The Zone

The Zone is a day trading tool, that starts out with the idea of making low risk, 3:1, 6:1, 9:1 trades.

What is different about it is that it is looking for trades where all moves come from, where most traders would damn any trades, calling it a kill zone etc. As it turns out it is not risky at all, and most of your entries would be less than 10 pips away from the swing point.

Here are some of the ideas I managed to round out the efficiency of trading in The Zone:

  • the zone itself gets shifted up and down based on 2 closes above or below the E-16
  • the 3 count starts with swing point and goes up to 8
  • I mark up the closes in a certain vicinity (check marks)
  • a number 3 count is the eye of the beholder, the check mark calls extra attention, but there is no official entry until the settlement / top of the hour
  • the tomato / chartreuse boxes marked up 12 pips wide from the close of the colored check mark
  • these boxes serve to define risk as well as add an extra confirmation to the trade based on current logic
  • a stop loss a few pips beyond could be applied, but I would not suggest to apply these immediately, for there are 4, 6 pips fake outs on the chart
  • T1 is 30 pips away, T2 is 60, and T3 would be at 90 – although it is not marked up yet

The lines:

  • I look up the last 5 gray check marks and take the last one from an individual box (5 candles)
  • the last two lines are thicker
  • they all change color based on current price being above/ below (meaning your ideal short entry) would occur with at least one line, the last one being not in your favor
It was a bona fide entry at the end of the day by all logic, but I did not take any shorts for the weekend, and finished with 3.25 lots more longs than shorts. I fear of interventions here.

As for risk management ideas:

  • apply a trail stop after 4-5 hours having been in the trade – my trail stop would lock in 1.5 pips after 4 in gains and 3 pips after 8 in gains and then start trailing 32 pips behind
  • to avoid exits falling shy from the 30 target (@ 27, 28 pips) monitor price and close out at market / pull the stop loss to 25 / just aim for 27 to be on the safe side (3 pips shy)
  • if you want to go for 60, 90 pips, take 1/3, 1/4 at the mentioned check points

Personal stuff

It was my best week so far this year beating the 1st week of February which had closed out profits of $1,199

1st week of March

The development can’t stop, won’t stop

Reversal values included