Crypto Academy||Season-2|| Week-8 | Homework Post for @fendit | The Wyckoff Method
This is a great regarding Wyckoff method. I am glad to learn about this method. In this lecture professor clear all concepts about Wyckoff method. There are some questions at the end of lecture. I will try my best to give answer of all the questions in concise way. I hope this post will help you to learn more about Wyckoff Method. Let’s Start.
What Wyckoff Method, share your understanding?
Wyckoff has given us a good idea to understand the market. This idea is called Composite man. According to this, if we want to better understand the fluctuations in the market, then we must assume that the whole market is controlled by one asset. If we think like this, it will help us to understand the market better.
Composite Man
The Composite man prefers market makers and also represents them because large investors and institutions maintain the shape of the market and invest when the price is low and hold the asset for a certain period of time. And when the price goes up, they sell their assets and make the enough profit. If we want to make a profit, we should buy and sell it in the same way.
Sometimes we see that investors have to face lot loss, because investors work according to their strategy, but if you look at the Composite man, his attitude is against the investor's strategies.
To understand Composite Man further, we will look at some of its phases. It has about four phases. About which we will learn one by one.
Accumulation
In this phase the composite man performs accumulation. He does this when there are very few investors in the market. They buy crypto assets at a very low price. When the price of an asset goes down, it first buys it at a lower price and over time the number of buyers of that particular asset increases and as people buy it The higher the price, the higher the chances of profit.
Uptrend
In this phase the price of acid goes up because a lot of people have bought this particular yeast and when a lot of people buy it the demand for it increases and as soon as it As the demand increases, so does the price. When the number of investors increases, then the purchase price of the composite man and the current asset price are very different.
Distribution
In this third phase of Composite Man, the demand for Asset increases tremendously and its price goes up tremendously and this was the prediction that the Composite Man had invested in this particular asset at a lower price and now the current price is high so the composite man will sell his asset at this moment and make a huge profit.
Downtrend
In this phase we can see that as investors start selling their assets, the trend in the market goes down and as people start selling assets, the demand starts to decrease and so does the demand. Supply increases and prices begin to fall.
Fundamental Laws of Wyckoff Method
Supply and Demand Law
The value of any cryptocurrency depends on its supply and demand, ie increase or decrease in supply and demand affects the value of the asset. The market will go up and if the demand goes down and the supply goes up, the value of this corrupt asset will go down and its market will go down.
Cause and Effect Law
As we all know that there is no change in the market without any reason, there are some reasons behind it. These changes occur as a result of a certain preparation period and these periods are of two types. One of them is Accumulation Period. In which the price goes up and it has an effect and there is another down trend in which the price of the asset goes down.
Effort vs Result Law
Effort is related to the volume of the asset. If there is a relationship between its owner and its value, then the attendant will go in the same direction. If the value of the asset and its volume are not related, then it is Indicates that the trend will change. If the volume is high, the effort will be high. If the volume is low, the effort will be small.
My Perceptions
If we want to make a profit in any market, we should wait for the price of a particular asset in the market to go down. And when the price goes down, we should buy it and store it for a while and when the price goes up. If so, it should be sent. We can make good profit by following this method. And that's the way Wyckoff explained it. Before investing in any asset, we need to know the market trend and where it is going. If the trend is downwards, then the accumulation period starts. In this phase, the value of assets will be in parallel. And the volume of assets will decrease. And if the trend is bullish, then the distribution phase begins.
The rising and falling price of the asset in this method helps us to further understand this concept. This method makes supply and demand easier. If demand is high then supply will be low. And if the demand is low then the supply will be high which will reduce the price.
Wyckoff method is used in market to avoid losses and gain profit, but this method is not very useful for those who are new in market because they do not have much money to invest. But this method is useful for those who have more investment. This method definitely gives benefits to those who are novel in market. This method at least help them to avoid loss in market.
Share a chart of any cryptocurrency of your choice . Show clearly the different 4 phases, how the volume changes and give detail of what you're seeing.
I consider the Cardano and Usdt chart for understanding the Wayckoff method. In this chart we will understand how Wayckoff method work and look like. In this chart we will see the different phases of Wyckoff method. There are four phases of Wyckoff method first one Accumulating and second is uptrend third is Distribution and fourth one is downtrend. We will see one by one that how it is applied on this chart.
Accumulation Phase
In this phase currently is market is down trend and the price of the asset is round about $1.600. At this period market is waiting of the composite man. When composite man enters in market and invests the in Cardano. Then market trend is slightly go up at round about $1.7800 and trend go down again due to some of selling. Trend is slightly go up and down one or more time. This is accumulation process.
Uptrend Phase
In this phases asset attract more investor toward him. Many investors invest in Cardano and market trend go up. At the stage of $1.945 the Re-accumulation process is occur. When the number of investor enters in market then they invest huge amount in ADA. In this way the Demand of ADA is increased and also price of the asset is increased as well. This cause the Market trend is going up.
Distribution Phase
In this phase the price of ADA is at peak of $2.400. Here Demand of ADA is high and price is also high. At this stage investor sells their asset when price is high in order to take profit from it. In this way Distribution process is start. In this way the supply of ADA is high and Demand or price becomes low down. The price of ADA is travel down.
Downtrend Phase
By seeing the downtrend of ADA at $2.100 few investor invest in it. This cause the price downfall is stopped for a while. When they see that the price not trying to go up again then most of investor massively sold their asset. In this way supply of ADA is increased and Demand or price is low down. In this way we can see in chart, the price behavior of ADA is on Downtrend.
Wyckoff Method is good technical tool for analyzing the Price behavior of a particular asset. We can understand the price behavior of asset and predict our next move accordingly. This tool is basically used for gaining the more profit in market by studying the price behavior. We act as composite man that enters in market when few investors are in. They can take advantage of this situation and buy asset due low price and sell asset when the price is high.
Written By:
Thanks Professor:
@fendit
Thank you for being part of my lecture and completing the task!
My comments:
Nicely done!
I believe some of the concepts could have been a bit more developed and analyzed, but overall it was really good and very well explained!
Also, nice analysis on the chart!
Overall score:
7/10
Thank you very much professor @fendit,