Wyckoff method

Starter draft. Rewrite in the group’s own voice.

The idea

Richard Wyckoff’s method assumes that large operators (he called them the “composite man”) build positions inside trading ranges before a trend starts. Price and volume within the range show whether they’re buying (accumulation) or selling (distribution).

Accumulation phases

1. Phase A, stopping the decline: preliminary support, a selling climax (SC), an automatic rally (AR), and a secondary test (ST). Together they set the range.
2. Phase B, building the cause: a long range where supply is absorbed. Tests of the lows come on lighter volume.
3. Phase C, the test: often a spring, a quick break below the range low that reverses. It traps late sellers.
4. Phase D, markup begins: signs of strength (SOS), higher lows, and a last point of support (LPS).
5. Phase E: price leaves the range and trends.

Distribution is the mirror image. Its equivalent of the spring is the upthrust after distribution (UTAD), a false break above the range high.

The three laws

• Supply and demand: price rises when demand exceeds supply, and falls when it doesn’t.
• Cause and effect: the longer the range, the larger the move that can follow it.
• Effort versus result: volume (effort) should agree with price movement (result). When it doesn’t, the move is suspect.

Using it on SPX/ES

Wyckoff works best on clean ranges in liquid markets. On index futures, a spring or UTAD that lines up with a GEX level, like a quick break of the put wall that reverses, is one of the stronger setups.