1. Wyckofff's Law of Supply and Demand helps determine the direction of price

This is the core of trading and investing methodology. When demand> supply ==> price increases, when supply> demand ==> price falls. Traders can see the balance of supply and demand by comparing prices and trading volume.

2. Wyckoff's Law of Cause and Effect helps to define price targets

This rule allows traders to determine price targets by calculating the range that will go after the price breaks a certain price range. The Cause section is measured by Wyckoff by the number of horizontal dots on a point-and-figure chart, while the Outcome section is a predictable price range based on the width of the aforementioned horizontal dot.


This rule roughly understands that the more price accumulates (sideways), the stronger when it exits the sideways, the stronger it will follow the trend.

3. Wyckoff's Law of Effort and Outcome warns an early trend reversal

The divergence between the direction of price and volume is often a warning sign of a trend change. For example, there are many candles with high trading volume (great effort) but the real body is small after a bullish/bearish wave, and the price cannot make a new high/low suggest that Big Hands is closing orders gradually, leading to a forecast of a trend change


Summary of Wyckoff's law

Wyckoff's rule is a very good summary for Trader, and can be applied to Stocks.

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