Steemit Crypto Academy - Season 2-Week 8| The Wyckoff's Method| homework post for professor @fendit| by @huzaifanaveed1

'The market has crashed.' These words ring a bell in the heads of the investors no matter where they are leaving them in a chaos and distress, and this is the situation right now as well because we are going through a bear market

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But as a famous saying goes what goes down must come up, there's always a way of recovering from anything. Be it a market crash or a loss in your general life. Where there is will there is a way

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This is the same in the Cryptomarket. Even during a bearish trend there are some ups where you can pull up some quick profits.

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So instead of losing hopes and leaving the market with a loss we can actually dig in deeper, enter the market, identify the the directions and movements and come out with profits.
Now the question arises, how do we do that?

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The answer was given to us by MR Richard Wyckoff in the form Wyckoff Method

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Now what is The Wyckoff Method, how do we apply it and how do we use it to get quick profits?

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Lets find out shall we?

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THE WYCKOFF METHOD

This method was drafted by Richard Wyckoff in the 1920s. Wyckoff was an excellent techinal analyst of the stock market and he was also the founding father of the Wall street magazine

He died in 1934 leaving a legacy behind him.

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Mr. Wyckoff explained us how to select an asset based on your market interpretation, it's trend and the market history. The Wyckoff method teaches us about the stepping in the market in a very clear way.

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To understand where the market stands at the moment and to predict the future market trend. He came up with a method known as the Composite man

Lets find out about this composite man

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COMPOSITE MAN

The Wyckoff's composite man is actually a fictional character who will play in this market to your disadvantage, and its your duty to understand his psyche and play along in a manner that you pull out with profits.

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Lets elaborate:

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The composite man lures the traders to invest in an asset in which he (Composite man) has already stockpiled lots of shares by already investing in them, thus displaying his assets by creating an appearance of a broad market

• there are 4 phases that this Composite man plays.

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• ACCUMULATION: The Composite man will attract the investors and tempt them to buy the assets at a lower price that he has been gathering the assets on.

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• UPTREND: A common concept of supply/demand in any market. If a person has accumulated all the assets, a scarcity is meant to take place. The Composite man will basically control the prices and make them go up. When investors notice a rise in the price of any particular assets they surely will be tempted and will buy these assets thus increasing the demand which will make the trend go up

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• DISTRIBUTION: In this phase we will once again observe the sideways movement of the chart, that is because the composite man will start selling the assets at the highest prices possible before a downtrend gets started as the demands till then would have been completely met.

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• DOWNTREND: This is where the Composite man will force the market towards a bearish trend. The price will be lowered which will leave the investors in a position where they will try to exit the market without having losses. All the investors will sell their owned assets which will increase the supply and we will see a huge downtrend, a bear market.

Here's a picture which will further clarify my explanation to you all.

source

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As I have thoroughly discussed and explained the game and the manipulation of the Composite man above, I think the safest way to play in the market is to play along the Composite man You cannot overcome or beat the composite man as you don't even have the capital to start off with in the first place. So how about you tag along him and make profits for yourself as well.

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There's a very famous quote:

Make hay while the sun shines

Which means to make the most of a favourable situation while it lasts.

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So as a trader myself it's in my best interest to play along the Composite man and try to make profits in all these phases.

Even though I will try to play along the Composite man but still somethins are very important in doing so.

• Analysis of the market
  Yes. This is the most important point for me. I mean you cannot just jump in blindly into the market in false hopes of profits. You will have to understand the market trend first. Observe whether there is a bullish trend or a bearish trend.

Analyze; is the market in the supply position or in demand position? Should you enter the market while its in a dowtrend or not? Where do you think you can exit the market with the most profits? Answer these questions to yourself first then jump in

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If I were investing in a market I'd first try to find the accumulation phase. I won't hurriedly and heedlessly jump in the market. I believe patience is the key. Even if I miss one cycle I will trade in the second, but atleast I will be completely sure and I would have analyzed the market completely. I will invest when I see the market trend has started going upwards and will pullout as soon as the market reaches the the downward trend.

So, analyze the market first, then trade

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Take assistance of the Technical indicators

This is a must for me and an advice to you all, that you should use Technical indicators as well.

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Take assistance from the Relative Strength Index(RSI). See if the market is closer to the 70 line or the 30 line. If its closer to the 70 line you should probably sell your assets and pull out with profits (if you had entered the market in a good position)

If the market is closer to the 30 line its time to invest in the market and get the assets in lower price. It's all about analysis.

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Secondly, the Moving Average Convergence Divergence indicator also helps a lot. Observe if the MACD line has overlapped the signal line in an upward direction then it is time for you to sell your asset and if the MACD line has overlapped the signal line in a downward direction then it is time for you to invest in.

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So in short, have complete analysis of the market. Understand all the 4 phases of the Wyckoff Method and take assistance from the indicators, and you'll have a hige chance of profits.

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I hope every detail about the The Composite Man is clear to you all

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WYCKOFF'S FUNDAMENTAL LAWS

Whether it he a cryptomarket, a stock market or any sort of market that exists. There are some fundamental laws laid down by analysts such Mr Richard Wyckoff, which assist the investors while trading.

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Mr. Wyckoff laid down three fundamental laws which are as follows:

• The law of supply and demand

• The law of Cause and effect

• The law of effort vs Result

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1. The law of supply and demand

Lets understand it in the layman's terms first:

Imagine a viral infection has spread out in a particular area which can be cured by a particular medicine. The demand for that medicine sky rockets. Everyone wants to have that medicine and in no time there's a shortage of the medicine. Now what happens when there's a scarcity of some item and it's in huge demands, the price of that asset goes up. If one store has that medicine he will charge more money than it's original price, takimg the advantage of that situation.

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The same happens in the Cryptomarket. The Composite man accumulates the assets and when there is a scarcity, he sells off the assets in his desirable amount. The demand of the assets causes an uptrend as more and more people want to invest in it.

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During the distribution phase the Composite man is selling and thus the stock is going in different hands. This increases the supply of the asset. Now when everyone has the asset, and it is easily available, a downtrend starts taking place.

When there is equal amount of supply and demand the price of the asset will be static and no sudden uptrends or downtrends will take place.

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2)The Law of Cause and Effect

Nothing happens without a reason. Everything leaves an affect

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Similarly in the Cryptomarket it is connected. This law is connected to the previous law.

Lets break this law down for bettwr understanding.

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The CAUSE:

Remember in the accumulation period, the Composite man had accumulated all the assets which resulted in the rise of demand. The accumulation IS the cause that resulted in the scarcity of the asset and thus the rise in demand which caused an uptrend.

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THE EFFECT:

The effect is directly proportional to the cause. A large cause will result in a large effect and a small cause will produce a small effect.

The accumulation and the the distribution phases design the cause and the effect. *The Effect results in an uptrend or a downtrend

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3)The law of Effort and Result

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The effort of an asset is it's volume.
The volume moves the price of the asset upwards or downwards respectively.

When there is an increased amount of volume along with the buy orders, the market trend moves in an upward direction. Similarly when there is an increased volume of the sell orders, the market tends to move in the downward direction.

For identifying:

• High Volume = Big effort

• Low Volume = Small effort

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The fundamental laws of the Wyckoff's method's were thoroughly discussed and hope its clear to you all

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EXAMPLE OF WYCKOFF'S METHOD ON CRYPTOCURRENCIES

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For this question I will he demonstrating an example of the chart from my binance account.
I will also activate the Relative Strength Index and the Moving Average Convergence Divergence indicator for a better understanding.

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First example

The first example I will be taking is of ENJ/USDT 4hr chart.

screenshot taken from my binane account

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The next example is of BNB/USDT 1 day chart.

screenshot taken from my binance account

In these above examples I have marked all the phases of the Wyckoff's cycle

We can clearly see:

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• Accumulation: You can clearly observe that the price of the asset is sidewards in this phase and the movement of volume is also stable.

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• Uptrend: the uptrend in both the screenshots can be seen and if you observe its quite symmetrical. There weren't any re-accumulation phases in this uptrend. The traders have started investing.

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• Distribution: The market gets stable for some time. The supply from this point increasing as the investors start selling which will lead to a downtrend.

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• Downtrend: The price falls and there were two re-distribution phases in the first screenshot which you can see as I have marked them. The supply increases thus the price falls.

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The examples given were real-life examples taken from the Cryptomarket and hope everything is clear to you all

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CONCLUSION

A big thanks to Mr Richard Wyckoff first of all for this amazing method. He passed on in the 1900s but his method sure lives amongst us till date.

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Secondly thank you professor @fendit for enlightening us with different theories and methods, EWT first and then this theory; This I believe is the need of the hour as we are in a bear market at the moment and these methods help alot.

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I had to do a lot of research for this assignment and it took a lot of time for me to draft this homework. But I got to learn a lot and I am sure this will help me alot in the market

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Conclusively, we learned about the Wyckoff's method. The composite man and how this character basically controls the market trends. We learned about the different phases of this method and then some real-life examples from the market.

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I enjoyed making this assignment and hope you had a good read as well.

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Waiting for your remarks with anticipation.

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ps: all the screenshots were taken from my binance account

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Regards,
@huzaifanaveed1