Crypto Academy Week 16 - Homework Post for @Fendit
I am @kelechisamuel and this is my homework post for @fendit
Before we go into details about the laws and more details about the composite man, let's talk about the wyckoff method
WYCKOFF METHOD
The founder of this method is Richard Demille Wyckoff, who developed this method to aid in the technical analysis of the financial markets in other words, the wyckoff method is a method based on the study of demand and supply to understand the financial market and give technical analysis to dominate the market
FUNDAMENTAL LAWS
The wyckoff method has its fundamental laws, laws that form the foundations of this methods which are
1. DEMAND AND SUPPLY
Assuming an asset is valued high and it's scarce because of an increment in demand there will be an increment in price this is a major factor of the upward trend, when the accumulation has been done, supply becomes low any increment in demand will increase the prices
2. CAUSES AND EFFECT
If I may borrow a little knowledge of physics, Newton's third law states that "action and reaction are equal and opposite" meaning for every equivalent force there is an equivalent reaction meaning a high cause will produce a high effect and vise versa, a low cause will produce a low effect in other words a high accumulation will lead to a high upward trend and a high distribution will lead to a high downward trend and vice versa
3. EFFORT AND RESULT
This is a correlation between volume and price, in which if the volume and the price synchronizes, the trend will continue but if it goes haywire on a different sequence, there will be a change in the trend
COMPOSITE MAN
The Composite man is an idea created by wyckoff which indicates that the traders and investors should study the market and stock system as though an individual body that is in charge in other words wyckoff employers traders to understudy the market as though it is operated by only one man which is the composite man
The composite man represent big players in the system who buy when the asset when they are low and sell when they are high because the average players were losing a lot of money that is why the composite man strategy was created to be able to predict and technically analyse the financial market
FOUR(4) PHASES OF THE COMPOSITE MAN
There are four major phases of the of the composite man
1. ACCUMULATION:
Accumulation just as the name implies is a gathering stage where the composite man accumulates or gather assets which is done smartly so that the price doesn't have an instant change
2. UPTREND
This is a point where demand gets higher than supply at this point, and more investors are getting attracted there may be cases of re-accumulation where the market takes a pause for a while and kicks off again
3. DISTRIBUTION
At this point, sales kicks off and we notice a side ward movement as the composite man attempts to exhaust the urge of demand selling off at a late stage
4. DOWNTREND
Just like the upward trend as I said earlier, this stage there may be occurrences of re-distribution as the composite man has sold a large amount of his assets and tends to push the market down, here supply is more than demand
MY VIEW
The composite man scenario can be seen in our everyday lives not only on the cypto market but also in the local market it's a formula that is readily applicable to any sector of any financial market, I feel it is an easy and understandable method yet very efficient. I sincerely recommend it
ANALYSIS OF VET/BUSD CHART
Using the composite man theory I will be analyzingbrhe chat below show the four phases of the composite man
Looking at the chart of the vet/busd exchange, we can see the accumulation stage as circled below, that stage is where the assets where gathered and supply is higher than demand
There is an upward trend after the accumulation stage where the assets gets a boast in price and the demand is higher than supply
We can see the re-accumulation stage where the investors, buy more or gathers more asset at the current price hoping and believe for a shoot in price
There is another upward trend as the price of the asset increases which is a result of the cause of re-accumulation which gives an equivalent effect to give rise to the asset
There is a distribution stage where the composite man sells off his assets at the last stage and makes his profit in this case, the supply is higher than demand
After the distribution stage we can all observe the downward trend of the asset, completing the cycle of the composite man theorem
CONCLUSION
Honestly it was an interesting lecture, straight to the point with great goodies, I have been able to learn about wyckoff himself, the fundamental laws, the composite man and it's applications. The composite man, is an excellent way to teach average or retail investors how to make money practically
Thank you all for reading
Cc
@fendit
@fendit please verify my work
Thank you for being part of my lecture and completing the task!
My comments:
Explanations were fine, but you could have developed a lot more all concepts.
When it comes to the chart, you should have included the volume bars as that's key when it comes to this method. It's the only way to actually see if the pattern is correct and that was missing. As well as that, the analysis was too vague and I believe you could have gone a bit more in depth.
Overall score:
4/10