Steemit Crypto Academy - Season 2-Week 8 | The Wyckoff's Method | homework post for professor @fendit| by @preye2

INTRODUCTION

Designed on Canva

Wow, let me start by saying that this is my first homework task for Professor @fendit, and am really happy to be participating in this homework task.

So far I have really learnt alot from our respected professor @fendit, whose lecture has taught us more on how to make both short and long term profits using The Wyckoff Method. Although most times the crypto market can be unpredictable, but various technical analysis like this can go a long way in guiding traders on how and what to do.

Mr Richard Wyckoff has delivered a method that is aimed in guiding trend-following traders on the best period to enter into the market and make quick profits, in what we were made to understand as the Wyckoff Method.

Having learnt and understood your lecture Sir, permit me to proceed with my homework task for Season 2: week 8, which is on "The Wyckoff Method".

Question 1

Share your understanding on "Composite Man" and the fundamental laws. What's your point of view on them?

Answer

Following the trends and instability in the crypto market, the aim of the Wyckoff Method irrespective of the zig-zag movement is to help the trader make confident decisions with some good chances of success and equally reduction of possible risks in the market.

This Wyckoff Method gave rise to an Imaginary big character of the market which is regarded as "Composite Man". This composite Man is suggested to attract traders into a stock market where He (Composite Man) ensures he buys less and sell high.
Our duty is to study the stock market as if it is controlled by an Individual unit or organization, and to know the best time to enter and get out of a trade with profits.

But here comes the advantage, Wyckoff has made us to know that the Composite Man uses some kind of predictable strategy which investors can study and know what best to do.

These strategy consist of 4 phases, which includes; Accumulation, Uptrend, Distribution, and Downtrend. Here's how it works;

• Accumulation:
  In this phase, the changes in prices and volume will be less as the Composite Man tends to gather so many assets at a low price before the other traders arrival.

To avoid sudden significant changes in price, the accumulation is done gradually.

• Uptrend:
  In this phase, the Composite Man might have gathered so much asset and as such making it scares and somewhat difficult to find. And at this stage he will attract and tempt investors to buy the assets by pushing up the market price of the asset.
  There will be an increased concept of supply and demand which will make the trend go up (bullish trend).

During the course of this Uptrend, multiple phases of accumulation are observed and called re-accumulation, whereby the bigger trends gradually stops and combine for some time and then continue to increase up.

Distribution:
It is in this phase that the Composite Man will start supplying and selling his holding at the highest possible price to buyers who are entering the market at a late period. This phase is observed by a sideways movement that reduces demand until it gets almost empty.

Downtrend:
And finally, this is the phase where the market begins to return back to it's normal state, because the Composite Man has sold a good amount of his holding, and the best thing left for him to do after making so much profit is to push down the market price (bearish trend).

My point of view on the different phases of "Composite Man" would be that traders should study the market trends closely, especially on the various phases of the Composite Man, in order to atleast get a short-term profit from the trends.

Below is an example of what am talking about

Source

Wyckoff has laid down ways in which we can approach the market to make profits; these approaches includes:

• Determination of the asset's strength,
• Determination of the current trend,
• Determination of the type of asset,
• Determination of possible movement of the asset,
• Determination of the timing of your entry.

The Fundamental Laws of Wyckoff

These laws are designed to guide all the different types of traders especially trend-following traders in the market. These laws includes;

The Law of Supply and Demand:

This law states that they would be increase in prices when demand is greater than supply, and decrease in prices when supply is greater than demand. And further more, if there is equally supply and demand, then they would be no major changes in prices, which is very true.
It can easily be identified by these below;

• Demand > Supply = Increase in Price
• Demand < Supply = Decrease in Price
• Demand = Supply = No major changes

So the trick here is to observe the volume bar, which will give you an insight of how the next movement or trend is gonna be.

The Law of Cause and Effect

This law states that the Major changes in the market are not undefined or unknown. In other words, there's a reason for outcome of every action in the market.
A clear example is the case of the Composite Man, before an Uptrend (effect) occurs, they must have been an accumulation (reason/cause), and before a Downtrend (effect) occurs, they must have been a distribution (cause).

The Law of Effort Vs Result

This law states that when they is increase in the amount of Volume (effort), the trends of the market tends to move upward (result).
The effort of an asset is determined through it's volume, which can eventually move the direction of the trends either upwards of downwards as the case may be.

All am trying to point out is that the Wyckoff method gives the trader the ability to make wise and confident decisions in the market.

Question 2

Share a chart of any cryptocurrency of your choice and analyze it by applying this method. Show clearly the different phases, how the volume changes and give detail of what you're seeing.

Answer

Ok, I will be sharing a DOGE/USDT chart, with a 1D timeframe showing the different phases and Analysis on my Binance account.

As you can see in the screenshots above, I have indicated the various phases of the Dogecoin trend in the past 3 months (yellow, pink, blue and red respectively).

I indicated them as follows;
1. Accumulation: You can see that in this phase, the changes in volume was somewhat stable and equally.

2. Uptrend:
As observed through the screenshots, Investors were attracted with good profits from the beginning, and then they was a re-accumulation in the chart, which means the investors accumulated more assets before it later went high (bullish trend) and fast too.

3. Distribution:
As you can see the Uptrend got to a certain extent and it became somewhat stable, which means investors who bought it at low prices has started distributing to new investors, this gradually lead to bearish in trend, as the market gradually went down.

4. Downtrend:
As you can see through the screenshots, this is the final phase and it's in a bearish trend, where the price falls down because the big investors have have shared their holdings to new investors, whereby reducing the price.

Conclusion

We all know how unpredictable the crypto market can be, so these methods are not always 100% accurate, which means there are some percentages of risk to be taken with good chances of success.
So far, I have really learnt something new and am really grateful to you respect Professor @fendit for such an educative lecture.

Note: All pictures were personal screenshots from my Binance account, otherwise designed on Canva.

Thank you all for your time.