Zones, Zones, Zones

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horserider

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With so much interest in zones lately, here are a number of zones superimposed for comparison. Which is better?
Which one do you like? Flowing channel ? Straight channel ? S/R pivot bands(r and s labels) ? Fib levels(% labeled) ? Pink lines?

Wade through the jumble of colors and make your pick and reasons why.
 
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BenTen

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Different zones have different meaning and interpretations based on the trader’s pov. Our eyes see things differently. There are a lot of zones on your chart there. Would be better to have separate charts with their own indicator on it. You should describe how each zone is made.
 
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horserider

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@BenTen True but all are on the same chart intentionally for comparison. Let us see if you or anyone wishes to comment or answer the questions posed. There is also something else someone may see. What is it?
 
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skynetgen

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Been playing with zones lately. All in all fundamentally I think of "zone" - to be and indication of a place with good Risk/Reward. So the most basic ones are the MAs zone (e.g pullback areas). That is for trending setups
Mean reversion setups however is entirely another matter - this would be near the maximum overxtension (think BB 2dev + KC 3ATR break) and within say, 1 ATR range
Trick is to also have a reliable indicator of setup. because the zone should appear on lower timeframe chart (say 5m) but setups happen on higher timeframe (say 30m)

the other concept could be some significant area on a chart (e.g major Support/resistance)/ volume spike area. But those are even more complicated
 
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horserider

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OK kinda surprised with everyone interested in zones but few had any curiosity about different zones shown. There were several different methods here. You may notice that even with different methods of selecting zones the place price hits the different ones is amazingly similar. So is it worth chasing all these different zones that appear or are you better off selecting one and learning it completely ?

Look for the different zones displayed here to show up as individual studies when I get the motivation to add them.
 
BenTen

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Well, first of all, you showed an image of AMD on the 5m chart with tons of zones on it. Very hard to differentiate and inspect. That's why I suggest you add different zones or indicators separately so people can look further into it. If you are willing to share the indicator, that would also be helpful as well so that we can use it on different time frames and then answer your question. Like I mentioned, our eyes see things differently. Each person has their method of identifying supply and demand zones, hence, the reason why there are tons of resources out there that "teaches you" how to draw these zones.
 
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horserider

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Ok last time I will say it. The point was to show how the different ways of doing zones made little difference. Price mostly hit the different zones in the same places. So do not keep searching for that magic zone indicator when more likely than not price will hit the zone in the same place it would hit most zone studies. Select your method and learn it completely.
 
BenTen

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Since you only showed the 5m chart, all I can do is assume that the price would hit different zones in the same places on the higher timeframes as well? Also, who is looking for the magic zone indicator?
 
Billions

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Since you only showed the 5m chart, all I can do is assume that the price would hit different zones in the same places on the higher timeframes as well? Also, who is looking for the magic zone indicator?
@BenTen I am looking for the magic zone indicator can you help?
 
Huffmac90

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With so much interest in zones lately, here are a number of zones superimposed for comparison. Which is better?
Which one do you like? Flowing channel ? Straight channel ? S/R pivot bands(r and s labels) ? Fib levels(% labeled) ? Pink lines?

Wade through the jumble of colors and make your pick and reasons why.
@horserider I am curious about the price channel zone indicator that is following the cyan moving average in the center. It looks like a cleaner version of the channel I was using. What deviations are you using to create the inner and upper/lower boundaries?
 
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horserider

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@Huffmac90 Hmm must be Hurst Channels. It is a complicated formula stressing my math skills. I believe it is not deviations but a different moving average calculation multiplied by input factors. Problem is those input factors may need to be changed for each stock. If you are only trading a few stocks and set up the inputs for each it could be worthwhile. I am sure you can find info on the internet to explain it better.
AMD on the chart look like inputs were 55 , 1.3, 2.0, 3.0
 
Huffmac90

Huffmac90

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@Huffmac90 Hmm must be Hurst Channels. It is a complicated formula stressing my math skills. I believe it is not deviations but a different moving average calculation multiplied by input factors. Problem is those input factors may need to be changed for each stock. If you are only trading a few stocks and set up the inputs for each it could be worthwhile. I am sure you can find info on the internet to explain it better.
AMD on the chart look like inputs were 55 , 1.3, 2.0, 3.0
@horserider Is there a hurst channel script floating around somewhere? Also, I think if you went with a input combo of 1.9, 2.9, 3.9 you would achieve really good results. I use those factors for my double BBands script and it seems to catch the majority of the action.
 
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horserider

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@Huffmac90 You can try but do not believe it works as you are thinking. Anyway have fun with it and see if you can come up with good inputs for what you are trading.

 
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Huffmac90

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@Huffmac90 You can try but do not believe it works as you are thinking. Anyway have fun with it and see if you can come up with good inputs for what you are trading.

@horserider, thank you for posting! I went digging through some of Mobius' work and found a better base script that I combined with Fib that resulted in a great success! The key is to divide fib levels to 1/4, 1/8, 1/16 to fit slow moving/low volatility stocks and use full +1/2 to fit higher volatility stocks/etfs. I think if I can change the values to def and add a multiplier it will be able to fit any stock extremely well.

Additionally, I solved the Volatility box question on another forum. The answer was Hull-MA Drummond channels, I don't want to post the code because I don't know what type of legal protection those guys have on it and don't want to open myself up for lawsuit potential. Took me an hour to re-engineer based on the Drummond channel script posted in the OneNote cloud.
 

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