Market phases: first understand where we are

7 min read · Rise, distribution, decline, accumulation. Why the entry depends on the phase.

Level:

Short version for experts: tables, lists and screenshots only.

Words in this lesson (6)

Stop — A price chosen in advance at which the trade is closed at a loss, so the loss doesn't grow bigger.

Volume — How much money or how many units changed hands over a period. A move on high volume is more reliable than one on low volume.

Timeframe — What stretch of time one candle on the chart shows: a minute, an hour, a day.

Level — A price where the market has already turned before. Support is below the price, resistance is above it.

Breakout — The price has gone through a level and held beyond it.

Correction (pullback) — A temporary move against the main direction.

The market owes nobody anything

The most common beginner mistake is looking for an "entry point" without understanding what's happening in the market as a whole. The same picture on a chart is a buy in a rising market and a trap in a falling one.

The chart in "Terminal": the higher timeframe first

So the order is always the same: phase → levels → entry.

Four phases

Phase	What it looks like	What the crowd does	What we do
Accumulation	a long sideways range at the bottom after a fall, low volumes	doesn't believe, doesn't watch	watch, mark the boundaries
Rise	every new high and low is above the previous one	comes in more and more boldly	buy the pullbacks
Distribution	a sideways range at the top, sharp moves back and forth	buys "at the highs"	take profits, don't buy
Decline	highs and lows keep getting lower	hopes and averages down	sell the bounces or stay aside

The rule that saves the most money

In a rising market, buy the pullbacks and sell when the highs are renewed.
In a falling market, sell the bounces.

The crowd does the opposite: it buys when the price has already flown away and it's "scary to miss out", and sells at the bottom when it's "scary to lose everything". Those who got in earlier sell to exactly these buyers.

How to tell the phase

Open a higher timeframe — daily or 4 hours.
Find the last two notable highs and two lows.
Both rising — a rise. Both falling — a decline. Standing still — a range (at the bottom — accumulation, at the top — distribution).

Lower timeframes (15 minutes, 5 minutes) are only for picking an entry point in the direction of the higher one.

Who is trapped

A useful question for any chart: who is in a loss right now, and where are their stops?

The price broke a level upward and came back — those who bought the breakout are trapped. Their stops are below the level, and when the price gets there, their sales will speed up the fall.
The price dropped sharply and bounced — those who sold at the bottom are trapped.

Strong moves often begin precisely with the crowd getting stopped out.

A scenario is not a forecast. The right way to put it: "if the level holds — I expect a rise to such-and-such; if not — the idea is cancelled". Without the second half it's not a scenario, it's hope.

↗ Open "Terminal" in MAMAY