Swing Trading Course part 1.1
Professional trading course part 2
Good morning everyone, I do apologize for not continuing the trading course sooner but I’ve been busy as hell, but I’m all yours now, and from what I’ve seen you guys enjoyed the first part now let’s continue, I will do my best to write every couple of days as this is going to be a pretty long course so stay tuned, take your pants off and learn.
Let’s dive in!
Transition to Markup Down below you have a screenshot so we can understand better the theory behind.
Transition to markup, this is fantastic, because if you have a very clear period of accumulation and you know that is soon as we get that break out we could have an enormous trend on our hands, if you can capture the entry from the transition from accumulations to markup ,you probably have the low of the trend.
Getting that entry can be extremely profitable, and that is easier said than done but when you have a breakaway gap like this on a higher time frame you are a fool if you don’t take it especially if its on a high time-frame, in most of the cases price likes to come to retest the range and immediately is bought by responsive buyers initiative participants are moving the price higher all of this is a perfect storm for an amazing move and this is something that we're going to talk about in Part 2 of this course and how to trigger this entry and get an amazing price, if you can capture that move you could likely get the start of that move.
Distribution
Alright the distribution phase, the distribution phase occurs when institutional investors begin slowly liquidating, selling their inventory of a given stock that's creating compression and this usually precedes the markdown phase, so after a beautiful, glorious mark up face institutions will begin liquidating their profitable positions that means they're selling large amounts of that stock, but then again they're having to do it over a longer period of time so it's not to disturb price so up at these highs institutions are selling 200,000, 400,000 and so on(as seen in the picture in the distribution area), but overall they just held from 5,000,000 shares but they had to slowly liquidate over a period of time because if they would have just said sell 5 million sell 2,000,000 you're gonna get in the markdown period immediately and all of a sudden they're having to sell it all the way down and it's completely ruining their the profit they've made, so what they have to do is, they have to build this up overtime and that's a distribution phase once you get the downside move out of the top of the distribution phase you usually get a very nice established markdown phase.
The end of the distribution phase is the contraction before the expension and identifying this ahead of time gives you insight into the future opportunity of this issue, with experience you will be able to see that end of the distribution phase and instead of getting out somewhere in the middle of the markdown phase or on the pull back you will be able to get out somewhere in the distribution phase and make a turn for a short position as soon as it breaks down or in one of the pull backs, you'll be able to understand the market phases so you will know exactly what to expect where to trigger your entries and set your stops and set your targets and set your trailing, it all comes together but it comes together by a proper understanding of market structure again Wyckoff believes that this phase is the force, the fuel behind the upcoming move.
Are you still with me, good because I’m tired too but we’re still going, now we’re going to use the same picture just because my current state can’t handle more research but you can clearly see the markdown.
When you're looking at a distribution phase in an actual stock here (again looking at the picture way above us) what you see is clear sideways move, and I remember always being taught early on that if you consolidate at a high after an up move that's usually a continuation pattern, and those are usually called consolidations but this is not a consolidation this is a distribution phase this is a topping pattern you would usually see a rounding pattern (a lower high / and higher low) and this behavior tells you that this is a distribution phase and that doesn't mean that we can get a fake out and just rally through a high because anything can happen in the stock or cryptocurrency market but more often this is not a consolidation that's going to lead to more strength but is a buying climax and that's when you get your markdown phase and of course every pullback becomes a selling opportunity which also comes with a redistribution phase same with the accumulation and re-accumulation phase.
Remember nothing is not 100% sure as I said above it can be interpreted in many ways, but in most of the cases it is going to follow the most probable scenario and always, Always wait for a confirmation, the goal is to identify the high probable opportunities withing established phases, being able to identify and capture those small moves between pull backs and we are going to learn these concepts.
That will be all for today we will continue with a mark down scenario so we can understand these phases a little bit better even though it’s similar to a mark up phase, but will still do it and after we’re going to move a little bit deeper on understanding the value of these opportunities.
P.S. If you are serious in learning these trading concepts than please open a chart right now and practice what you’ve learned today, put it in practice, that way we can have a better understanding in the next article and in the next one and in the moment when you will start trading.
Love R.
P.S. 2. Also would you like for me to do market analysis like a weekly thing, maybe? write down in comments I would be down for it.
