# Market basics

### Wyckoff Theory

The fundamental principle of market cycles as described by Richard Wyckoff is elegantly simple: everything that has been bought must be sold. No large market participant ("whale") enters a market for the technology or ideology; everyone is there to make money, which necessarily implies taking profit.

This profit-taking cycle creates predictable market phases that repeat across all timeframes and asset classes:

1. **Accumulation**: Smart money quietly builds positions
2. **Mark-Up**: Public participation and price appreciation
3. **Distribution**: Smart money transfers holdings to retail investors
4. **Mark-Down**: Price decline as demand exhausts

<figure><img src="https://2651440114-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FCNkpSotL7eck1Ytqq55p%2Fuploads%2FQVhMMNhDrTLgFrPczjqa%2Fimage.png?alt=media&#x26;token=fa1b2361-0f8b-4a30-a299-4849a139b1d7" alt=""><figcaption><p>Wyckoff Market Cycle Diagram with Accumulation, Mark-Up, Distribution and Mark-Down phases</p></figcaption></figure>

Understanding where we are in this cycle provides crucial context for trading decisions.

### Technical Analysis Fundamentals

#### The Truth in Price Action

Technical analysis doesn't lie; it reveals what's actually happening in a market:

* Shows whether an asset has genuine interest
* Reveals when wealthy market participants want to drive prices higher
* Fundamentals merely reinforce what technical analysis already shows
* Fundamental narratives typically emerge _after_ price movements to explain why something pumped

The "tokenomics" trend that emerged in 2022 during the bear market was largely an attempt to rationalize investments after the fact. In reality, tokenomics = marketing = largely meaningless.

For swing trading, weekly timeframes provide the clearest signals. Timeframes below daily are typically filled with noise and "manipulation".

#### Key Chart Patterns

<figure><img src="https://2651440114-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FCNkpSotL7eck1Ytqq55p%2Fuploads%2FaRQ9Z3dKIMVsYgx4fDon%2Fimage.png?alt=media&#x26;token=0337bdc4-a8e2-4c64-921d-1194d5b815d1" alt=""><figcaption><p>Double Bottom Weekly - Double Top Weekly Chart</p></figcaption></figure>

<div align="center" data-full-width="false"><figure><img src="https://2651440114-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FCNkpSotL7eck1Ytqq55p%2Fuploads%2FhLmSElHKw4b5TMGhpArT%2Fimage.png?alt=media&#x26;token=1e5ed702-1a88-47ba-b236-82afe268c73b" alt=""><figcaption><p>Complex Top</p></figcaption></figure></div>

<figure><img src="https://2651440114-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FCNkpSotL7eck1Ytqq55p%2Fuploads%2FFfk9oCHUNCCXDIRBWZJ4%2Fimage.png?alt=media&#x26;token=c18b26b7-ba90-4878-b58a-80c275800881" alt=""><figcaption><p>Falling Wedges Chart</p></figcaption></figure>

These patterns represent psychological shifts in market sentiment and often precede significant price movements.

#### Trend Indicators

**EMA 9/18 Crossover**

* Entry: Bullish crossover on weekly timeframe
* Exit: Bearish crossover on 3-day timeframe

<figure><img src="https://2651440114-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FCNkpSotL7eck1Ytqq55p%2Fuploads%2FeJeoAWFQZG5E9lRemMBD%2Fimage.png?alt=media&#x26;token=27752e61-6a1e-4a3c-880f-c2e2cecff0ee" alt=""><figcaption><p>EMA Crossover Chart</p></figcaption></figure>

**200-Day Moving Average**

* Entry: Price above the 200 MA
* Exit: Price below the 200 MA

<figure><img src="https://2651440114-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FCNkpSotL7eck1Ytqq55p%2Fuploads%2FbzdAEe27aBV6lMVu25sv%2Fimage.png?alt=media&#x26;token=e8b9b01a-0f90-4e78-b3b7-a46a6481e333" alt=""><figcaption><p>200 MA Chart</p></figcaption></figure>

**SuperTrend**

* Entry: Bullish signal on weekly timeframe
* Exit: Bearish signal on 3-day timeframe

<figure><img src="https://2651440114-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FCNkpSotL7eck1Ytqq55p%2Fuploads%2F2wFS6KoJZIyT6TNqTe5m%2Fimage.png?alt=media&#x26;token=30e3c18a-dbcf-4ae5-b72d-15a6ca89631b" alt=""><figcaption></figcaption></figure>

**RSI (Relative Strength Index)**

* Entry: Trendline breakout on weekly RSI
* Note: Don't simply trade overbought/oversold conditions

<figure><img src="https://2651440114-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FCNkpSotL7eck1Ytqq55p%2Fuploads%2FD6HOnckQ0OjbX2gpd97W%2Fimage.png?alt=media&#x26;token=121685f4-bc12-41a8-b878-079525fa6009" alt=""><figcaption></figcaption></figure>

**Hull Suite**

* Entry: Bullish crossover on weekly timeframe
* Exit: Bearish crossover on 3-day timeframe

<figure><img src="https://2651440114-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FCNkpSotL7eck1Ytqq55p%2Fuploads%2FWFaQmtjbx5J284mxcg9r%2Fimage.png?alt=media&#x26;token=f07b9037-171b-43ab-95a2-8b67d63fce5a" alt=""><figcaption></figcaption></figure>

**Ichimoku Cloud**

* Entry: Price above the cloud
* Exit: Price below the cloud \[Ichimoku Chart]

<figure><img src="https://2651440114-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FCNkpSotL7eck1Ytqq55p%2Fuploads%2FxNfj1YJAuqO20Fa3NCs4%2Fimage.png?alt=media&#x26;token=761e1598-801d-40f6-a710-89e5be988c42" alt=""><figcaption></figcaption></figure>

#### Pattern Examples

**Quadruple Bottom Daily**

<figure><img src="https://2651440114-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FCNkpSotL7eck1Ytqq55p%2Fuploads%2FR0QLc1kaMzW1KF9CNu03%2Fimage.png?alt=media&#x26;token=6cdc851b-f416-415b-9de3-5b3c42fe1c95" alt=""><figcaption></figcaption></figure>

### The Nature of Trading Systems

These indicators and patterns aren't magical; they're simply reference points that allow us to execute a strategy consistently. One could theoretically base a trading system on lunar cycles, and if it provided a statistical edge, it could work!

A losing trade doesn't mean your strategy is flawed or that the market is "wrong." Trading is probabilistic; even the best systems produce losing trades. The market is never wrong; it only takes one participant to change the outcome of a trade.

### Implementation Steps

1. **Create a plan** with clear entry, exit, and risk parameters
2. **Develop or adopt a setup**, then backtest and forward test with small positions
3. **Maintain discipline** in following your rules
4. **Always prioritize capital preservation** above all else

Remember: Losing everything means game over. The ability to continue trading tomorrow is your most valuable asset.
