After enough time trying to learn trading well enough to make your account balance go up (rather than the opposite), you eventually learn about Richard Wyckoff.
Even though he died in 1934 his legacy of creating a window into the machinations of the instutions and major players in the securities markets is still as valid today as the day he first wrote about it.
He was an active trader and became wealthy from trading. Throughout his career from his standpoint as a trading professional he saw money invested by the non-professional retail investor flow out of their pockets, and into the accounts of the ‘smart money’, the professionals and institutional players.
It bothered him enough that he wrote a course that taught the retail investing public about “the rules of the game”, where he revealed the tactics of the instutions and major players in the market.
Image credit: Wikipedia.
Among other things, he introduced the public to Accumulation and Distribution trading ranges, and how these zones represent the institutions soaking up the supply at one price level so they can be ‘distributed’, or sold, at another level.
Looking for some new trading info today I started reading this Tradeciety article about “Supply and Demand” trading, and it seemed to be describing how to trade the situation that Wyckoff revealed to us all those years ago.
Supply and demand levels/zones are created when big players (institutions, funds, banks, governments etc.) build their positions. The big players leave clues on the charts that we can pick up and then trade with the players who move the markets.
With the knowledge of supply and demand zones we can often identify those areas because the big players leave clues on our charts. (Read more) … Supply and demand trading strategies
If you don’t want to be victimized by institutions and the massive volumes they have to trade, you have to know their motivations and how they trade. Basically, you have to know how they think and be able to see what they are doing when they are doing it.
With this ability you can be in tune with their market activity and hitch a very profitable ride.
It is as true today as it was 100 years ago, because supply and demand are laws of nature, principles that will never change.