Price action is "it". Everything else is secondary. Sounds simple, but its ridiculous how often it's forgotten. PPM - Price Pays Me. A rally on weak volume with no interest from buyers that hits resistance left right and center is STILL a rally that pays you if you were long, and gives you a loss if you were short.
Studying anything -
VSA, tape reading, etc. - needs to be referenced in context to which MARKET we are talking about.
When you read the tape, you are analysing what other traders have DONE.
When you study the depth of market, you are studying what you THINK traders are ABOUT to do.
These are two different things, and are specific to different markets. Example:
The SGX Nikkei futures are very technical, but in my opinion useless as far as reading price action. You are trying to read the price action of Spreaders and funds Arbing the OSE-Nikkei.
The
DAX has every man and his dog trading it - retail guys across Europe and America, big funds, automatic trading, the lot. In my opinion, it is a very good candidate for reading price action. I like to know my S&R levels, and then "live in the depth" of that market, and glance at the chart occassionally.
In the prop firm I work at, we do 10-20% of the volume in a particular futures market. This is my bread & butter market - if I am reading the depth of the market as I trade, I'm trading the other guys in the same ROOM as me. Clearly this changes the way you would trade a market.
Price action is king across all markets, because it's the only thing that pays you. However, you can't take the same 'rules' you apply to one market, and apply it to others.
Master one market to trade, but in doing so, study the price action of all the markets that are relevant to it. Nothing moves in a vacuum, and often whichever market was leading yesterday, might not be leading today. You can do it with charts or Price Ladders, but you want to see the flow of money across interrelated markets.
It's like driving a car - when you are accelerating to take over someone on the highway, you have a smooth action - indicate, pull into the other lane, hit the accelerator to raise revolutions as you move your hand to the stick-shift, hit the clutch as you change gears and continue accelerating.
You might be sitting there trading Singapore, not much is going on. Hang Seng starts to lift bids with size, Jap Gov Bonds are coming off which sends the Nikkei up. The Aussie SPI & Taiwan are taking notice - that might happen in less than 10 seconds. You want to be hitting bids pronto.
At the end of the day, trading is a career, a business, a sport to some. It's not a simple activity. To consistently profit day in day out, you need to learn how to learn. Be dynamic. You don't want to be a jack of all markets, but you don't want to be a master with one tool either.
DBPhoenix, I enjoyed your preface - Nice clean charts.
SMW