Original subtitles

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.