PivotBoss Masters Market Structure Principles and Concepts Key

PRESENTS
CORE TRAINING [ANALYSIS]

Market Structure Principles and Concepts
with Frank Ochoa, AKA PivotBoss
Author, Secrets of a Pivot Boss
ANALYSIS: MARKET STRUCTURE
PRINCIPLES AND CONCEPTS
Market Structure principles are extremely important to understanding how the supply and
demand equation affects price, which is valuable to forecasting future price action.
In this training, we will delve into powerful market structure principles and concepts that will
help improve your ability to analyze, forecast, and execute in any market.
1. The Three Wyckoff Laws: These principles

lay the groundwork for our understanding of
price action
THEORY
2. Market Structure Types: Understanding
these market structure types is important for
forecasting price action
ANALYSIS
3. Market Structure Trades: High probability
trade ideas that recur in various market
structure types
EXECUTION
THE WYCKOFF METHODOLOGY
Richard D. Wyckoff (1873—1934) was a pioneer in technical analysis. His comprehensive
work, known as the Wyckoff Methodology, has withstood the test of time. The Three Wyckoff
Laws are the driving force behind The Methodology, and his Four Market Phases are
essential to anticipating and forecasting future price action.
THE THREE WYCKOFF LAWS
1. The Law of Supply and Demand— This law determines the direction of price movement
2. The Law of Cause and Effect— This law studies the cause that will result in the effect
3. The Law of Effort and Result— This law measures the effort versus the subsequent result
THE FOUR MARKET PHASES

1. Accumulation Phase— This phase builds the force (CAUSE) that leads to expansion and markup (EFFECT)
2. Markup Phase— This phase occurs after accumulation (CAUSE) and is a bullish trending phase (EFFECT)
3. Distribution Phase— This phase builds the force (CAUSE) that leads to expansion and markdown (EFFECT)
4. Markdown Phase— This phase occurs after distribution (CAUSE) and is a bearish trending phase (EFFECT)
The Law of Supply and Demand
Wyckoff’s Law of Supply and Demand is a principle that determines the direction of price and examines the
quality of ownership of the supply. The Supply/Demand equation drives price action.
• The Supply/Demand equation determines the direction of price
• When demand is greater than supply, prices will rise
• When supply is low, any incremental increase in demand will cause price to move higher
• When supply is greater than demand, prices will fall
• When supply is high, any incremental decrease in demand will cause price to move lower
• When stock has been absorbed it is in strong hands— this measures the quality of ownership of the stock
• When stock is being distributed it is going into weak hands— this measures the quality of ownership of the stock
• When stock is in a trading range, supply and demand are about equal
• The balance of ownership begins to shift within a trading range, which will change the Supply and Demand equation
• Eventually expansion from the trading range occurs, and markup or markdown will begin, which will directly reflect
the imbalance of supply and demand
The Law of Cause and Effect
Wyckoff’s Law of Cause and Effect is a principle that studies the cause that will result in the effect. In essence,
this law measures the force behind a move, as the effect will be directly proportional to the size of the cause.
• Studies the cause that will result in the effect

• A cause must develop in order for there to be an effect
• The effect will be in proportion to the size of the preceding cause
• A large cause will result in a large effect
• A small cause will result in a small effect
• Accumulation and distribution phases build the cause
• Markup and markdown phases are the effect
• The size and duration of the accumulation/distribution will decide the size, strength, and duration of the
subsequent markup/markdown
• Accumulation/distribution phases fuel the resulting markup/markdown phases
The Law of Effort and Result
Wyckoff’s Law of Effort and Result is a principle that measures the effort versus the subsequent result. Effort is
required to drive price higher or lower, and the strength of the effort will directly correspond to the strength of the
subsequent result.
• Measures the effort versus the subsequent result
• Effort drives result
• Effort can be measured in the form of Volume
• Result can be measured in the form of price action
• In order for a result to be achieved, the required effort must be present
• Strong effort will feature expanding volume and expanding price ranges
• Weak effort (fatigue) will feature narrowing price ranges and expanding volume
• Strong effort with minimal result is an indication of fatigue, and suggests a price correction may be seen
MARKET STRUCTURE TYPES
Markets go through various phases of market structure over time. Understanding the various types of market
structures and knowing their tendencies will allow you to anticipate and forecast future price action with greater
precision, thereby allowing you to position yourself accordingly.
1. Clean Market Structure: Occurs when price trades within clearly established price distributions and, upon
expansion, will develop a new price distribution completely above (or below) the previous distribution. This
pattern will continue until failed market structure occurs.
2. Failed Market Structure: Occurs when price fails to hold completely above (or below) the previous price
distribution, thus sparking a high probability reversal across the width of the previous distribution.
3. Compartmentalized Market Structure: Occurs when the width of a trading range is so wide that the market
must compartmentalize the range into smaller price distributions in order to better facilitate trade.
4. Converging Market Structure: Occurs when two independent price distributions converge to create one price
distribution. This behavior typically precedes a powerful phase of expansion.
5. Bubble Market Structure: Occurs when price action progressively accelerates at a parabolic rate, which
ultimately leads to a catastrophic fall.
MARKET STRUCTURE TRADES
Market structure opportunities are among the most powerful trades that you’ll come across. Theses trades offer high
odds of success and recur throughout the market structure lifecycle.
BULLISH MARKET STRUCTURE BEARISH MARKET STRUCTURE
1. Failed New Low (Accumulation Phase): The failed new low 1. Failed New High (Distribution Phase): The failed new high
(failed range expansion) at the bottom of Accumulation is (failed range expansion) at the top of Distribution is one of the
one of the most powerful trade opportunities most powerful trade opportunities
2. Expansion from Accumulation Phase: The transition day 2. Expansion from Distribution Phase: The transition day from
from Accumulation to Markup can oftentimes be an explosive Distribution to Markdown can oftentimes be an explosive day,
day, and can trigger months of trending price action and can trigger months of trending price action
3. Retest after Expansion from Accumulation Phase: The 3. Retest after Expansion from Distribution Phase: The first
first major retest after expansion from an Accumulation phase major retest after expansion from a Distribution phase offers a
offers a high probability opportunity with great trade location high probability opportunity with great trade location
4. Failed New Lows (Markup Phase): Failed New Lows within 4. Failed New Highs (Markdown Phase): Failed New Highs
a mature markup phase can offer strong rejections and quick within a mature markdown phase can offer strong rejections
bounces to new highs and quick sell-offs to new lows
5. BTFD (Markup Phase): Anytime a mature markup phase 5. STFR (Markdown Phase): Anytime a mature markdown
develops, it’s best to BTFD (Buy The Freaking Dip) using phase develops, it’s best to STFR (Sell The Freaking Rip)
pullbacks to the PEMA trigger zone or pivot range using pullbacks to the PEMA trigger zone or pivot range
PRESENTS
CORE TRAINING [ANALYSIS]

Market Structure Principles and Concepts
with Frank Ochoa, AKA PivotBoss
Author, Secrets of a Pivot Boss

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PRESENTS

CORE TRAINING [ANALYSIS]

1. The Three Wyckoff Laws: These principles

THE FOUR MARKET PHASES

• Studies the cause that will result in the effect

CORE TRAINING [ANALYSIS]

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