Trading Zones : Meaning, Importance, Tips | Share India
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What Is Trading In The Zone | Quick Summary 

A group located between the supply zone and the demand zone is known as the trading zone. The supply zones and the demand zones tend to be quite alike. They are connected to the resistance zone and support zone.

Resistance levels and support levels are more like trending lines. These lines are impenetrable when one makes an attempt at knowing the price movements at specific timings. Additionally, demand and supply encompass price levels of resistance and  support at a broad level.

In simple terms, these zones are places where sellers and buyers flog together. Please note that in some trading strategies, some stop losses get triggered around resistance and  support levels.

No. 1 Understand The Difference Between Short Term and  Long Term Gains 

Expert traders consider the process of trading a numbers game. They know that it requires repeating the same activities and the same processes, over and  over again. This repetition always involves failure to a great extent. However, with each failure, you get close to learning more about the trading zone.

In this learning curve, a trader must pay proper attention so that he can understand the difference between short-term outcomes and long-term outcomes. Short-term outcomes are also called ‘micro’ outcomes and long-term outcomes are called ‘macro’ outcomes.

The reason it is important to learn more about the micro and  macro-outcomes is because of the following reasons:

  • You understand the ‘micro’ belief which indicates that the result of each trade is independent from the other. It is also quite random in nature.  
  • You also understand the ‘macro belief’ which indicates that the outcome of a sequence of trades leads to steady results.
  • You learn that at a micro level, things are unpredictable.
  • On the contrary, at a macro level, things are quite predictable.

No. 2 Don’t Spend Too Much Time Predicting What Will Happen In The Market 

It isn’t compulsory that a trader needs to know about little things that are going to happen next. Many times, it is okay not to have any information about the next movements in the trading market. However, there’s one piece of information that the trader needs to note. This information indicates that the market is bound to behave predictably in certain situations.The market may display this predictability, most of the time.

A trader also needs to understand that whenever the market acts in a predictable way, it can help him earn more profits as compared to the unpredictable scenarios. This can also be referred to as the ‘Trading Edge’. The bottom line is that you have to keep observing instead of constantly going for predictions. Observation of patterns will build your perception and you will be able to intuitively make the right calls while trading. 

No. 3 Get Comfortable With The Uncertainties Related To ‘Take profits’ and  Good ‘Stop-Losses’  

While you place a stop-loss order, there’s one belief that you should bear in your mind. This belief is that the trade’s result would be quite indefinite. You also have to be prepared that the order may get hit. This belief system helps you to ensure that if there’s a hit pertaining to the stop-loss order, you won’t be hit too badly in terms of finances and  emotions. 

This approach keeps you clear, level-headed, logical and prepared for the next activity. Additionally, there’s an important point about the trade profit that the trader needs to bear in his mind. If a trader wants to successfully take profits, he must maintain a pre-defined profit-taking strategy.. On the contrary, if the trade isn’t working, he must simply leave the trade and move on to the next opportunity. 

No. 4 Don’t Try To Win Every Trade Or Else You’ll Lose 

As a professional trader, you need to know the importance of psychology in trading. You also need to learn about the ideal mindset required for trading and investing systems. It is highly critical that you must let every trade work out  automatically. This will give the probabilities some room to function. It is important to note that probabilities directly govern market speculation. Hence, if a trader breaks any rules pertaining to the trading system, the probabilities of success in the long run are affected. As a trader, you also need to fully accept the uncertainties of each 'edge' along with the unique nature of each moment. Acceptance will end any trade related frustrations. 

No. 5 Know That Past Trades have Zero Impact On Market Risk 

Most traders perceive risk based on their recent trades. However, as a professional trader, you should not be affected by any of your last trades. The last few trades shouldn't determine whether you feel negative or positive. The best mantra is to be constantly neutral. 

No. 6 You Must Focus On Long-Term Profits 

As someone in the trading zone, you should avoid getting affected by short-term trade losses. Instead, you should learn from each negative experience in trading. Your goal should be long-term profit. The nature of the market is constantly changing.

No. 7 Know That Anything Is Possible In The Markets At Any Time

‘Trading in the Zone’ is like trading in conjunction with the environment of the market. However, every trader will have his own perception of the market environment. Everyone makes losses or profits at any point in time in the market. Hence, it is important to believe that the unpredictable nature of the market is the biggest asset a trader has. It opens the possibility of making great long-term profits. Thereby, simply believe that anything is possible in the markets at any time.

In Conclusion – Quick Things To Remember About Trading In The Zone 

  • Know the difference between short term and  long-term gains
  • Don't waste time predicting what will happen in the market. Stay on top of your game with Share India stock trading software.
  • Get comfortable with the uncertainties related to ‘take profits’ and  good ‘stop-losses’
  • Don’t try to win every trade or else you’ll lose.
  • Know that past trades have zero impact on market risk
  • You must focus on long-term profits
  • Know that anything is possible in the markets at any time. When utilizing an online trading platform, such as Share India, traders can effectively apply these principles to their investment strategies, helping them navigate the complexities of the market and work towards achieving their long-term profit goals.
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