Predicting Major Trend Changes in The Forex Market
I have always been much more interested in big market moves than opportunities for small profits. What’s interesting to me is for most new traders, all they want to do is day trade for small market moves. Day trading is fine but fewer trades with large profit zones has always been easier and much more profitable to me. This is one of, if not, the most important things to consider when speculating in markets. Below is a passive income trade I was in for a couple weeks with a profit target of over 150 ticks in the Canadian Dollar.
Sam Seiden Trade: May 2017 / Profit: $4,000+
Canadian Dollar Futures
The profit zone is the distance in price between the entry point and the profit target price. When looking for trading opportunities, people tend to focus on where the next big turn in price will happen. As I often write about, these turns happen at price levels where supply and demand is out of balance. When looking at charts, you will find that there are many supply and demand levels. By no means are we interested in taking trading opportunities at all the levels we find. In fact, when considering profit zone into the filtering mix, we would ignore most of the supply and demand levels we find and narrow our focus down to the supply and demand levels that have large profit zones associated with them like the trade above.
To explain the concept of profit zone and its importance in trading, let’s take a look at the Canadian Dollar (CD) trade above. Here we are looking at a larger time frame chart of CD. Notice the supply level above, just above the blue line which is the profit target. This is where we expected there to be more willing supply than demand. The area in the grey box is the “profit zone” which is basically the distance from the supply level to the demand level. Notice in the grey box, all we have is plenty of trading activity but no supply zones. In other words, there were no supply levels to stop price from moving higher through that area once I bought at demand (little circle on chart). The trading opportunity was to buy at the demand level and profit from a move up in price through that price action in the grey box, the profit zone.
The key element here is to identify where the demand and supply is, then look at current price, and finally determine the “path of least resistance” as that is where the next move in price is likely to go. Meaning, price is likely to have a relatively easy time moving through that grey box price action, the profit zone. Keep in mind a VERY important point here: I am coming to all these conclusions BEFORE entering the trade. You must perform your analysis in advance and make your decisions before its time to push the button or this will never work.
As I mentioned earlier, there are many supply and demand levels on a chart and many large and small profit margins. The key for the astute trader is to be able to identify objective supply and demand levels. Then and only then will you be able to find supply and demand levels that have huge profit zones associated with them. What I do is ignore most supply and demand levels on a chart and only focus on the ones that have a great distance between them. This does two things. First, it obviously offers an attractive risk/reward opportunity. Second and just as important, the larger the profit zone, the greater the probability of the trade working out. This is because when you have a big profit zone, by definition your supply and demand levels are far out on the supply and demand curve. Entering your trades at market price extremes increases the probability of success.
To better understand the concept of profit zones in trading, think of profit margins in any other business. Think of how companies who sell products determine what to sell. Most of the decision if not all of it comes down to profit margin. Think about companies who produce products and how they decide what to produce. Most, if not all, of that decision comes down to profit margin, which I am calling profit zone. The decision on which trading opportunities to put your hard-earned money at risk on is absolutely no different, and in fact, we chart profit margin/zone the same way as any successful company would.
Hope this was helpful. Have a great day.
Note: All information on this page is subject to change. The use of this website constitutes acceptance of our user agreement. Please read our privacy policy and legal disclaimer. Opinions expressed at FXstreet.com are those of the individual authors and do not necessarily represent the opinion of FXstreet.com or its management. Risk Disclosure: Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts.
Editors’ Picks

EUR/USD stabilizes above 1.1350 on Easter Friday
EUR/USD enters a consolidation phase above 1.1350 on Friday as the trading action remains subdued, with major markets remaining closed in observance of the Easter Holiday. On Thursday, the European Central Bank (ECB) announced it cut key rates by 25 bps, as expected.

GBP/USD fluctuates below 1.3300, looks to post weekly gains
After setting a new multi-month high near 1.3300 earlier in the week, GBP/USD trades in a narrow band at around 1.32700 on Friday and remains on track to end the week in positive territory. Markets turn quiet on Friday as trading conditions thin out on Easter Holiday.

Gold ends week with impressive gains above $3,300
Gold retreated slightly from the all-time high it touched at $3,357 early Thursday but still gained more than 2% for the week after settling at $3,327. The uncertainty surrounding US-China trade relations caused markets to adopt a cautious stance, boosting safe-haven demand for Gold.

How SEC-Ripple case and ETF prospects could shape XRP’s future
Ripple consolidated above the pivotal $2.00 level while trading at $2.05 at the time of writing on Friday, reflecting neutral sentiment across the crypto market.

Future-proofing portfolios: A playbook for tariff and recession risks
It does seem like we will be talking tariffs for a while. And if tariffs stay — in some shape or form — even after negotiations, we’ll likely be talking about recession too. Higher input costs, persistent inflation, and tighter monetary policy are already weighing on global growth.
RECOMMENDED LESSONS
Making money in forex is easy if you know how the bankers trade!
Discover how to make money in forex is easy if you know how the bankers trade!
5 Forex News Events You Need To Know
In the fast moving world of currency markets, it is extremely important for new traders to know the list of important forex news...
Top 10 Chart Patterns Every Trader Should Know
Chart patterns are one of the most effective trading tools for a trader. They are pure price-action, and form on the basis of underlying buying and...
7 Ways to Avoid Forex Scams
The forex industry is recently seeing more and more scams. Here are 7 ways to avoid losing your money in such scams: Forex scams are becoming frequent. Michael Greenberg reports on luxurious expenses, including a submarine bought from the money taken from forex traders. Here’s another report of a forex fraud. So, how can we avoid falling in such forex scams?
What Are the 10 Fatal Mistakes Traders Make
Trading is exciting. Trading is hard. Trading is extremely hard. Some say that it takes more than 10,000 hours to master. Others believe that trading is the way to quick riches. They might be both wrong. What is important to know that no matter how experienced you are, mistakes will be part of the trading process.

The Best brokers to trade EUR/USD
SPONSORED Discover the top brokers for trading EUR/USD in 2025. Our list features brokers with competitive spreads, fast execution, and powerful platforms. Whether you're a beginner or an expert, find the right partner to navigate the dynamic Forex market.