At The Close: Understanding The Trading Enviornment by Joseph J. Mertes
Spending time to assess the market
environment you are trading is a
good habit to develop.
I have a lot of trading experience
from trading — some good, some bad, but great
lessons all. One of the lessons
I’ve learned has been about the use of the chart. Understanding the chart is important. Understanding
what drives the chart is invaluable.
I use the Market Development and Market Structure methodology.
What drives the method is Auction Market Theory,
where a willing buyer and a willing seller agree on price.
When you have many buyers and sellers coming together and
agreeing on price, they determine where value is for whatever
commodity they are trading. It is the determination of value
and depicting value on the profile chart that gives us the
information that is the basis of a trade or investing strategy.
MAKING AN AGREEMENT
Behind the buyer and seller agreeing on price (value) is a
greater force that makes the determination of value possible,
and that is the psychology of the players in that market or
instrument. When the trading psychology involved in a
market or equity changes its outlook on that market or equity,
it will move price (value) to a different level. Understanding
the mindset of the players in a market can give an advantage
in trading and investing.