The Wyckoff Method

Richard Wyckoff's method explains how institutions manipulate price to accumulate or distribute positions. Understanding their playbook gives you an edge.

The Composite Man

Wyckoff's key concept: imagine all institutional participants as a single entity — the Composite Man. He:

• Accumulates (buys) when the public is scared
• Marks up price once his position is built
• Distributes (sells) when the public is euphoric
• Marks down price after selling into strength

The Four Phases

1. Accumulation

Price moves sideways in a range after a downtrend. The Composite Man quietly buys. Key events:

• Selling Climax (SC) — Panic selling, high volume, smart money starts buying
• Automatic Rally (AR) — First bounce, sets the range ceiling
• Spring — False breakdown below range support. The trap! Shakes out weak hands, then price reverses sharply upward.

2. Markup

The uptrend. Demand exceeds supply. Higher highs, higher lows. The public starts buying.

3. Distribution

Price moves sideways at the top. The Composite Man sells into public demand. Key events:

• Buying Climax (BC) — Euphoric buying, high volume
• Upthrust (UT) — False breakout above range. The trap at the top.

4. Markdown

The downtrend. Supply exceeds demand. The public panic sells.

Trading Wyckoff

The highest-probability Wyckoff trades:

1. Buy the Spring — In accumulation, after the false breakdown
2. Sell the Upthrust — In distribution, after the false breakout
3. Trade the markup/markdown — Ride the trend between phases

Key Takeaway

Wyckoff teaches you to think like institutions. When the crowd is panicking, smart money is buying. When the crowd is euphoric, smart money is selling.