, as the upward trend is
Confirmed, what bad can happen? It is there.
that the shark's mouth opens.

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Distribution cycle

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Distribution cycle

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Distribution cycle

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Distribution cycle

As we can see in the example above, the

trades that enter this type of movement
they provide liquidity for the big players
they will dissolve their positions each time at prices
more expensive, thus taking advantage of the euphoria of the

brave trades until they dry completely

the demand to initiate the movement
forcing the stops of the opposite
high-end buyers and driven the
market down.

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Redistribution

It consists of a market range.

basically a break for the market
breathe/distribute more contracts or shares and
continue the movement.

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Accumulation cycle

Accumulation cycles occur when the

large players notice a certain decrease
from the offer caused by the large mass that
keeps the downward trend by selling each time
go to cheaper prices. After identifying
this event is time to make the money change
hand and put profit in the pocket, the trades
beginners, apprehensive and in panic,
basically scared and willing to play the
towel delivering its assets, as the trend
the sick leave is confirmed and they do not want to be
the last to turn off the light. They simply
they throw in the towel!

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Accumulation cycle

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Accumulation cycle

As we can see in the example above, the

trades that enter this type of movement
they provide liquidity for the big players
they will buy more and more at lower prices
cheap, thus taking advantage of the panic and the
greed of the trades, until they dry up
completely the offer to start the
opposing movement thus forcing the stops
two that sold in the background and boosted the
market up.

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Reaccumulation

It consists of a market interval,

basically a break for the market
breathe/accumulate/buy more contracts or
take action and continue the movement.

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VIDEO ABOUT ACCUMULATION AND

DISTRIBUTION

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VIDEO ABOUT EFFORT VS RESULT

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WARNING

ALWAYS PRIORITIZE READING THE CONTEXT

BEFORE A DECISION IS MADE, BECAUSE
IT WILL SHOW YOU THE MACRO VIEW OF
MARKET. AND FOR A BETTER ONE
UNDERSTANDING OF THE CONCEPTS OF
MARKET ADDRESSED BY US FROM CT-
TRADER COMMUNITY WE RECOMMEND
READING OF ALL OUR E-BOOKS.

HAPPY STUDYING!!

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