As I have struggled to understand markets , my concepts mostly came from a synthesis of ideas from Brett from Traderfeed and The Chair's forum at Dailyspeculations. Here I will briefly outline my idea of approaching markets which is a never ending work in process.
- Understanding the Day's Structure : As a short term day trader I want to form an initial working hypothesis as to whether the unfolding day is Trending, Rangebound. This has to be continuously revised in a Bayseian approach as new market generated information is taken into consideration. Data I normally consider are Advances vs Declines, Sector strength ( what sectors are leading, percentage movements ), Correlated asset price movements like commodities , currencies, Asian Markets, European Markets, US Futures data.
- Observing VWAP or ATP : One of the useful practical technique I have learned from Traderfeed is tracking the evolution of ATP ( Average traded price). This is volume weighted average of price. Trader can form his opinion on how the price is reacting to vwap. Whether market is taking support at VWAP or rejecting VWAP and going lower thus effectively VWAP acting as resistance.
- Reaction to Opening Price : How the instrument is reacting to opening price. Is it rejecting open price with volume or finding support at opening price.
- Concepts derived from DailySpec: Always many approaches from posts in DailySpeculations act as a conceptual background. some of the examples are
- Market Overshooting to extremes as form of maintaing Ecology
- Market trying close the door if you have only one Exit
- Market's technics of Torture
- Survivl techniques when in a bad position, crying for help
- Not Panicking, Proving to be difficult to be devoured by market
- Market being more bullish on extreme negative mews and vice versa
- Reaction to news and economic announcements
- Deception and camouflage trying to lead you in the wrong way
These are some of my observations . I will keep posting as new ideas develop.
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