How To Use Balance Zones To Trade in 5 Easy Steps - from the trading desk of JJ @vwaptrader1
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HOW TO USE BALANCE ZONES TO TRADE IN 5 EASY STEPS
Establish a Balance zone. We look for a low and high. Then we look to see if we go under that low and come back up do we go back to the high we picked out?
This is the FOUNDATION of our balance; once we establish it, we can use it for all of the session. This takes a lot of stress and worries about trying to find tops and bottoms we already have a good idea where they will be. If the market breaks these levels then we know something has changed.
Double the Balance zone
Simply double the balance zone to the top and bottom to get targets that will now TEST to see if it works.
Watch how the price behaves as it gets to these levels and see if we stop and come back down if we go to say the top of the breakout
Take a test trade
This trade is based on the “LOOK BELOW A LEVEL AND FAIL TO ACCEPT UNDER IT” It is one of the most popular trades that MP teachers teach. The basis of the trade is that the sell orders that took prices lower have been completed. Without follow through sell orders the market will turn and go higher looking for supply. This is because supply is not coming in fast enough to satisfy the demand AT THAT TIME.
This means the trade must be done quickly and we MUST sell into the strength that the LACK Of supply has created. This causes the price to move higher and we MUST sell into that buying coming in from traders seeking supply
Confirm the first trade. This step is taking another test trade when we break out of the bottom of a lower breakout zone
We keep doubling the zones to the up and downside if they break the bottom of the previous zone. The middle of the next breakout zone can be great for another quick responsive trade. If you miss it don’t worry just make sure you realize the zones are working. YOu can use these zones during the whole session to find your next trade. If you miss one there will always be another so you can relax and take only the trades that make sense to YOU
Keep watching and trading these zones all session, As time goes by in the session it should confirm your levels over and over again
Use the zones for the rest of the session to trade with great targets. Also trading this way can help you manage your expectations while IN a trade. If the market cannot get to the next level then get out of the trade. Your stops are based on the levels. IF you are long and using a lower balance level you stop is right under it. If you are short and using the upper balance level your stop is just above it. Knowing your risk helps as if you do get stopped out you know you can trade the zone later.
REMINDER: JJ @vwaptrader1 teaches and trades live at www.Microefutures.com