A trader using the ZoneTraderPro trading system will be expected to learn the following material. It is suggested that you follow the steps in the order that they are presented to maximize your learning.

1. The ZoneTraderPro Manual - The manual is approximately 147 pages and covers all aspects of the system. Print the manual and if you have any questions on a concept, email or phone ZoneTraderPro support.
2. The ZoneTraderPro Video Series - The video series will build visually on what you have learned in the manual. The videos that are important at this point are the first 21 videos that cover Setup, Lessons, and Strategies.
3. Sign up for eSignal and start the ZoneTraderPro trial. It is now time to start watching the market and its' patterns operate in real time. It is very important to realize that you have just started your learning process, and it is time to learn, not to trade. By adding the pressures of trading, you will slow or stop the learning process, because you are now focused on making money and not learning. You will need the least expensive eSignal package, and the CME e-mini feed. There are several sources for getting the Yen carry trade information, or you can add this from eSignal also.
4. Study the Yen carry trade in relation to the patterns that ZoneTraderPro produces. The Yen carry trade is the markets reaction to risk. The more the Yen weakens, the more risk that market players are willing to accept. The money that is borrowed in Yen, will then be invested in the stock market. If the Yen strengthens, money is being pulled out of the market. If the amount of the Yen strengthening is significant, this will then cause illiquidity volatility in the market. Illiquidity volatility carries some of the highest risk of losing trades. Additionally the market patterns will be difficult to read, and trades can be won or lost in seconds. The section on trading a gap down day should also be studied again here, because the unwinding of the Yen carry trade occurs as the market is gapping down in the pre-market. There will be a video and manual update in the near future.
5. Illiquidity volatility was the reason the Bar Color EFS was created. The Bar Color EFS is a simple way to determine if increased risks are associated with the trade you about to enter. On a "normal" day you would expect to see less than 2-3 color bars. If you are seeing a dozen on a chart, or if you see a color bar develop as you are entering a trade, you will understand there is an increased risk of trading. There are two reasons color bars develop. Know what each one is, why they occur, and how to identify each reason.
6. The Yen Carry Trade charts. These charts examine 1-23-08, when the S&P had a large range, and a 75 point rally from market bottoms. These charts illustrate the concepts of the Bar Color EFS and illiquidity volatility on actual charts.
7. Review the Yen Carry Trade Strategy video. This video demonstrates the concept of the Yen being a leading indicator. The video also demonstrates how the Yen also reacts in a similar manner to the S&P, and what happens when it does not.

At this point you should be ready to start testing some of your knowledge.

1. Take the ZoneTraderPro Basic Training video test. The Basic Training video will test your knowledge of what you learned in the 5 sections above. The test is 20 questions that cover the material covered in the manual. If the answers are not easy, do not worry. Stop the test and review the material in the manual and videos that covered the concept. It is very important to note that some of the questions in the test are based on previous answers, so do not go on to the next question without fully knowing an answer.
2. This next step is the hardest. It is not hard because you will be asked to do complex math that you have forgotten years ago. It is hard because most traders have never done it. That is creating a trading plan. A trading plan is nothing more a detailed look at each type of trade. There are 4 types of trades. You need to study each trade, and have a detailed plan for each. The steps you need to take are outlined on the Advanced Video Training page. In addition to the questions, ZoneTraderPro provides Excel worksheets that detail all of the trades made that create the statistical history of the system.

Why is this important. First you can see where ZoneTraderPro has losing trades. You will see losing trades occur

1. During the 0800-0900 news release time period. ZoneTraderPro cannot control the news. Taking a trade before the news is just a 50/50 coin flip.
2. During the 0945-1005 new release time period. Why not just look at trades starting at 0955, why start at 0945? The answer is because the traders on the floor controlling the market have a whisper number or may even have the real number. Trades leading into the news will be head fakes as the smart money tries to suck in the retail traders into trading in the wrong direction. That means taking the S&P to strong trend levels and losing trades.
3. At the end of the day. In the last 45 minutes there is an increased number of losing trades. This could be because large traders who can move the market must initiate trades and hedges prior to the close. Here is a chart which has 3 losing trades between 1530-1615 hours.
4. Illiquidity volatility, which was covered above.

Now that you can understand where losing trades can occur, you may consider removing all (winners and losers) of those trades from the Excel worksheet. I am only referring to the trades occurring during news events and the end of the day. There is no way to determine if illiquidity volatility caused the losing trade.

 

Page 1 | Continue to Page 3