Crypto Academy Week 16 - Homework Post for @fendit

Hello steemians,

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This is another week of the steemit crypto academy, last week’s discussion was about the Elliot wave theory. This week’s discussion is about the Wyckoff Method and fundamental laws, composite man and the steps involved to apply this method. I am here to present my homework post based on the understanding i had on the topic when I read the lecture notes.

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The Wyckoff Method is the technical analysis done to find out the financial state of the market based on the study of the relationship between the supply and demand of an asset. This method was developed by a trader and a market forecaster called RICHARD DEMILLE WYCKOFF, who started trading in business as a 15-year old stock runner in the 1888.

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This method demands understanding, observing and studying the supply and demand of an asset through analyzing data related prices, volumes, price action and time to be able to anticipate or predict the prize. It occurs when the market trend.

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What is a composite man?

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When I first heard composite man, I thought it was a real person, after reading and understanding this lecture I got to understand that composite man is an imagination of the entire trading market in a single point. We can understand better how the market moves and it’s changes when we view/imagine the market as if it was controlled by a single person and not a group of companies, this basically what the composite man is about. Based on the analyses Wyckoff did, we certainly know that:
• The composite man will try his possible to get other investor to buy the asset he has been accumulating for a lower price. If he makes this possible, there is no doubt that the price of that asset will rise.
• We can predict the prices of assets when we get the full understanding of the behavior of composite man. When his strategy is practiced regularly he believes that his behavior tend to be predicted by investors.
• Find out the reason to his actions by analyzing the market and charts critically with the purpose of understanding his behavior.

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Phases

There are a total of four 4 phases in the cycle of this composite man. We can see clearly from the chart above his every move.

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source
Accumulation: this is where the composite man accumulates the asset in a lower price where the rise in the price is not that huge or there is no rise in the price and wait for other investors to get and buy the assets so the price would go up. His accumulation hereby causing the graph move sideways.

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Markup/Uptrend: since he has accumulated and psychologically made other investors buy the assets, the asset begins to be scarce. The composite is a step ahead in succeeding in his mission because the price of the asset will rise. While the demand of the asset is going up and it becomes more scarce the might be some re-accumulation.

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Distribution: this phase kicks in when the composite man starts selling his share of the asset causing a sideways movement of the chart. The price of the asset has risen to its peak because he slowly sold out his asset absorbing the demand of the asset in the market. It is best for the investors who bought the asset to sell it at this phase.

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Markdown/Downtrend: the market and the price of the asset fall again, this is where there is little or no demand of the asset once the composite man sell all his holdings.

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The fundamental laws

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Basically, there are three fundamental laws:
price direction is determined by the supply and demand
Supply and demand is really important when its about determining the prices of assets. When investors tend to buy more than they sell an asset the price of the asset will rise up and when investors tend to sell their assets more than they buy the prices will drop. Using this ideology the composite is able to manipulate the market, when a lot of people buy the price rises and when a lot of people sell the price falls.

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cause and effect
The composite man accumulates asset which causes an uptrend and the increase in price of the asset. He then sells his accumulated share which causing a downtrend and the fall in prices. Everything that happens in the market has a reason and understanding the composite man will help us understand these reasons.

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law of effort vs result

This law is based on two factors; when an uptrend or bullish market does not have the volume that goes with the force that does not increase. The speed at which the market when up will be equal to the speed it uses to drop.

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Share a chart of any cryptocurrency of your choice (BTC or ETH won't be taken into account for this work) and analyze it by applying this method. Show clearly the different phases, how the volume changes and give detail of what you're seeing.

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This chart is a four hour time frame of the GRT/USDT in which i have labelled all the stages of the wyckoff cycle.

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You can see at the accumualtion stage that the price goes sideways,this is where the composite accumulates the asset. The price here does not rise neither does it fall.

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There is an uptrend in the price of the asset
The price has increased due to high demand of the asset. There are stages of re-accumulation.

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Once the compsite man starts selling his position or share of the asset the distribution stage kicks in. The price of the asset reaches it's peak as he slowly sell and absorbs the demand of the asset. There are few last minute buyers.

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The supply of the asset will become greater than it's demand caused by the selling of the asset by the investor who bought it earlier. This will lead to a downtrend of the market as the composite man will try to bring the price of the asset down.

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Conclusion

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The wyckoff method is a very usefull method that can help investors when trading in a market. When uou fully understand the composite man only then will you be able to use this method effectively. Check whether there are more investors selling their assets than buying. Find out uf the current market is bullish or bearish. Once you have more knowledge about the assets, compare the asset to other cryptocurrencies.

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Thank you for this wonderful lecture @fendit and i jope to use this method in the future when i am trading.