TrapZone Pro

14. Aug. 2023

This script combines the concepts of Price Action, Trend and Momentum to identify Price Zones (Red and Green filled areas) and Price Bars (Red, Green and Gray) where traders can get trapped in the Market.

It will clearly mark the bars which favor the prevailing Trend and those bars which just don't have the momentum anymore. TrapZone moves with the market trend and will often provide it support. As the TrapZone changes direction & its color, traders can change their trade bias.

Features:

• Identify strong & weak price action - By leveraging a regression calculation of price movement on Y axis against the x axis, we identify the strength of current bars. Increasing relative strength of bars indicate Bullish (Green Bars) & Bearish (Red Bars) price movement, respectively. As the relative strength starts to decrease in Bullish or Bearish price action, the indicator immediately changes the color of these bars to Gray (by default). We call these TrapBars.
  
• Current price trend - By using the highs and lows of price in multiple periods, we are calculating the trend of the price. The Bullish trend is shown by the Green zone and Bearish trend is shown by the Red zone. These zones are the shaded areas which are plotted on the chart. If the price is in these Zones, Longs or Short trades are not advised as that price action is weak. We call these TrapZones.
  
• Strength of the Momentum - the thickness of the TrapZone shows the strength of the current Bullish or Bearish trend. That means the wider the shaded area grows the stronger is the current market momentum. A Flat TrapZone indicates sideways price action.
  

Knowing when NOT to Trade is as important as when to Trade. While this indicator is designed to avoid taking bad trades such as FOMO, Catching a Falling Knife or Fighting The Trend, it successfully reveals the good trade setups!

How these features of this indicator helps Traders avoids common mistakes:

• FOMO or Fear of Missing Out - If a Trader Sees TrapBars in a Bullish or Bearish Trend, they will avoid entry as the price action is weak at that time. This will avoid late entries.
  
• Catching a Falling Knife (a.k.a. Picking a Bottom) - When Red TrapZone is being plotted, Traders can avoid taking Long Entries hoping for a price reversal.
  
• Fighting The Trend (a.k.a Picking a Top) - When Green TrapZone is being plotted, Traders can avoid taking Short entries hoping for a price reversal.
  

TrapZone Pro does all this in a single panel of the chart irrespective of the market or timeframe.

How to use TrapZone Pro indicator for trading[

A. Market Analysis

• Green TrapZone is Bullish and traders should not take Shorts. If Green TrapZone is moving higher, Market is Strong
  
• Red TrapZone is Bearish and traders should not take Longs. If Red TrapZone is moving Lower, Market is Strong
  
• No trades when TrapBars are forming
  
• No trades inside the TrapZone

B. Trade Guidance System

• Establish Market Bias - Bullish or Bearish using the TrapZone Color
  
• Only Enter Long in Long Color Bars i.e. Green by default
  
• Only Enter Short in Short Color Bars i.e. Red by default
  
• 3 Classes of Trades are Possible Class A, B & C. A being the best Reward : Risk ratio and C being the least rewarding. So use trade size accordingly.
  
• Class A - Best bars are always the first & Second, close to the TrapZone
  
• Class B - Long Bar or Short Bar Forming after TrapBar away from the TrapZone in a Strong Market
  
• Class C - Long Bar or Short Bar Forming after TrapBar close to the TrapZone in a Flat Market (identified by Flat TrapZone)
  
• Take profits when Price moves away from the TrapZone & TrapBars start forming OR Your Target is hit !
  

See a few examples of Trade Classes & Entries/ Exits for a better understanding


Recommendations

1. Select Session to “Electronic Trading Hours” in chart settings so you can see the Post & Pre Market trading as well. You can change the color of these sessions to the same color as chart background, so it is not distracting.
   
2. Start by Trading in the Hourly or Daily time frame to get used to the new indicator and its Trade Guidance System.
   
3. Position Size is the best form of Risk Management. Have a fixed dollar loss per trade pre-determined and adjust the size based on market volatility.
   
4. Even though this indicator is designed to work on any market or timeframe, trade the markets that you are familiar with and timeframe that matches your lifestyle. Your understanding of the instrument's behavior and knowledge of what makes it move is valuable.
   

Basic Set-Up

• Add the Indicator to the chart
  
• Open Chart Settings and in Symbol Section
  
• Switch off “Borders”
  
• Switch off “Wick” or Change the colors to a same non-distracting color like Black or Gray
  

Open TrapZone Pro Settings

1. Set the colors for the “Long Bars”, “Short Bars” & “No Entry Bars” if you wish to change the default colors
   
2. Change “TrapZone” colors to your Taste or leave the defaults
   
3. Green for “Color 0” that represents Bullish Price Action
   
4. Red for “Color 1” that represents Bearish Price Action
   

Important Advice & Disclaimer: This indicator does not guarantee that you will make money. It is a tool that performs market analysis for you and presents it in a easy to consume fashion. Markets are truly random and can change direction on a dime. You must use prudent risk and money management strategy based on your investor profile, investment objectives and risk appetite.

To Get Access - See Author’s instructions below