All language subtitles for 3. Wyckoff and the futures markets

Wyckoff and the futures markets.

And what happens then with the futures
markets?

Although originally the Wyckoff method
was applied to stock trading, basically

because in Richard Wyckoff's time there
were no other markets, thanks to the

universality of its application, it was
also used to trade on derivative markets

when these appeared.

We had to change the rationale in this
case, and instead of explaining the

accumulation and distribution process as
stock exchange campaigns, as originally

explained for the stock market, we began
to introduce concepts such as

aggressiveness or lack of interest to
determine the behavior of the

in these new markets.

In this type of market, it is not stock
that is exchanged, but rather contracts,

and the number of contracts that can be
exchanged is unlimited.

Under this premise, accumulation and
distribution processes in the

market are not based on absorption until
the availability of the stock is

exhausted but are based on
aggressiveness and lack of interest on

buyers and sellers the number of
contracts that can be traded in the

market is limited only to what the
participants want to trade therefore it

these participants who determine based
on their disposition when an

or distribution process might be
generated the idea is that at the end of

processes most of the market will be
positioned in the same direction.

At that point, one side will denote
aggressiveness through its positioning,

the other side will denote a lack of
interest by staying out of the market or

maintaining very little presence.

It is at that moment that the cause will
start to develop its effect.

If we can continue using the same
rationale to explain the way these

markets work, what's the problem? There
doesn't necessarily have to be a

problem. But a major drawback of these
types of markets has to do with the

nature of the agents that participate in
them. As mentioned previously, as well

as speculators, there is another large
block of participants who come to the

market looking for hedging positions and
who are not interested in the direction

in which the market is moving.

Therefore, taking into account the
impact of their interaction is of no

from the point of view of analyzing the
supply and demand.

Our goal should be to determine if the
speculators, the agents that come to the

market to take on risk, are opening or
closing positions because they have

bullish or bearish interests in the
market.

Where am I going with this?

Indices, currencies, commodities.

There are so many different interests
behind all these markets from large

financial and commercial institutions.

Brokers that need to hedge risk.
Liquidity providers.

central banks and other financial
institutions that need to manage

huge corporations with major exposure to
oil or other materials.

All of these turn to the derivatives
market to try to reduce their risk.

The large number of trades that they
generate are reflected on the chart but

follow no underlying deterministic
logic.

My opinion is that the futures markets
are the ones with the largest share of

hedging operations.

Therefore, this attribute reduces the
percentage of determinism and increases

uncertainty and randomness, making it
more difficult to identify the behaviors

we are looking for genuinely.

That is why the stock market seems to me
to be our best option.