Untitled Deck

Question 1

What are the two types of trading in the basic structure of the market?

Answer 1

Trends
Trading ranges
Footnote: Trends can be bullish or bearish; ranges can be accumulation or distribution.

Trends can be bullish or bearish, while trading ranges can be of accumulation or distribution.

Question 2

In the accumulation phase, what do professional traders do?

Answer 2

• Buy up all available supply
• Test the market for sellers
• Confirm market is clear before allowing price to rise

Smart money won’t start an uptrend until they’ve verified the path of least resistance is upward.

Question 3

What signifies the distribution phase in trading?

Answer 3

Buy available supply
Test for remaining sellers
Confirm supply is absorbed before allowing price to rise
Footnote: Smart money waits until upward movement has the path of least resistance.

This phase creates a ceiling where the price cannot rise further.

Question 4

True or false: In a downtrend, sellers are stronger than buyers.

Answer 4

TRUE

This results in the price naturally moving lower.

Question 5

What are the four phases of the market cycle?

Answer 5

• Accumulation
• Uptrend
• Distribution
• Downtrend

Each timeframe can be in a different part of the cycle.

Question 6

What does CHoCH stand for in the Wyckoff methodology?

Answer 6

Change of Character

It indicates a major shift in control, such as from a downtrend to accumulation.

Question 7

In the accumulation phase, what is the purpose of the Selling Climax (SC)?

Answer 7

Final panic sell-off where price collapses fast, then bounces hard

This is a critical point to identify the start of accumulation.

Question 8

What does the Automatic Rally (AR) indicate in the Wyckoff methodology?

Answer 8

Price snaps upward quickly after the Selling Climax

This occurs because sellers are exhausted.

Question 9

What is the Last Point of Support (LPS) in the context of accumulation?

Answer 9

The final higher low before the main uptrend begins

This is considered a low-risk entry point.

Question 10

What is the Sign of Strength (SOS) in the Wyckoff methodology?

Answer 10

A powerful breakout showing big demand and confirmation of the uptrend

This indicates that the accumulation phase has successfully transitioned to an uptrend.

Question 11

What happens during the Upthrust After Distribution (UTAD)?

Answer 11

A fake breakout above all previous highs designed to trap late buyers

This is a critical point before the price collapses.

Question 12

What is the ICE in the context of distribution?

Answer 12

The main support level in a distribution range

Breaking ICE signals the beginning of a downtrend.

Question 13

What does a shallow pullback indicate about a trend?

Answer 13

The trend is STRONG

It suggests that the momentum is still in favor of the prevailing trend.

Question 14

What is the Preliminary Supply (PS) in the distribution phase?

Answer 14

First attempt to slow the up move

This typically fails and indicates the beginning of the distribution phase.

Question 15

What is the Buying Climax (BC) in the Wyckoff methodology?

Answer 15

Final buying surge that ends the uptrend

This marks the transition from an uptrend to a distribution phase.

Question 16

What is the Last Point of Supply (LPSY) in the context of distribution?

Answer 16

Lower highs formed as sellers dominate

This often represents the best low-risk short setups.

Question 17

What does depth refer to in trading?

Answer 17

How deep each pullback goes

It is used to assess the strength of the trend.

Question 18

What is the path of least resistance in trading?

Answer 18

If supply is absorbed and sellers are gone, price can rise easily

Conversely, if heavy supply shows up, price may fall instead.

Question 19

What type of orders are limit orders below the current price?

Answer 19

PASSIVE orders

They can stop the price from going down but require buyers to aggressively purchase to move the price up.

Question 20

Not all ranges are accumulation or distribution processes. True or False?

Answer 20

TRUE

Some structures are merely price fluctuations without a motivating cause.

Question 21

In Wyckoff trading, where do movements typically originate?

Answer 21

Lateral conditions

Traders look for the beginning of new structures to analyze price and volume.

Question 22

What does harmony in candle development indicate?

Answer 22

Effort (volume) and Result (price) match

A significant increase in volume suggests professional money is present.

Question 23

What does divergence signify in trading?

Answer 23

Effort (volume) does NOT produce Result (price)

It indicates a potential weakening trend or reversal.

Question 24

Use harmony to:

Answer 24

• Enter pullbacks
• Stay in a trend
• Add to positions
• Expect markup or markdown continuation

Example: Big green candle + big volume indicates a strong trend.

Question 25

Use **divergence** to:

Answer 25

* Exit positions * Stop chasing * Look for CHoCH * Expect a trap (Spring or UTAD) * Prepare for reversal setups ## Footnote Example: Big green candle + huge volume followed by a red candle indicates buyers failed.

Question 26

An **accumulation range** follows what type of market move?

Answer 26

Bearish move ## Footnote It is a sideways price phase where large players absorb supply.

Question 27

What typically emerges in the later stages of an accumulation range?

Answer 27

Rising highs and rising lows ## Footnote This indicates large traders beginning to nudge the price upward.

Question 28

The **reaccumulation process** is similar to what other process?

Answer 28

Accumulation process ## Footnote The difference lies in the development of the structure.

Question 29

What do the **green circles** represent in Wyckoff trading?

Answer 29

* Strong-Hands Buying Zones * Ideal Entries ## Footnote They indicate points where smart money is accumulating while weak hands are shaken out.

Question 30

What are the **three types of green-circle entries**?

Answer 30

* Early Accumulation Entries (Phase A/B) * Spring + Test (Phase C) * LPS / B.U. Entries (Phase D) ## Footnote Each type corresponds to different stages of the cycle, risk profile, and expected reward.

Question 31

What does a **red circle** indicate in Wyckoff trading?

Answer 31

DO NOT ENTER ## Footnote Red circles mark traps like Upthrusts and weak-hand distribution zones.

Question 32

What is the **Upthrust** maneuver during distribution?

Answer 32

A sudden upward movement designed to achieve three functions ## Footnote It forces short sellers to cover, triggers breakout buying, and allows professionals to sell into induced demand.

Question 33

What do professionals do to test demand during distribution?

Answer 33

Conduct upward movements to evaluate buyer interest ## Footnote They monitor volume response to determine if demand is still present.

Question 34

What are the characteristics of a **distribution range**?

Answer 34

* High Volume & Volatility Early on * Low-Volume Tests of the Lower Range * Upward Shakes Toward Highs * Stronger Down Moves Than Up Moves * Lower Highs & Lower Lows Forming ## Footnote These characteristics indicate growing bearish control.

Question 35

What happens when demand disappears in a distribution range?

Answer 35

A turning point forms ## Footnote This leads to a markdown phase as professionals no longer support the price.