You often hear about "Smart Money" or "The Algorithm".
But 100 years ago, a man named **Richard Wyckoff** called it the **"Composite Man"**.
He theorized that the market acts *as if* it is controlled by one single entity. This entity **accumulates** positions when prices are low, **marks the price up**, and **distributes** them when prices are high.
Understanding the **Wyckoff Method** gives you the ability to see the "Matrix". You stop chasing random candles and start seeing the **Cause and Effect** of market moves.
SVG 1: The Market Cycle (Wyckoff Logic)
1. The Law of Supply and Demand
Wyckoff is not about patterns; it's about logic. The cycle is dictated by the imbalance of institutional orders:
- **Accumulation:** Demand > Supply. (Smart Money is buying quietly).
- **Mark Up:** Demand explodes. (Price trends up).
- **Distribution:** Supply > Demand. (Smart Money is selling quietly).
- **Mark Down:** Supply explodes. (Price trends down).
2. Accumulation Schematic (The Bottom)
This happens at the end of a downtrend. The "Composite Man" wants to buy, but he needs sellers. He keeps the price in a range to bore retail traders into selling their positions.
Key Events in Accumulation:
- **PS (Preliminary Support):** The first pause in the crash.
- **SC (Selling Climax):** Panic selling. High volume. The absolute low (usually).
- **AR (Automatic Rally):** Price snaps back up because selling pressure dried up.
- **ST (Secondary Test):** Price goes back down to test the low. Volume should be lower (Sellers exhausted).
- **The Spring (Crucial):** A final fakeout below the support level. This is the **Liquidity Grab** that traps bears and triggers stop losses.
3. Distribution Schematic (The Top)
This happens at the end of an uptrend. Banks want to sell, but they need buyers. They keep the price high, creating "FOMO" to trick retail traders into buying.
Key Events in Distribution:
- **BC (Buying Climax):** The massive green candle that makes everyone think "To the Moon!".
- **UT (Upthrust):** A fake breakout above the resistance. It looks like a continuation, but immediately reverses.
- **UTAD (Upthrust After Distribution):** The final **"Bull Trap"**. The ultimate liquidity grab before the crash.
SVG 2: The Money Spots (Spring & UTAD)
4. Phase Analysis (Timing the Entry)
Wyckoff is divided into 5 Phases (A to E). **Do not trade in Phase A or B.** This is where the volatility is high and direction is unclear.
**The Entry is Phase C or D:**
Wait for the **Spring** (in Accumulation) or the **UTAD** (in Distribution). These are the highest probability entries.
**Risk Management Note:** Because Wyckoff setups offer deep retracements, the **Stop Loss is often very tight** relative to the potential move. Use the Lot Size Calculator to size your position correctly, aiming for a **1:5 to 1:10 Risk-to-Reward Ratio**. Verifikasi rasio Anda menggunakan Risk & Reward Calculator.
5. Wyckoff + Volume Confirmation
Volume is the key to confirming Wyckoff's logic (Effort vs. Result).
- **Accumulation Logic:** We want to see HIGH volume on the down moves (Selling Climax) but then **LOW volume** on the Secondary Tests and the **Spring**. This shows that the *effort* to push the price down was weak, confirming sellers are exhausted.
- **Distribution Logic:** We want to see HIGH volume on the upward move (Buying Climax), but then low volume on the final Upthrusts (UT/UTAD), indicating the underlying buying pressure is absent, and the subsequent reversal is genuine.
6. Final Thoughts: The Edge of Patience
The Wyckoff Method requires patience. A range can last for days or weeks. But spotting a proper Accumulation setup can give you a trade with a phenomenal Risk-to-Reward ratio. Algorithmic trading has evolved, but the core human emotions (Fear and Greed) never change, and Wyckoff explains the psychology behind the algorithms.
Stop trading every candle. Start trading the Cycle.
