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The Wyckoff method: accumulation, distribution and the spring

The three laws, the Composite Man, the phases A–E of accumulation and distribution, and entering at the spring or LPS.

Who Wyckoff was

Richard D. Wyckoff (1873–1934) was an American trader and financial journalist. He studied how large operators accumulate and distribute positions and pictured them as a single player he called the Composite Man.

The three laws

Supply and demandWhen demand exceeds supply price rises, and vice versa.
Cause and effectThe longer the accumulation (cause), the bigger the following markup (effect).
Effort vs resultVolume (effort) should match the price move (result); a mismatch is a warning.

Phases of accumulation

Phase A: stopping the downtrendPS (preliminary support), SC (selling climax, huge volume), AR (automatic rally), ST (secondary test)
Phase B: building the causePrice ranges between the SC and AR for a long time with many tests
Phase C: the final testSpring: price breaks below the range and quickly comes back, shaking out weak holders
Phase D: markup inside the rangeSOS (sign of strength on rising volume), LPS (last point of support, a higher low)
Phase E: leaving the rangePrice breaks out of the range and the uptrend begins

Distribution is the mirror image: PSY, BC (buying climax), AR, ST, UTAD (a false breakout), SOW (sign of weakness), LPSY (last point of supply).

How to trade it

  1. Spot a range after a long decline, starting with a high-volume selling climax.
  2. Wait for a spring and a low-volume test of it: an early entry with the stop below the spring low.
  3. Or wait for an SOS breakout and enter at the LPS: a safer entry with the stop below the LPS.
  4. Minimum target: the range height projected from the breakout (Point & Figure counts give finer targets).
Watch outLabelling Wyckoff events is easy in hindsight and hard in real time. Not every range is accumulation; always have a plan for being wrong.

Try it on a chart

Educational content only, not investment advice. Practise on a demo account before using real money.