Killer Whale Crypto
July 15, 2021, 2:51 AM UTC
An in depth explanation of the Wyckoff composite man
In this final edition of An Overview of the Wyckoff Method, we will discuss the most important fundamental concept, which Wyckoff based all his teachings and studies around. This concept is known as the “Composite Man.” If you would like to look back at any of the other topics we have discussed in this series, feel free to check out the links below!
Wyckoff’s composite man
“All of the functions in the market and in of all the various stocks should be studied, as if they were the result of one man’s operations. Let us call him the Composite Man, who, in theory sits behind the scenes and manipulates the stocks to your disadvantage if you do not understand the game as he plays it; and to your great profit if you do understand it.” – Richard D. Wyckoff.
The “Composite Man” or “Composite Operator” is a heretic device Wyckoff created to help understand the movements of individual stocks, as well as the entire market, on a large scale. Wyckoff. Advised traders to approach the market, as if they were the “Composite Man” themselves. The “Composite Man” – and behaving like him – Is similar to the “Best way to catch a fish, is to think like a fish; rather than a fishermen” concept. Based on a lifetime of observing the impact of large operators on market conditions, he taught his pupils to understand:
Let us look at some examples of what Wyckoff would like us to understand, from some of the concepts we have discussed up until this point. Phase C of the Wyckoff Distribution chart is likely the point where market manipulation by the “Composite Operators” appears most evident.
“Phase C -- This phase may reveal itself with an Upthrust (UT) or an Upthrust After Distribution (UTAD). It is a price move above the trading range resistance, which quickly reverses and closes within the trading range. It is also a bull-trap, meaning it appears to indicate the redemption of an uptrend, but in actuality is intended to "fake out" unconfirmed break-out traders. Upthrust (UT) and Upthrust After Distribution (UTAD) allow large interests the oppertunity to mislead the public about the future direction of the trend, in order to sell additional assets at elevated prices to traders and investors before the markdown begins.” – An Overview of the Wyckoff Method: Part 3 – Distribution
Furthermore, Reaccumulation and Redistribution, which we discussed in An Overview of the Wyckoff Method: Part 4 are direct examples of both “Bear traps” and “Bull Traps.” These are essentially events created by the “Composite Man” that are designed to make the market appear as if it is going through a trend reversal. When the market is moving upwards, a “Bear Trap” is placed, and the market is made to look – by the “Composite Man” – as if it will start moving in a downwards direction. Conversely, when the market is moving in a downwards direction a “Bull Trap” is placed, and the market is made to look as if it will start recovering in an upwards direction.
The Wyckoff Method is not the only methodology which can be applied to the markets, however it is one of the most fundamental and effective approaches to technical analysis. The Wyckoff Method has has consistently withstood the tests of time, and is still used widely amongst skilled traders.
The Wyckoff Method is fantastic first step for anyone who is studying technical analysis! We hope you enjoyed this series!