How To Draw Zones




 
 

Drawing Zones

A Teen Trader is an Educational site, Trade what you are willing to lose.

Zones, when trading based off of technicals drawing zones that are proper and as well placed as possible allow for the best possible outcomes for trades. RULES FOR ZONES:
  • Include most of or the entire wick, if it is normal in size (look below for examples)
  • Look for zones that had previous rejected resulting in a big pip move
  • Zones With 1-2 rejections are ideal
  • The more the touches on a zone, the weaker it becomes
  • Change/Edit your zones often (especially on lower timeframe)
  • If your zone is broken, WAIT, if you don’t see what you like. LET IT BE. DONT FORCE A TRADE.
  • its OK to be Picky

Here are examples on 3 different timeframes with reasoning, on how I Draw MY zones. 

Daily Time FrameHow I Draw Zones: When I first start my analysis I start on the daily. How I draw those zones are shown above. I find points of high rejection, I look for clear rejection areas, and I look for zones with only a few touches (the strongest). Looking at the zones above, why did I draw the bottom zones? because we had a double bottom there (with 200+ pip rejections each time) which to mean is a sign of a strong zone. When drawing the zone I drew,I drew it based off of the arrow. I draw it BELOW the bodies of the candles, and include the entire wick. I include the entire wick because, in this scenario, it is very small and shows a zone for potential future liquidity grabs. And as you can se we retested that zone a few weeks later and it played out nicely. The top zone, I drew based off of the massive rejection, resulting in hundreds of pips rejections. I drew this zone NOT including the entire upper wick why? because it was so long that it would have been an illogically sized zone. I instead drew the zone the length of the previous candles wick (candle with arrow). I do this because I want to be logical, simple, and limit mistakes. Because if I had my zone the entire length of the massive wick, I would be holding a buy position and want to keep holding for the wick fill because “a full zone move” when in reality I would like to take a move simply to the zone I drew, because it will allow the highest probability of success. 4h Time Frame How I Draw Zones: After drawing my zones I then will drop into the 4h timeframe. I do this because the zones in the daily will be massive on the 1h and 4h etc. so dropping down, adjusting, and in this case drawing completely new zones Is key. On this 4h timeframe, I drew all new zones, because price is not coming near the daily just yet. What I drew here are zones in which I would scalp off of. The top zone, I drew because, as you can see with the top left arrow, we have had many wicks and a solid rejection move from the zone. I drew the zone the thickness It is because, as you can see, I made it the size of the wicks that have an arrow to them. The bottom zone, as you can see is BELOW an FTR candle, which as I mentioned in the FTR post (here), serves as a place in which orders are set. Meaning to me that we can place a zone here with the wick included, and wait for a retest and rejection to look for a move. 1h Time Frame Unlike the 4h timeframe, on the 1h I kept the same zones, for the most part. As I mentioned as you drop time frames you will need to tweak them because candles form and close differently on smaller timeframes. Here, were simple have the top zone draw based off the same top left arrowed candles, which is drawn with all of the normal sized wick included. And as you can see we later broke this upper zone, and as I mentioned in the Rules, the more touches the weaker (we had a lot of touches or near touches of the zone) The bottom zones is drawn based off of the left arrow. why? because as you can see, we initially rejected the zone, then proceeded to break it and consolidate above it. Which serves as a collection of orders, meaning when we come back into the area, there will be orders still waiting there to get filled. I Really hope these help you better your trading! If you would like to chat with me about set ups you see, message me on Instagram here. If you would like to join my telegram chat, click here. VIDEO I MADE BETTER EXPLAINING ALL OF THIS!

IF YOU HAVE ANY QUESTIONS, COMMENT OR CONTACT ME! @ATEENTRADER ON ALL SOCIAL MEDIAS

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This Post Has 2 Comments

  1. Hi,
    Really appreciate your time and effort to be putting all the content out here for us to learn.

    Do you think you will be able to draw zones on a random stock that I can share? It would be amazing to look at how accurate/close my zones were as compared to yours.

    If you want to help me test this out, please could you take out 5 mins to draw for Havells (India – NSE Index)

    1. Feel free to send me a message on Instagram or twitter @ateentrader and I will.

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