Most traders are taught what to buy. Very few are taught why price moves at all.

Every market moves through a repeating cycle of four distinct phases. Richard Wyckoff identified these patterns over a century ago, and they remain as relevant today as they were then.

Understanding these phases gives you context for what the market is doing, not a crystal ball for what it will do next.

Markets do not move randomly. They are engineered.

This is the Wyckoff Market Cycle.

Wyckoff identified that all markets move through four distinct phases. Understanding these phases is like having a map of the market's journey. Here's the complete cycle:

These phases don't predict the future. They describe what's happening right now. Your job as a trader is to recognize which phase the market is in and trade accordingly.

Accumulation is where smart money—institutions, large traders, and informed participants—quietly build positions. This phase typically follows a markdown (downtrend) and occurs when price moves sideways in a range.

During accumulation:

• • Price trades in a horizontal range
• • Volume may be lower than average as retail loses interest
• • False breakouts (springs and upthrusts) shake out weak hands
• • Smart money absorbs selling pressure without pushing price higher

Accumulation is not a signal to buy. It's a context clue that smart money is preparing for the next markup phase. Your job is to wait for confirmation—a break of the range with strong volume and follow-through.

Markup is the trending phase where price moves higher. This is where most traders want to be—riding the wave of institutional buying pressure.

During markup:

• • Price makes higher highs and higher lows
• • Volume increases on rallies and decreases on pullbacks
• • Retail traders begin to notice and participate
• • Momentum indicators show strength

The markup phase doesn't last forever. Eventually, smart money begins to distribute their positions into the buying enthusiasm of retail traders. This transition is subtle and often missed until it's too late.

Distribution is the mirror image of accumulation. After a markup phase, price moves sideways again as smart money exits their positions into retail buying.

During distribution:

• • Price trades in a horizontal range at higher levels
• • Volume may spike on rallies as retail buys aggressively
• • False breakouts (upthrusts) trap late buyers
• • Smart money sells into strength without crashing the market

Distribution is dangerous for retail traders who mistake sideways movement for "consolidation before the next leg up." In reality, smart money is exiting. The next phase is markdown.

Markdown is the downtrend phase where price falls. This is where retail traders who bought during distribution get trapped and eventually capitulate.

During markdown:

• • Price makes lower highs and lower lows
• • Volume increases on declines and decreases on rallies
• • Retail traders panic and sell at the worst possible time
• • Momentum indicators show weakness

Eventually, the markdown phase exhausts itself. Selling pressure dries up, and smart money begins accumulating again. The cycle repeats.