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Market generates enormous amount of data every trading minute. Context is a traders attempt to organize this data in a structural way that is easy to comprehend and act upon. Various traders use different techniques to structurally organize this data , Market Profile, Volume Profile, Pivots, Candle Stick patterns, SR levels etc etc are few of them. A lot of traders use a combination of all these. It is not rocket science to organize data into what ever structural format you choose, with the capabilities available from today's trading platforms. IF a trader spend few hours a day, he can have the context mapped out with some clarity based on the structural rules. With experience and practice this will come more natural.

Every trader view the context differently based on how they choose to organize the market data. IF every trader use the same context to view the market, there wont be a market as there has to be someone on the other side of the trade for a transaction to take place. Understanding the very purpose of various players (big ones) in the market is another crucial component here.


Trading without context is like betting on sports by only looking at the final scores of every game. Yea we know who won and which teams have better records but we don't know why or how. Was it the teams' great defense that has been winning its games? the teams that they've played have they only been against weak offences? whos injured is there home field advantage? Did the team execute well or did they just get lucky? Did they really win or was it the other team who just made too many mistakes and lost it?

To relate to trading.. Whos would be buying or selling? Whats the macro view and primary market drivers at the moment? What kind of volatility is there in the market? are there correlations we should be paying attention to? Are there technical factors at play like prices being above or below yesterdays/weekly/monthly highs or lows. Are prices rising because of aggressive buying or is it just bids absorbing everything and sellers giving up? Whats the higher timeframe trends and where are we in the life of that trend? Is the market in a state of imbalance or balance?


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All information is for educational use only and is not investment advice. There is a substantial risk of loss in trading commodity futures, stocks, options and foreign exchange products. Past performance is not indicative of future results.
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