Trading Zone Extended From Support Resistance – Trading Systems – 13 January 2022

Trading zone in technical analysis is the extended concept of horizontal support and resistance. The zone is a great tool for determining your entry and exit from a trade as well as managing risk and reward. In particular, when the area around the important top and bottom is plotted, the value of the trade area is precious. When using Harmonic Pattern or X3 Chart Pattern, the trading area can be determined using the pattern completion interval. The detailed process is well described in the book: A Guide to Trading Micro Harmonic Patterns (2016). When using bid-ask analysis, the region is selected from the primary location. In particular, it is better not to repaint the trade area. The no-repainting zone becomes a powerful tool for determining the entry and exit of your trade because it always stays on site for reference.

A trading zone is useful if your trading strategy is based on forecasting the direction of the market. In such a situation, the trading area can provide a reasonable place for a stop loss. Then you can raise your take profit level according to your projected position. Even if your trading strategy is not based on anticipating the direction of the market, the trading zone is still useful. For example, let’s say you never want to anticipate the market, but you want to interact with the market so that you trade in the direction that the price is being pushed by the masses like a support and resistance technique. In this case, the trading area acts like horizontal support resistance. But managing your reward and risk is much easier than other support and resistance methods.

I used the minimum word stop loss instead of stop loss because sometimes, you may need to make the stop loss a little bigger than the actual area. The margin for your stop loss will depend on the reward to risk ratio. How the reward-to-risk system works is well described in the latest book: Technical Analysis in the Forex and Stock Market (2021).

For your information, we also provide MetaTrader 4 and MetaTrader 5 indicators that provide a non-repaint trading area. Take a look at these automated scanners, which you can trade with trend prediction strategy as well as respond to market strategy.

This is the link for the Ace Demand Zone Indicator for MetaTrader 4 / MetaTrader 5.

This is the link for the X3 Chart Pattern Scanner for MetaTrader 4 / MetaTrader 5.

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