Why am I such a big fan of this guy? Why I’m putting this particular topic as the first topic to learn, Wyckoff, in a month-long intensive and which is basically talking about a market profile, order flow, VSA, then why we are studying Wykoff market cycles and schematics and whatever Wyckoff has done for us.
The reason is that this particular trader probably has the most influence on the world of technical analysis than any other trader I know or I have studied. Let us find out who Richard Wyckoff was. So he was a trader himself, an avid market reader. Active in early nineteen hundreds, so he’s almost more than a century old. That itself is a very big achievement that we are still studying. This guy after 120 years of he was active in the markets. That is simply amazing.
So what it did was he crystallized his market wisdom in a precise methodology called Wyckoff market cycles and schematics. He studied all these great traders, he studied their behaviour, he studied how it affected the markets. And what these traders were looking for in the market to. Start their operations. And then he went about consolidating all that into a nice methodology called Wyckoff market cycles and schematics. So these are a bunch of diagrams and a ton of explanation behind those. But these are not simple pattern recognition techniques.
Now we will discuss more of this concept, Wyckoff market cycles. And let us take our first step towards that. These are the phases that we are going to study when we talk about Wyckoff market cycles.
It starts with. Accumulation. Where the smart traders accumulate all their long positions, followed by a markup phase where the prices will start rallying.
Once the accumulation is complete, then comes the re-accumulation phase when, you know, once the rally starts, some profit booking comes in. But the smart money is not done with their move. So they will absorb that supply and continue to move higher. That phase is called as re-accumulation.
But once the smart money feels that we have reached our objective, we have reached our target, they will start booking their profits and that will be the distribution phase. Once their distribution is complete, you will see that the market will move down.
That we call as the markdown phase some demand will come in, some traders will think that this is just a pullback, let us buy it. And when that small demand comes in, smart traders will again absorb all that demand and continue the auction down. That is called a redistribution phase. And finally, even the smart money, again, things that we have reached, a level where we can buy again that will again turn out to be the accumulation phase.
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