Crypto Academy Week 16 | homework post for @fendit | The Wyckoff Method | by @loveth01.

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Wyckoff was a professional market in the stock market, due to his erudition in the stock market research, he came up with what is today known as Wyckoff method. Wyckoff method is a technical method that is used in the stock market . Wycoff defined and explained some of these market operators and how do they operate? After a deep understanding, he concluded by saying that trading risks and returns are optimal.

Some of the conclusions that can be made from the wycoff method are as follows:

1. In his explanation, he positioned stop loss at any time a trader trades.
2. More so, he explained the advantages that is attached to the management of trading risk.
3. Lastly, he also expanciated on the bullish and bearish signals when trading in the stick market.

The trading methods as explained by Wycoff required only five steps in stock selection and entry timing, they are mentioned below:

A trader will determine the present state of the stock market and predict what may later happen to the market. He will also select the stock that is line with the market trend. After that he also Selects stocks whose movement equals or exceeds his own target. Furthermore, he makes sure the stock is ready to move before he trades anything.
When the stock market index reverses, he should have emergency approaches to deal with the market to avoid losses. More so, Wyckoff made some rules that if followed and are understood by traders, they will make nothing but massive profit in the crypto market.

Summarily, the important feature of this method is to allow and enable traders to know the price movements of any stock or asset to trade.

COMPOSITE MAN

Who is a composite man in the stock market?

Inorder to enable traders to understand the Wycoff method of trading, the man himself tried to relate the stick market to a real life. The Composite can be regards to be someone who has the virtually control of the market. As regards to the market trend, composite man is the one who makes the happenings in the market. In contrast to the market being viewed as being control by groups of people or investors, the composite man is the one solely responsible for the up and down trend of the market . According to Wycoff, traders should be able to reason just like that man (Composite man ).

The Composite man as it was explained by Wycoff is someone who comes up with the theory as regards to the market. He makes traders to buy when the market's direction comes down and he makes traders to sell when the market's prices goes up. So in this case, When a trader trades and doesn't know how the market is run, then, he makes losses each and every time he trades in the market. But a trader who understands how the market is will be able to make enough profit each time he trades.

FUNDAMENTAL LAWS

Wyckoff as we all know to be professional and stock market analyst, according to him, if traders have through detailed supply and demand analysis at hand, which also includes studying price behaviors, volumes and be conscious of time, trades should be able to know what really is happening in the market and should be able to make accurate predictions of the market.

Wyckoff’s analysis method is based on the important laws as explained by Wycoff. Theses laws affects and cuts across all ramifications of stock analysis; which may includes the forecast of the market and individual stocks, how to select stocks to trade and the appropriate time to enter the market.

These fundamental laws include:

1. The principle of supply and demand:
   With adequate knowledge of this principle to determine the direction of the price, a trader will be able to make profit. Okay look, the principle is simply this : WHEN DEMAND EXCEEDS SUPPLY, THE PRICE OF ANY ASSET RISES, and ANYTIME SUPPLY IS MORE THAN DEMAND, THE PRICE OF SUCH ASSET DOESN NOTHING BUT FALLS. Traders can analyze the relationship between supply and demand through the relationship between price and volume on the asset movement chart. A trader who wants to learn this principle needs to make constants use of it inorder ti master the relationship between volume and price.

2. The principle of effort Vs return :
   If there's an inconsistency in the volume and price of an asset, a trader should be able to signal our that it is an early warning of trend changes. If this is noticed and monitored, a trader should be able to know that it is a sign of price changes in the market. For instance, if there is a continuous heavy volume of an asset, the price of such asset is reducing gradually.

3. The principle of cause and effect: as we all know that everything happens for a reason or reasons. The price of an asset can be said to rise when there are a lot of traders that are having such an asset. That is, the increase in the price of that asset is caused by the the increase in number of traders who have such an asset.
   And there will be a decrease in the price of an asset, i.e there will be a devaluation in the price of an asset if there is a sudden decrease in the number of traders that have such an asset. We can see that the two occurrences happened due to the increase and decrease in the numbers of traders.

In a nutshell, with the deep understanding of the fundamental laws and relating the market as if it were controlled by single man we referred to be the composite man who is seen to be the one that manipulates the price of assets and also the one who controls the market i.e the market goes in his favour. Also, a trader who wants to succeed and makes profit in his trading smshiukd be willing to follow rulings of the composite man and any trader who fails to follow the lead of the composite man may be subjected to great losses.
However, the fundamental laws explain that traders should be active participant in the market, they need to know the how (s), the why(s) and the when (s) that happen in the market. A trader who knows much if this things will always be ahead of others and he has the potential of gaining massively each and every time he trades in the market. Also ut us worthy to know that everything that happens in the market happens for a reason and the best trader is the one who takes the advantage of such happenings.

The analysis of the chart based in the teachings and the technical methods as it is given by Mr. Wycoff is listed below:
Here I'm analyzing the Bnb coin chart:

Accumulation: There's no much variation in the price and volume of the coin. It can be seen that the chart goes sideways. This is point when the Composite Man comes in and accumulates much of the bnb, he does this to his own advantages before anyone does.

Markup/Uptrend: Once the accumulation is over and the supply of BNB reduces, the Composite Man will then again tries to make the price of the BNB to go on an increase, doing this, the price of BnB will skyrocket. When there volume of the asset increases and when there is a new movement of the asset, Since the price has become appreciable, other investors then try to get in.

Distribution: After that phase, the chart will show then again show sideways movements. With this, it will be seen that the Composite Man who has already accumulated enough for himself will start selling his position very slowly till everything is exhausted and virtually no one is willing to buy again. At this period, the highest price of BNB is seen and it's only the few late comers who will want to buy the asset. Furthermore, at this instance some of the traders that have bought the asset will want to sell it because selling at this period means making a huge profit while some may decide to hold on to the little they have.

Downtrend/Markdown: Once the Composite Man has sold part of his assets, the price of the asset will reduce because as it has been explained above, he is seen as the controller and anything and everything that happens in the market all depend on him. At this time, there will be an increase in the demand of the asset.

In conclusion,

inorder to be a successful trader in the market, there are some important one needs to learn just like the Wycoff method explained above. A successful trader is the one who knows how the market is controlled and in doing that, he makes more profit than traders who have little knowledge about the market.

Thanks to professor @fendit this is my homework post.