ZoneTraderPro Trading Strategies
ZoneTraderPro has four distinctive parts to it. They are the price patterns, order flow patterns, the real time divergence indicator, and its’ volume analysis tools. Just one of these tools doesn’t generally result in a trading strategy. The combination of all the tools creates a trading system that can be back tested to generate a trading plan.
ZoneTraderPro features integration with SharkIndicators BloodHound indicator to use real time data based upon options related trading activity, to generate signals that trade with trends.
When ZoneTraderPro was created it looked at only price patterns. The challenge was to figure why a trade loses. The best solution at the time was the $TICK symbol and the Tick Divergence trading pattern.
In March 2018 ZoneTraderPro started development of the order flow patterns. Other order flow products were not reliable. They had signals that would disappear and change. Those vendors were charging yearly “maintenance fees.” What is a maintenance fee? Its just a way to put more money in their pocket. They are not being charged anything by NinjaTrader to keep your “lifetime license” active.
They also charged an “upgrade fee” when you upgraded to NT8. But didn’t you buy a lifetime license?
In January 2019 ZoneTraderPro began adding the cumulative delta and Delta Strength tools, which are tools 100% unique to ZoneTraderPro. Why is the cumulative delta unique? It uses tape reconstruction technology to identify the size of the order and not the size of the fill. With Delta Strength we can filter for large orders. A Time and Sales window is useless, because what you see are the fills. Only with Delta Strength can you see real order size.
The cumulative delta was then modified to add real time divergences. There are three types of divergences. Regular divergence, divergences that show accumulation and distribution, and divergences that appear when price trades from a high to a low, or vice-versa.
By using the cumulative delta we can do volume analysis. We can see in real time, whether support or resistance is increasing or decreasing. This becomes a very important factor in your decision making because you can see iceberg orders and market participants trapping traders in the wrong direction.
In 2020 ZoneTraderPro made another big addition. In 2020, using the BloodHound indicator, we could now determine the trend in a market, using data from options trades. Using the SPY as a proxy for the ES, divergences that occur with the trend can form the basis of a back testable trading system. Additionally, real time divergences, can give excellent exit signals, as seen below.
Real Time Signals Trading With Trend Signals
ZoneTraderPro Price Patterns, Order Flow and SharkIndicators BloodHound
In June of 2019 the ZoneTraderPro script was completely re-written from a clean sheet. The original script was not compatible with BloodHound. Previously it had taken days to test a strategy idea. Now those trade ideas can be done in an hour. What is more important is that you can test different parameters in just minutes. Additionally, you can test price patterns and order flow patterns.
In the picture on the left, we can see 4 trading patterns on the chart. But only 3 had a combination of a price pattern and an order flow pattern. Where you see the red or green line on the chart, that is where you had the combination of a completed order flow pattern and a price pattern, indicating an entry.
A Complete Real Time Trading System
ZoneTraderPro is a complete trading solution. As such there are tools that can be combined and used in conjunction with each other. They can give you trading ideas and inspiration for others.
These are tools and not complete trading strategies. These tools that can put you on the right side of a trade after you enter, and that is important. But its not the complete solution because it does not address the exit from the trade. The definition of a win is exiting a trade with a profit. The tools also provide a way to manage risks. The hardest part of the trade is the exit. For an entry we know that the options hedging flow is in our direction, we have a good divergence pattern, and we may have a price pattern.
In the example below, we have a long accumulation divergence trade the made 7.5 points. But as that trade reached resistance, a sell divergence signal is seen, and price retraces 4.5 points. A second long accumulation divergence signal is generated which made over 10 points. But this trade also had a sell divergence signal. If your trading plan took profit at 5 points, there were 2 trades in less than 10 minutes, that earned 10 points. The exit is hard, because of emotions and you see the BloodHound all green.
You are not going to able to call a top or bottom.
You are not always going to able to call a bottom. It takes work. That is why we have to do a little homework. But with ZoneTraderPro and BloodHound those answers become easier.
Those answers can be a profit target, order flow, divergences and opposing price patterns. These are answers that are easily tested. For example, with BloodHound we only have to look at the successful trades and we can do that by only having to look at one chart. No more trying to look at 3 different charts and trying to figure out what signals were present.
On that same chart we can see when stops are hit and can very easily test different stops.
The Trading Strategies
There have already been several strategy videos created and are most easily found on the blog or ZoneTraderPro YouTube Channel right now. The most common trading strategy is to use the BloodHound indicator to determine options hedging flow. Options hedging flow occurs when options are traded. The VIX is the the market volatility index. ZoneTraderPro has created templates, which are provided with the software, that look at the VIX and other instruments related to the VIX that are tradable instruments. Why is this important. Options volumes have exploded. When retail and institutions are making options trades, the dealer making the trade need to be hedged and stay neutral. The options dealer does not have a directional bias. Options dealers are making real time trades in the ES to offset risk (hedge) and the template looks to trade with the options flow, and not against it.
The SPY and the ES are both monitored for divergences. Trades can be easily developed when there is a combination of the BloodHound and divergence.
The BloodHound signal is made up of 6 different signals. Three are related to price and 3 are related to VIX. So you can tell where the VIX was indicating long trades are favored and where short trades are favored.
This strategy is explained in detail on the VIX BloodHound page found HERE.
There are 3 videos at the top of the page, that represent the strategy and every signal generated over a 3 week period. Each video covers 1 week.
VIX Template Examples
In the charts above and below, there are red and green lines on the bottom indicator panel. I drew these in to denote where the VIX is indicating short and where it went long. There were also real time SPY divergences, both long and short, being indicated on the price charts. An opposing divergence signal can be used as an exit, as they are telling you in real time, you may be subject to a reversal.
As the morning continued on, the system continues to take trades in the direction of the VIX. You see a BloodHound red/green racing stripe on the charts when 5 of the 6 charts are in agreement. This can be used to prevent early entries. These charts are from 1/03/22 and this is a very important point. These charts are ONLY illustrating market direction and why it is a valid trading idea to be trading with the VIX. Not every divergence signal you see on these charts are valid trades. This is only meant to illustrate the power of the ZoneTraderPro VIX templates.
ZoneTraderPro Personal Training
When you purchase the software I will come to your screens and set everything up for you. After that we will immediately begin your training. The training is broken down into 5 distinct sections.
ZoneTraderPro is not a red light / green light system. It is also a system you would not want to use BloodHound to develop automatic signals. The reason is that some trades have more or less risk, based on historical patterns. These patterns are taught to you so you can understand risk before you enter a trade. By knowing a pattern, you know the difference between a tradable pullback, and a high risk situation.
The 5 phases of training are
- Identifying price patterns
- Order flow patterns
- Divergence patterns
- Volume analysis
- BloodHound VIX
Training is done at your pace and on your schedule. There is no free trial because of the time I take to personally train you on each of the subjects.
ZoneTraderPro offers a $200 discount on the software. For full details, contact me on Skype (search ZoneTraderPro), my contact form , or just call me.
ZoneTraderPro Live Demonstration
ZoneTraderPro offers a free live demonstration of the trading system. The system is also designed so that signals do not disappear or change. So you can look at historical charts and understand where signals were developed and if they failed or succeeded. This allows you to to create a trading plan based on an actual system and rules that you can back test.