The deadzone

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youyouyou
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The deadzone

Postby youyouyou » Tue Feb 12, 2019 11:39 pm

Hello Kreslickers,

If anyone ventures into this neck of the forum, what they will find here is a public journal devoted to my efforts to implement one specific set up--the DeadZone. I saw this technique posted on FF by LeMercenaire. I thought to myself, well this guy seems be pretty good at what he does, and the DZ...well this seems simple; if I can't trade this setup, it's safe to assume I have no business trading.

A note: based on what I've seen LeMercenaire post elsewhere, I have the understanding that he plays the deadzone bar 'wick-style.' However, in MY initial efforts, I will only be trading breakouts.

Another note: Also based on what LeMercenaire has posted elsewhere, it appears that he may trade this zone throughout the day if price returns to it. Initially, I will refrain from doing this and concentrate only on the first setup to occur.

In other words, for now, all I'll be doing is playing the first breaks of the bar that forms prior to the US market open (the break of the 6-7 AM C.S.T bar), and the only pair I'll trade is USD/CAD.


Can't really think of anything else to mention for now, other than this is gonna be on a demo account so nothing too exciting to see here.
If anyone sees this thread and objects to calling these trades 'deadzone trades' and thinks that name should be used for the full method (trading the zone throughout the day and plaing the wicks of the DZ bar) let me know and I'll call it something else. However, bear in mind that I do plan to move towards this once I can trade the break of the bar.

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LeMercenaire
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Re: The deadzone

Postby LeMercenaire » Wed Feb 13, 2019 1:29 am

Hi there.

Good to have you here and hey, very flattered, lol.

I certainly have no objections to how you are planning to run the DZ. It is, after all, how I initially ran it myself.

One thing to bare in mind here, however, is that one aspect of the method that you do not mention, is that of using countering to manage any ''bad'' trade (not to mention directional bias of any kind).

Now, for one thing - I know that this is generally not an available option for US traders anyway (unless you are using an offshore account or two separate brokers, one for long, one for short) and for another, that even for traders in Europe, it has become more difficult due to the ESMA bull****.

This will inevitably effect your statistics on the method, especially on AU. However, for UC, it shouldn't be such an issue (unless the pair's behaviour has changed in the last year).

Looking forward to seeing how you get on.

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Re: The deadzone

Postby youyouyou » Wed Feb 13, 2019 3:41 pm

Thanks for your feedback!

As for countering, I live in the States, so there are those extra hoops to jump through. That said, I'm quite curious about countering and would like to eventually add it as a component to this method/ my trading in general, but it’s on the backburner-- for now.

What do you do if you are able to establish a directional bias? Would you only trade in that direction, or are you just slightly more wary of taking trades counter to the bias? I can’t in good faith refer to my stats ( as I only have 3 weeks’ worth so far), but I’ve not been doing anything (well, not using any set criteria) to establish a directional bias, and its seeming like this method can scrape up more pips than it loses. Some days the direction of the breakout seems screamingly obvious (Feb 5th, for example), but other days my eyes and brain say ¯\_(ツ)_/¯. Today was kind of one of those days. USD/CAD fell yesterday (2/12), continued to sell off into the evening, but by the time the DZ formed this morning, price had pulled back fairly sharply to the .382 retracement (of yesterday's move down). I hadn’t formally declared a directional bias, but I was thinking ‘probably down’. BUT lo and behold, I get a quick break UP for 10 pips. However, the ‘good’ move, which I didn’t trade, was in fact the break in back down through the DZ, which could have netted someone 25 pips.

The first break of the DZ happened around 7:15. I had a pending order set. It quickly moved to +3.5 before dropping -5. I wasn’t happy about this, especially as there was some news coming out at 7:30. Luckily ( I guess) the news gave me a quick pop back up and I exit the trade at +5. I like that, but I don’t like sitting through a drawdown that equals my profit from the trade.

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Re: The deadzone

Postby youyouyou » Thu Feb 14, 2019 3:23 pm

+5.5. Yeehaw.

feb14uc.png
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Re: The deadzone

Postby youyouyou » Thu Feb 14, 2019 3:57 pm

Note: This morning presented the opportunity to take a second trade out of the zone, but as I wrote above, for now I'm focusing on only the first break. No surfing the zone for me yet. While it was annoying to miss a larger move, this morning's trade was fairly stress free insofar as it triggered and moved straight to a profitable price.

Oh, and happy Valentine's day to all the lovers out there.

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Re: The deadzone

Postby LeMercenaire » Thu Feb 14, 2019 4:13 pm

youyouyou wrote:+5.5. Yeehaw.

feb14uc.png



Nicely done.

As you note in the second of your posts, the one move that can pay off big time is a return and failed test of the DZ limits. You can see that clearly on your chart.

I commend you on your disciplined approach. Learn a kata one move at a time. That way when it comes to building the movement, progress will be greater.

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Re: The deadzone

Postby youyouyou » Fri Feb 15, 2019 5:36 pm

Thanks. To me this seems like a logical way to proceed.

Yesterday  I left for a trip to Denver, which is in a different timezone than my hometown, and I resigned myself to the fact that I wouldn't be up early enough to play the first breaks of the DZ.

If I had, it would've provided a learning experience. As the DZ formed price was at the bottom of the zone and immediately poked its nose out for 2 or 3 pips before popping back in the zone, working its way up to the top, poking out for 2 or 3 pips again, and then reentering the DZ and made a nice move south.

Note: in this timezone the DZ is the 5-6 am bar.

Screenshot_20190215-101334.png
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Re: The deadzone

Postby LeMercenaire » Fri Feb 15, 2019 7:06 pm

youyouyou wrote:Thanks. To me this seems like a logical way to proceed.

Yesterday  I left for a trip to Denver, which is in a different timezone than my hometown, and I resigned myself to the fact that I wouldn't be up early enough to play the first breaks of the DZ.

If I had, it would've provided a learning experience. As the DZ formed price was at the bottom of the zone and immediately poked its nose out for 2 or 3 pips before popping back in the zone, working its way up to the top, poking out for 2 or 3 pips again, and then reentering the DZ and made a nice move south.

Note: in this timezone the DZ is the 5-6 am bar.


Screenshot_20190215-101334.png

 


Yep - and I'm afraid if you are going to run your initial test in its most basic form, then this is what you will occasionally face. To give you a nudge, you would be wise to look at the adr and how it would play into the size of the trigger candle you are going to be using. You need to watch your candle is not too large. This is also why initially, the method used a mid-line.

This is why I slowly introduced first Wick-Zone techniques to run the Dead Zone and then countering. From there, the directional bias aspect was layered in. It was a natural progression. Just because a method works in its initial form, doesn't mean it can't still be made better.

However, it is no bad thing to see these moves happen to begin with, as it gives you an idea of how (and why) the ''final'' method was formed.

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Re: The deadzone

Postby youyouyou » Tue Feb 19, 2019 2:23 am

Conditions seemed pretty flat this morning. It's Presidents' Day here in the states, and many people have the day off. I wonder if this includes traders too. Possibly not a good day to trade.


I took the first break down, which happened in the first minutes after the DZ formed. Price moved 5 pips out of the DZ, but I only managed to take 1.5 for myself. What I didn't like about the trade was that the price action after the first break was wishy-washy, slipping in and out of the zone for a while, and I could only say a prayer and sit on my hands while waiting for it to inch down. In short, not a trade I enjoyed being committed too, but I'm learning to take the setups that come my way.

Thanks for the nudge in re the ADR.
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Re: The deadzone

Postby LeMercenaire » Tue Feb 19, 2019 9:18 am

youyouyou wrote:Conditions seemed pretty flat this morning. It's Presidents' Day here in the states, and many people have the day off. I wonder if this includes traders too. Possibly not a good day to trade.


I took the first break down, which happened in the first minutes after the DZ formed. Price moved 5 pips out of the DZ, but I only managed to take 1.5 for myself. What I didn't like about the trade was that the price action after the first break was wishy-washy, slipping in and out of the zone for a while, and I could only say a prayer and sit on my hands while waiting for it to inch down. In short, not a trade I enjoyed being committed too, but I'm learning to take the setups that come my way.

Thanks for the nudge in re the ADR.


Yeah, not a day I'd have wanted much to do with the Dollar pairs and as much of Canada was also taking the downtime, UC would probably have been avoided totally by myself.

As far as the pa after the entry, this is why it is important to take the time needed to watch and learn how your chosen pair(s) behave at this time. That will go a long way towards alleviating that (natural) anxiety felt as price hovers around before it makes up its mind.

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