How to trade based on Zones?This is an example of how I mark my charts while taking trades.
Defensive trading strategies are very good for sideways markets. The indices around the world are sideways and not making any fresh highs or lows.
The principle that I have explained on the charts is ideal for protecting your capital and has a higher chance of succeeding. When the price moves to either of the extremes, you should look at taking a trade on the opposite side.
This means that once the price approaches the higher boundary, you should be looking at selling and when the price approaches the lower boundary, you should look at buying.
This does not mean that you blindly set that marked price as the entry point, but you should wait for an extreme to be created and then take a trade only after the confirmation of your bias. Trading such markets requires patience and entries should only be made on the boundaries. If you enter a trade in any direction in the middle of the zone, you are likely to get trapped. What I mean by trapped is that your stop loss will become larger and probabilities are starting to move against you.
Trade only with capital you are willing to lose and maintain proper money management.
Feel free to ask questions, if you have any! :)
