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The Wyckoff Trading Method Explained

The Wyckoff trading method has become very popular lately. A lot of people are teaching Wyckoff trading these days. However, most people completely understood it the wrong way.

Now you get people claiming to make 1:200 risk to reward trades using this method (which of course, is complete BS)

In this article you are going the read the truth about the Wyckoff method and how I use the Wyckoff trading method in forex.

Realistic expectations about the Wyckoff trading strategy

Let’s start off with giving you realistic expectations. The Wyckoff trading method is JUST a trading method that you can use to become a profitable trader in the markets. It’s just a trading method, it’s not the holy grail.

The holy grail will always be finding a trading method with an edge that 100% fits with your personality.

With the Wyckoff trading strategy, you can get into reversals early on and you can potentially aim for big targets. However, everything comes with costs. If you aim for huge targets, your win rate suffers, your losing streaks increase, your consistency of results decrease. These are all things to consider when you want to use the Wyckoff trading method.

On average, aiming for a 1:1, 1:2, or 1:3 is the best thing to go for. So, not 1:3000.

Also, don’t expect to drive a Lamborghini within 2 weeks because you think you have found the holy grail.

Again, it’s just a trading method that you can use to develop an edge. Nothing more, nothing less.

What’s the Wyckoff trading method?

The Wyckoff trading method is a method used to analyze supply and demand imbalances in different assets. The Wyckoff method can be used in basically all markets, such as:

  • Forex

  • Commodities

  • Metals

  • Equities

  • Bonds

When you are trading with the Wyckoff strategy, you essentially look for supply and demand within trading ranges to identify what’s happening. Is there absorption of supply or demand? How aggressive is that absorption?

You have to think about it like this: if a big player wants to buy a certain asset at a certain price, let’s say 1USD, that means that at that exact price there should be someone willing to sell to him.

Now, when the order is small, that’s not an issue. But, when the order is 1000 lots, that can be an issue if only 500 lots are selling at that price. Because of the imbalance, price goes up and a part of the 1000 lot order gets filled at a higher price, which causes the trader to buy at a disadvantageous price. Imag