V. 20:6 (22-30): The Auction Market Theory by Donald Jones

The Auction Market Theory by Donald Jones

Thanks to the Internet, even when you are far removed from the floor of the exchange, you can still hear what the market is saying.

At some point, every trader benefits from a surprisingly fast, good trade. When that happens, should you take what you have and run, or should you hold out in hope of additional appreciation? How do you know what the market is telling you?

To answer that question, you need to know the theory behind the markets. This will help you to tie the myriad loose ends of market data together, organize them, and simplify your market analysis. The Auction Market Theory, which is based on observable facts, takes the entirety of market data and other information and compresses it into a set of assumptions and rules leading to consistent, intelligent trading strategies. The resulting structure helps you understand the migration of value and the market condition within which the value changes are taking place, enabling you to understand what the market is saying.