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Wyckoff and the futures markets.

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And what happens then with the futures
markets?

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

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

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

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when these appeared.

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

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accumulation and distribution process as
stock exchange campaigns, as originally

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

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aggressiveness or lack of interest to
determine the behavior of the

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in these new markets.

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

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

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Under this premise, accumulation and
distribution processes in the

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

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exhausted but are based on
aggressiveness and lack of interest on

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

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

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these participants who determine based
on their disposition when an

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

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

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

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

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maintaining very little presence.

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

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

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

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

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

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

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

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in which the market is moving.

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

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

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

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

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bullish or bearish interests in the
market.

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Where am I going with this?

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Indices, currencies, commodities.

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

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financial and commercial institutions.

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Brokers that need to hedge risk.
Liquidity providers.

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central banks and other financial
institutions that need to manage

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huge corporations with major exposure to
oil or other materials.

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

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

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follow no underlying deterministic
logic.

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

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hedging operations.

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Therefore, this attribute reduces the
percentage of determinism and increases

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

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we are looking for genuinely.

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