The battle of Somme. The first great offensive of World War I and the moment of truth for the British that would shape their resolve for the rest of the conflict. Among the trench warfare conflicts that took place during the war, this was one of the bloodiest.
The most dangerous place you could find yourself during the entire conflict? No man’s land — right at the center between the trenches of the two opposing sides. A place of confusion, bullets, blood and raw carnage.
Likewise, the market has a no man’s land of its own — and it’s where 95% of retail traders get caught in the institutional crossfire. You can steer clear of this zone simply by knowing where it is and trading with the right timeframe using True Value.
The zone where institutions mow down the amateurs
The infamous term ‘no man’s land’ was first recognized by the British Army. Known as the space between the trenches during World War I, you entered at your own peril, with full knowledge that there would be bullets flying in your direction. A dicey venture that many soldiers never survived. The battlefield in Somme covered an entire region in France. Miles of no man’s land that could only be analyzed from the air.
Every day, millions of retail traders venture into the no man’s land of the market with no concept of where it is, or the dangers that it holds. Known as the Value Zone, this is the price territory where 70% of the volume is taking place.
Within the Value Zone, you’ll find the Point of Control — or POC. This is where most of the volume is taking place during that period of time — and is considered fair value by the institutional traders.
Like no man’s land during an actual battle, knowing where this is, is the difference between trades that survive — and those that get mowed down.
Clear the fog of the market by knowing where value is
Whether it was due to the effects of artillery shelling or a sense of false bravado, running across no man’s land without proper cover was a real problem. This was especially the case when new replacements or recruits would come in to relieve the veterans. The fog of war and the chaos simply caused confusion.
As instructions were passed down the line in advance of the charge, someone would seem to get it wrong, leap into the
fray — and get mowed down. The same thing happens in the market every second. Retail traders leap into the fray, not fully understanding what they’re getting into — and their trades are caught in the crossfire.
This most frequently happens when micro swings within the Value Zones are mistaken for actual price reversals. While they can be tempting, and the case for entry may seem compelling — they’re doing nothing but heading right into the activity that the institutional traders are driving.
Without an accurate view of the Value Zone, this will continue to happen. Understanding both the right timeframe and range with which you’re dealing is critical in spotting safe, high probability entries.
Attack with high probability entries at the extremes
It was an aerial view of the German fortifications that ultimately gave the Allied forces an advantage. The pictures gained from viewing the German trench system from above revealed the layers that sat just beyond no man’s land on their side. It uncovered the advancement patterns that would ultimately be picked off.
Take an aerial view of your market and reveal the value zone using True Value. In just one look, this will tell you exactly where price sits relative to overbought or oversold conditions. Using this will give you the intelligence you need to advance candidate entry locations.
Simply look for price to advance into the red for overbought conditions for a potential sell entry. Conversely, track price when it enters into the green oversold zone for potential buy entries. Above all, now you’ll know where no man’s land is — so you can steer clear.
The key to using True Value properly: The time settings. If you’re a scalper, your True Value lookback should be in hours since your time in market is going to be very brief and your value zone oscillations will be narrower. If you’re taking longer positions, say 14-21 minutes — set True Value with a one- to two-day lookback.
With the right settings in place, stalk price and advance your attacking entries.
Don’t fall for ‘swings’ that can kill your account
Of course there are several moments when price presents an apparent swing that can be very appealing. Many would argue that not trading these moments equates to leaving money on the table — especially if you’re sitting on your hands waiting for price to approach a new extreme.
Although appealing, these are swings that the institutional traders are hoping retail traders will take the bait on. Because they fall in the middle of the value zone, they also come with the volume that surrounds fair price — the price tag that the institutions are most interested in protecting.
Instead, opt for opportunities right at the edges of the value zone, especially if there is a macro location in the form of a volume rejection level (VRL). WIth a macro view of price performance to support a micro entry opportunity, your odds for a profitable trade increase significantly.
Advance victoriously while avoiding market casualties
It was the losses that are most remembered about the battle of Somme. A staggering 57,470 casualties were incurred July 1, 1916 by the British alone. This was more than the total British casualties in the Crimean, Boer and Korean wars combined. When it was all said and done, there were around 420,000 British casualties.
Don’t be another retail trading casualty. Know where the Value Zone is at all times and steer clear of no man’s land in the middle. Stay true to your trading strategy and view the value zone in the right timeframe.
If you’re a scalp trader operating with a one-minute chart, take a True Value perspective with a setting in the ‘hours’. If you’re a swing trader, work with ‘days’. Grab your sell opportunities in Value Area High (VAH) and your buy opportunities in Value Area Low (VAL).
Let others rack up the losses while you advance victoriously.
Noft Traders offers a Funded Trader Program. To learn more, visit their informational page at NOFT-Traders.com.