The Wyckoff Method: Accumulation and Distribution

The Composite Man

Developed by Richard Wyckoff in the early 20th century, this methodology suggests that retail traders should view the market as being controlled by a single, highly capitalized entity: the "Composite Man." Your goal is not to fight the Composite Man, but to understand his motives and trade alongside him.

The Four Market Phases

1. Accumulation: Smart money quietly buys up the asset within a sideways trading range, absorbing all selling pressure from panicked retail traders.
2. Markup: The available supply is exhausted. The Composite Man allows the price to break out, attracting retail FOMO which aggressively drives the price higher.
3. Distribution: The smart money quietly offloads their massive position to the euphoric retail public at the top of the market.
4. Markdown: The selling pressure overwhelms demand, the support breaks, and the market crashes, returning to the accumulation phase.

Springs and Upthrusts

A key Wyckoff concept is the Spring—a sudden, violent dip below the accumulation range designed to trigger retail stop-losses. This allows institutions to buy the final remaining liquidity before initiating the Markup phase. Conversely, an Upthrust is a fake breakout during the Distribution phase to trap late retail buyers.