A20 (explained): See pages 397 on encounters and 203 for ready action in the core rule book.

Readying an action tends to rely on by RAW initiative. Depending on the style of your DM, encounters may or may not all use initiative. An encounter is defined in the book as anything that requires the group to solve an issue or over come an obstacle (be it monsters or disarming a trap).

By RAW standards your DM is correct, because technically speaking outside of initiative actions can take place simultaneously. This is more of a function of actually gaming and playing your character. Outside of Initiative if you want to "ready an action" just wait until an action occurs that you want to preemptively act upon and say so. Unless of course your DM does turn order for out of combat/encounter playing, in which case s/he should allow for the readying of an action.