Wyckoff how prevent big players from being deceived

Wyckoff how prevent big players from being deceived

Wyckoff how prevent big players from being deceived

Now, in order to make a competent analysis of the market, which will lead to an increase in the Deposit, you only need a few minutes. However, before the advent of computers, traders analyzed the market manually and for much longer. Some of the principles of those times can help us earn money today.

Computers made it possible for anyone to trade Forex. However, do not underestimate the "grandfathers" – the most important principles that directly affect the state of the account and which we still follow were laid down in the pre-computer era of trading. Do you want to learn more about them? Then watch my free webinar.
After watching the video, you will learn how to build the most obvious price reversal points in just an hour, understand what is common between the Wyckoff method and modern VSA analysis, and learn how to use these methods to make a profit! And all this is completely free!

Now back to the story. In the era of "manual" market analysis – let's call it that for convenience – trader Richard Wyckoff proposed an unusual method of price analysis at that time, based on simultaneous observation of price and volume. He used three indicators:

Trend
Demand zone
Offer area

Let's look at each of them. An uptrend (Fig.1) is a unidirectional price movement in which each vertex formed by the price was higher than the previous one. The same is true for a downtrend, but exactly the opposite.

Supply and demand zones are characterized by the behavior of prices outside the balance zone, i.e. if a large supply appears at the moment when the price is in balance, the price will rush down, if demand prevails, the price will rise. In figure 1, the number 1 indicates the balance zones. The same is true for a downward movement, only in this case, after the price is in the balance zone for a while, we will see an impulse that causes an imbalance and the price decreases to lower price levels.
According to these three factors, the market can be in the balance phase – in other words, in the demand zone or in the supply zone – as well as in a trend state (see figure 1). when the price is in the balance zone (1), a kind of "stagnation" occurs, after which a range breakdown occurs, and the price impulsively rushes in a certain direction (2). After a while, the price stops again and is in the balance phase for a while, and then an impulse movement occurs again.

Wyckoff used three types of graphs as analytical tools:

Vertical lines and bars (Fig. 2)
Figures, or the TIC-TAC-toe graph (Fig. 3)
Additional wave graph (Fig. 4)

Vertical lines and bars

In fact, some traders still use price bars in the process of market analysis. Almost any trading terminal allows you to display price movements in the form of bars.
TIC TAC toe chart

What is interesting about this method? First of all, it does not take into account the time factor, only the price change matters. If the chart usually shows time on the X – axis and price on the Y-axis, then this method of analysis reflects the price change along two axes at once. On the chart take into account changes equal to a certain minimum value, it is possible to choose for a specific timeframe. For example, the minimum change is 5 points. The price is going up. This means that every 5 points a cross will be added to the chart, and – importantly – the crosses are superimposed on top of each other. In other words, you get a vertical column that grows up and reflects the dynamics of price changes.

The analysis is based on the closing price. For example, the price has changed by 23 points – put 4 crosses on top of each other. But it didn't go any further, the trend has changed. If the price falls below the value of the reversal, we start the next column of zeros – that is, displaying a downward movement. In this case, the zeros are drawn under each other, and the column grows down.
An additional wave chart

This representation of the price movement allows you to smooth out the so-called market noise and, together with other analytical data, analyze the price more effectively.Each of the charts provided its own unique information, which was used for market analysis and making trading decisions. We remind you that all constructions and calculations were made manually. This process required extreme concentration and considerable patience on the part of the trader. To analyze the Forex market, a whole team was involved, in which everyone performed a specific task. Imagine how long it took to analyze a single trading instrument!

Since then, everything has changed dramatically. Now there is no need to involve several people to conduct a qualitative analysis of the market, the entire process can be performed by one person. All he needs is a personal computer, Internet access and a trading terminal. At the same time, it is enough to use only one type of chart that displays Japanese candlesticks, and, of course, an indicator that displays exchange volumes.

It is important to note that, even after almost a century, the basic principles of Wyckoff have not lost their relevance. In the modern market, the most important element of analysis for a trader is still to determine the interest of major players. But the process of analysis itself has gone very far. Today, the trader has access to tools for price analysis that are significantly superior in terms of capabilities to the tools of that time. At the same time, the market has become more complex. Therefore, today, qualitative analysis requires more knowledge than the classical Wyckoff approach required. Major players are trying to "confuse the tracks"in every possible way. This doesn't mean that it does this to make you lose money. It is more correct to say that he does it to earn money himself. Who and how much will lose in this case, it does not care at all.

However, no matter how hard a major player tries, an experienced trader, having stock data in his Arsenal, will be able to unravel most of the tricks and make the right trading decision.

Today, thanks to modern technology, exchange volumes can tell a lot about the price. So, the VSA 2.0 trading system, in addition to using volumes in the classical sense (Fig. 5), meaning displaying bars under the chart, uses a market profile (Fig. 6), which is also based on exchange volumes. But the display is implemented in the form of vertical volumes. The combined use of these two components can give the trader very high-quality entry points. At the same time, the risk of losses is minimized, and the profit potential exceeds the risk by a significant number of times.
Comprehensive price analysis based on stock information allows you to read the market like an open book. The trader opens up new horizons in the field of understanding the price movement. It becomes clear when to expect a corrective price pullback, and when to expect a trend reversal.

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