Change Your View - Look At Price Zones, Not Price Targets

Let's get it engraved in your brain now that nothing in trading is exact. There is always some kind of variation somewhere. It is a dynamic process, so you also have to be dynamic in your thinking.

I see too many times, and have done it myself, traders calling for exact price levels due to X, Y, or Z reason that the charts are supposedly telling them. Again, I have fallen for this fallacy as well. Just like nature, nothing in the markets happens in a straight line. So why should your targets be at an exact price line.

You can see in this chart example that high volume area are what create consolidation zones. If you wanted to go long and catch the pump in the middle of this zone, you see that price didn't come all the way back to the original point of control for the previous 2 hours. This is where watching a zone comes into play.

Missing Targets?

When you focus on a particular price target, you are prone to miss moves. It's just a fact. The price could come just shy of your target and you miss a trade entirely or you it may happen that you end up getting stuck in a trade that goes the wrong way.

If you use a price area vs a specific target, you can get a bigger picture of what the market is doing. Even using volume profile and trading off the point of control, you have to look at that as an area as well. Price rarely comes directly to an exact target. It more or less will find the range, sometimes going on through the range for higher or lower prices. This can fake traders out and can put trades at risk very quickly.

One thing that has really improved my trade profit levels is not being greedy and taking profit at the start of a target zone. You never know where the price is going to correct from when it hits the zone, so you want to make sure you are taking your profits! You can watch what happens at that zone to determine your next trade move. Don't worry if it continues to pump, be secure in knowing that you made money.

Don't Get Stopped Too Early

What happens allot of times, people will put a stop loss at a certain price target because of their strategy calculation, but they end up getting stopped out of a trade because instead they should have been looking at the whole price range.

If you are in a consolidating area, price can spike in one direction or the other a few times before making a big move in whatever direction it is going to go. So putting your stop loss inside a consolidation range versus just outside of the previous swing high or low (depending if you are going bullish or bearish) can really make a difference. Using the range gives the price a bit of breathing room to move around before making its move.

As a trader you need to be dynamic in your thinking to be able to recognize what is happening in these ranges to be able to decide if what move you are going to make.

Reading The Volume Flow

This is extremely important in finding your targets, whether it is an entry target, profit target, or stop loss target. Using tools like volume profile will really help in finding these zones. You will be able to see what prices that the biggest amounts of volume have been coming in. This will show you support and resistance levels and can help you in making a more dynamic trade decision.

I have many times set a stop loss and take profit and missed them because I was too busy playing on technicals and patterns than looking at was was actually going on in the market and who was buying and selling. It's extremely important to pay attention to your exchange's order book to also have a leading reference on where buy and sell orders are coming in. This will help you determine where in the zone you want to try and fight for your price.

Less Mess Less Stress

Using tools like volume profile can really help you understand where the demand for the asset has been and can help you make a more educated trade based on the volume zones. Don't try to focus on catching the exact tops and bottoms of a move, because most likely you are not going to catch it. It's best to make your money in the middle and ride the trend waves.

Using price zones can help you get in and out at a more secure price because you are waiting to see a clear direction that market is taking. If you were just playing on price targets, you can get in trouble if the market doesn't respect that particular price.

Don't overcomplicate your trades. Play it simple and catch the money in the middle!

Don't get rekt out there!

Until next time traders...

Be Cool, Be Real, and always Abide!

Nothing we say is financial advise.

This is for educational and recreational purposes only!

Stay safe in these volatile markets and don’t get rekt!

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