How to Trade ‘in the Zone’

It was the mid-1980s and I was in my mid-twenties when I stepped on the CBOT trading floor as an employee. I was terrified, intimidated and eager. I got a jacket with team colors, a badge for access to the pits, and a warning to keep my mouth shut and do what I was told. I obeyed. It was easy, my parents demanded the same thing. I kept quiet, observed and learned. I quickly learned that a trading floor was as powerful as an athletic event, if not more. There were many days that had the intensity of a Super Bowl, World Series or U.S. Open. It was a chess match on steroids. Chaos comes to mind.

Athletes talk of getting “in the zone.” The zone is that place where time slows down, noise becomes a hum and preparation pays off. It is when training and instinct take over. Traders, like athletes, can get in zones. Observation, groundwork and practice are essential to become good at anything.

It starts with preparation. Great traders always have a plan. Over the years I’ve learned that traders differ like snowflakes. There are no rules, but they all had a method.

To define your style and time frame, ask…

How much time can I spend looking at markets? Intraday, Day, Week, Month

  • Intra- and day traders should track 30-60 minutes chart patterns
  • Swing (3-5 days) use 5- to 20-day indicators
  • Long-term use 20- and 60-day indicators

No matter what time frame suits your style, it is a good idea to have a short-term directional indicator to identify the start of a longer-term trend.

If you prefer to catch short-term trends, search for markets that have below average day ranges over five sessions, along with below average ranges for the previous three weeks. Furthermore, a week of severe overlapping prices is common just before breakouts. When all the conditions are realized odds, increase for an abrupt vertical move or the onset of a trend.

John Seguin
Senior Futures Instructor
Market Taker Mentoring, Inc.

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