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Overview: Today we will be talking about how to execute trades based off of our zones that we now know how to draw from my zone trading video/post. We will learn what zones are valid, how to get a better understanding of if a zone will break or hold and what to wait for in terms of execution off of zones.
Zone trading is by far one of most known and most favorable technical charting/trading strategy that i know of. It allows for those without extensive knowledge of financial/economic outlooks to be able to take trades with probable outcomes. Understanding how zones are to be traded is something that brought in many people asking me questions and asking for help. So now, after nearly a fully year of the original how to draw zones video. We will dive into that.
How To Draw Zones: Drawing zones is the easy part. Please refer to this post to get an understanding of how we draw zones.
The Factors to identifying to see if a zone is good or not include: the trend, the power of the move, the time of day, and the severity of the zone.
- Are you attempting to sell at a critical zone but the market has been rallying up 80 pips a day?
- Is the move weak or strong? weak moves that move toward critical zones are more likely to turn over and have nice potentials to take trades off of the zones vs when you are trading against a large strong move.
- Are you taking a trade during a market open?
- Are you taking a trade near the middle point of a session?
- Is the session slow?
- Is it a 1 hour zone that hasn’t been touched in 5 days? or has it been touched (has the liquidity/orders been accumulated already) multiple times today?
These are all questions that need to be asked in order to determine in a zone is a viable option to be taking a trade. Then we must decide what is the best means of execution?
When understanding these ideas and viewpoints on zones, time of day, strength in moves, it allows us to better pick good zones/trades off of those.
- FTR/FTB- is there an FTR/FTB when we break critical zones like on EUR/JPY on Monday? YES on the 15m there was as seen below in image 1.1
- Bearish/Bullish Engulfing- Is there an engulfing candle that can be executed on off of these zones? YES- look at image 1.2
- Pin bars- are there exhaustion pin bars candles? YES- very often like seen below on 1.3
All in all. Trading zones comes down to understanding all of the different concepts that i put together. Understanding market structure, manipulation, zones, candle confirms, and traders mentality. When all of these are effectively put together it will allow you to better trade the currency markets!