There are many ways to understand and trade the financial markets but when it gets down to it trading is a performance art. The act of trading is a joint effort by the trader to understand market behavior and to also recognize his own emotional response to the ever changing market`s movements. There are many psychological and mindfulness techniques that can be practiced in order to enhance the trader`s inner game,
There are also many tools that can be used to understand market behavior. They range from technical analysis to astrology. Arch Crawford was one of wall streets most successful traders and he combined the two tools mention earlier. Whatever works for you is the one to use. A tool that has resonated with this writer to better understand market behavior is the market profile. This tool is an excellent way to learn to day trade the markets as it can assist the experienced trader in evaluating the market`s condition. The basis of the market profile tool is that the market`s own price discovery mechanism, the two-auction. This is why exchanges exist. They are venues for hedgers, speculators and producers to discover (determine) price.
The market`s condition refers to the stage of development of the auction cycle. The market`s two-way auction moves from consolidation to transition to trend and then back to consolidation. These phases of the market`s natural development occur on all time frames simultaneously. Knowing this information is the core building block that an experienced trader uses so that he can then adjust his trade execution to match the current market condition. The trader that starts from that perspective has a leg up on those who use a purely price based decision based model.