Wyckoff Accumulation/ Distribution (WAD)- Day Trading NF


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Hi all,

starting a new thread with a focus on using Wyckoff accumulation/distribution for day trading NF. The reason for the read-only thread is as I also don't know how to shape this stuff as it's very discreationary with broad guidelines. also, I don't want to disturb my thought process on the topic.

Wyckoff accumulation/distribution is very complex and advanced stuff.so if you are a beginner trader or only with a couple of years of experience better to refer to the original Wyckoff course. what I am sharing here is my take on it and how I am using it, which may differ from the pure way of looking at it.

WAD focuses on Wyckoff's law of "cause and effect". basically for any impulse move to happen be it on the upside or downside there must be a cause (trading range) and the effect of this cause is the impulse move. these trading ranges are what are known as accumulation/distribution or reaccumulation /redistribution as per the price structure of the market.

the objective of using WAD in trading is to have a very high R: R. it gives the opportunity to have multiple places to enter a trade with a very tight SL.

volume is an integral part of the Wyckoff trading and particularly of WAD. but as per my experience and observation even if one does not have much knowledge about volume, one can still use WAD profitably in trading.

I will be posting NF 1-2-3-5M charts as time frames are irrelevant in my way of day trading along with my thought process. also I will share the theory behind the key points. hope members find it useful.
1-12-20 NF 1M


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How to identify WAD?

the easiest way to identify the start of WAD (including re AD) is to find climatic action on bars, which can be an individual or on a couple of bars. this climactic action bar has some key characteristics:

1) occurs after a significant impulsive move on the time frame of interest.
2) accelerating bar with a wide to ultra widespread (spread is relative to nearby bars).
3) close will be in the middle or high (in the case of BC mostly it will be a bearish candle and in the case of SC bullish candle).
4) steep ascent.
5) volume expands dramatically.

6) can occur on a couple of bars.

it is not that only demand is there. It's a quality of demand against poor supply. also, see in the chart below the next 3 candles after SC clear really, known as an automatic rally.

once these 2 things are identified, the next step is to mark S/R. support is the low of SC and resistance is the high of AR. resistance is also known as a creek.

with S/R in place observe PA. mostly it will go in the trading range. The next step is to draw the lower creek, which is nothing but a line connecting the highs of minor swing highs, starting from the high of AR. Now we have both lower and upper creek

next is to wait for BOS (break of structure) or JAC (jump across the creek). once it happened conservative entry will be on the test of JAC. there are other precise ways to enter much earlier with very tight SL. BUT this is the whole WAD.

it is just one piece of the puzzle. one has to read the liquidity/pending liquidity etc which are not part of the WAD so I am not covering. will cover later how to find the probable targets with WAD (as of now just a theory so not sure whether it works or not )

in the chart below I have not shown the secondary test/ sign of strength etc, which is not needed much. it looks great for "show off" on the chart but one can use WAD without such stuff also.

in future posts, I will share variations of WAD. but most imp is the climactic action, which is a common factor.
one can refer to Tom Williams book "the undeclared secrets that drive the stock market". OR anna coulling "VPA" book.

1-12-20 NF 3M chart


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support tool for WAD:
OB/OS in a trend channel
. when climatic action happened with PA getting OB/OR or after PA gets OB/OS its a good indication to start looking for the rest of the stuff.


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Reaccumulation- it's very deceptive as compared to accumulation as it looks like a fresh distribution. so traders make the mistake of shorting the market. A complex concept. there are subtle points that can help an astute trader to recognize the reaccumulation Broadly speaking it's a pause in an existing uptrend for the absorption of more shares by stronger buyers. Below writings, I have gathered from multiple on it.

A Reaccumulation serves the same purpose as an Accumulation with one main distinction. An Accumulation stops a downtrend. This begins with the stopping action of a Selling Climax. A Reaccumulation is a process of Absorbing shares during an uptrend. It is a pause in a major uptrend.

A Reaccumulation will begin with an acceleration of the uptrend into a Buying Climax (BCLX). A BCLX and an Automatic Reaction (AR) set the Resistance and Support areas of this new ‘range-bound’ condition. The trendless trading range will discourage many traders and they will sell shares

Often traders will misinterpret a Reaccumulation as Distribution. With careful analysis, one can learn to make the essential distinction between these conditions.

In the schematic below notice how each of the lows (in the area of Support) is higher than the prior low. It is not uncommon for the lowest price of the structure to be on the AR or the following Test. Reaccumulations can also have a Spring at the conclusion.

Reaccumulations are encountered with frequency. There will be a number of them in a long bull market. Accumulations come along much less frequently.

below is the NF 2M chart where it happened

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