Why are there Zones?

It’s no mystery… The volume and directional movements of these zones stem directly from the market’s 3 major trading sessions - the Euro Session, the U.S. Session and the Asian Session.

You’ll notice that when the market’s primarily in the Euro Session and in the first few hours of the U.S. Session, the majority of directional Forex transactions take place. These are those nice and neat trades where you can easily find entries and exits and the waves are clearer on the charts, simply because of the volume and pace of the market during those hours.

Trading, Market Zones, for a, Profit, Forex Training, currency , fx trader, forexfig.2Fig. 2

Figure  2  is  an e example  of  what  trading in the active  zone looks like on the charts with the inherent volatility of the active zone shown in green and the lack thereof in red, representing the dead zone.

The active zone movements carry more pips, a stronger direction and as a trader, I read that as simpler, more consistent trading wins than the short, erratic moves of the dead zone.

From Figure Two, you start to see one major trend of the deadzone - market pullbacks.

Changing Your Trading Game

When you start to view the market through these zones, your trading day almost plans itself.

Firstly, you know that to trade for larger pip counts and faster movements, you want to trade the active zone during the hours listed above. Now, you can always trade the dead zone, but because of the erratic movements and slow pace, some traders look at their account, their risk and their profit goals and like me, decide to call it a day before the dead zone takes over. Swing traders, market scalpers and day traders love this method as they are typically after higher volatility moves.

New traders love this because it helps them build confidence with a few winning trades from a market zone they can more easily see on the chart.

Putting it All Together

The active zone is faster. You can time your trades from it, you can judge whether you have a push up or down as well as have higher confidence in your trades. Several automated trading systems also work well in this zone as opposed to the dead zone.

The dead zone is where you will see false signals, you wind up holding much longer trades and it is not as accurate.

Joshua Martinez
Head Analyst
Market Traders Institute