Wyckoff Method Trading
The Wyckoff Method reveals how institutions accumulate and distribute positions, giving you the blueprint to trade alongside smart money.
Wyckoff Market Cycle
Phase 1: Accumulation
- Smart money quietly buys at low prices
- Price moves sideways in a range
- Public is bearish and selling
- Volume decreases as selling exhausts
Phase 2: Markup
- Price breaks out of accumulation range
- Strong uptrend begins
- Public starts noticing and buying
- Volume increases on advances
Phase 3: Distribution
- Smart money quietly sells at high prices
- Price moves sideways at highs
- Public is euphoric and buying
- Subtle signs of weakness appear
Phase 4: Markdown
- Price breaks down from distribution
- Strong downtrend begins
- Public panics and sells
- Cycle repeats
Key Wyckoff Events
The Spring
- Price briefly breaks below accumulation support
- Shakes out weak holders
- Smart money buys aggressively
- Powerful reversal upward follows
- Best entry in Wyckoff trading
The Upthrust (UTAD)
- Price briefly breaks above distribution resistance
- Traps late buyers
- Smart money sells aggressively
- Powerful reversal downward follows
Sign of Strength (SOS)
- Strong rally on high volume
- Breaks above trading range resistance
- Confirms accumulation phase is ending
Sign of Weakness (SOW)
- Sharp decline on high volume
- Breaks below trading range support
- Confirms distribution phase is ending
Trading the Wyckoff Method
Accumulation Trade
- Identify sideways range after decline
- Watch for spring (false breakdown)
- Enter long on spring reversal
- Stop below spring low
- Target: Top of range and beyond
Distribution Trade
- Identify sideways range after advance
- Watch for upthrust (false breakout)
- Enter short on upthrust reversal
- Stop above upthrust high
- Target: Bottom of range and beyond
Volume Analysis
- Increasing volume on advances = bullish
- Increasing volume on declines = bearish
- Decreasing volume in range = absorption
- Volume climax = potential turning point
Key Principles
- Always ask: Who is in control?
- Volume tells the truth
- Springs and upthrusts are high-probability entries
- Be patient waiting for confirmation
- Context of the overall trend matters