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At times these successful traders seemed like magicians, but as my market awareness increased I started to appreciate that these traders were exhibiting their trading skills; skills that had been forged over many years of experience. It is easy to assume when watching anyone execute a particular skill effortlessly, that they have an innate ability that cannot be replicated. The truth is though, whether we are talking about golf, tennis, chess or trading, that the skilled practitioners of these arts have dedicated their lives to mastering these skills. Of course we all have different natural ability, which will determine our full potential, but whatever the limits of our ability, we have to be willing to dedicate and commit ourselves to the development of these skills. What sort of questions can we ask as we observe the market that will enhance our understanding of what is happening. Below is a list that is by no means exhaustive, but is a starting point. When I am trading my main focus is on the current bid, the current offer and the last trade price and volume. Consider these questions when observing the market: What does an improved bid imply? What does an improved offer imply? What does a big bid imply? What does it imply if this big bid is sold in one hit? 71 What does it imply if this big bid is sold gradually? What does a big offer imply? What does it imply if this big offer is bought in one hit? What does it imply if this big offer is bought gradually? What does it suggest if the market has been falling and the spread starts to widen? What does it suggest if the market has been rising and the spread starts to widen? What does it suggest if the spread starts to narrow? What does it imply if most of the trading is at the offer price? What does it suggest if most of the trading is at the bid price? What does an increase in trading volume imply? What does a decrease in trading volume imply? |
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