Mastering the Markets

All of the charts in this book were taken from the TradeGuider or VSA software (the forerunner to
TradeGuider). In order to maintain the continuity, meaning, and relevance of the original text, we have
chosen to keep the original (VSA) illustrations in some parts of the book, as reference is made to various
points on the charts for teaching purposes.
This book is your foundation course in the Volume Spread Analysis™ (VSA™) methodology, which takes
a multi-dimensional approach to analysing the market, and looks at the relationship between price, spread,
and volume.
For the correct analysis of volume, one needs to realise that the recorded volume information contains only
half of the meaning required to arrive at a correct analysis. The other half of the meaning is found in the
price spread. Volume always indicates the amount of activity going on, the corresponding price spread
shows the price movement on that volume. This book explains how the markets work, and, more
importantly, will help you to recognise indications as they occur at the live edge of a trading market -
indications that a pit trader, market-maker, specialist, or a top professional trader would see and recognise.
Volume Spread Analysis seeks to establish the cause of price movements, and from the cause, predict the
future direction of prices. The ‘cause’ is quite simply the imbalance between Supply and Demand in the
market, which is created by the activity of professional operators.
The effect is either a bullish or bearish move according to the prevailing market conditions. We will also be
looking at the subject from the other side of the trade.
It is the close study of the reactions of the Specialists and Market-Makers which will enlighten you to
future market behaviour. Much of what we shall be discussing is also concerned with the psychology of
trading, which you need to fully understand, because the professional operator does and will take full
advantage wherever possible. Professionals operating in the markets are very much aware of the emotions
that drive YOU (and the herd) in your trading. We will be looking at how these emotions are triggered to
benefit professional traders and hence price movements…. …

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