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-   -   Trading S+D With Facts Ebook (https://www.forexfactory.com/showthread.php?t=563723)

willo123 Oct 27, 2015 10:18am | Post# 1

Trading S+D With Facts Ebook
 
Hello traders of forex factory, i have been a long time lurker on forex factory but only made an account a few weeks ago, i have made this small guide for you to understand my way of thinking and trading S+D, the guide is one part of my overall methods of trading the market and supply and demand in general.

The method is focused on understanding the psychology of market participants to see where real zones are located, the typical way of trading s+d is focused on marking areas from past price history which is based on the belief that limit orders have been placed at these levels ahead of time.

This assumption is flawed, there are no limit orders at these levels why would somebody put a limit order to sell at a level then wait 2 years for price to return to it to sell again?, the whole time not knowing weather the market will return to it in the first place?
Doesn't make sense does it?
This thread will restructure the current idea's around S+D trading into something easier and more profitable which in turn will give you a better understanding of the market and the participants within it.



looking forward to discussion and ideas from you all

willo123 Oct 27, 2015 10:19am | Post# 2

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here's the book
supply and demand english.pdf

willo123 Oct 27, 2015 10:26am | Post# 3

sorry guys page 2 of the book is slightly incomplete doesn't really matter though was just me rambling about common technical analysis .

willo123 Oct 27, 2015 10:49am | Post# 4

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i want you to look at the area i have marked in blue

this zone does not have a strong move away so by standard s+d definition its not that strong, the reality is that area is more imprtant than any s+d zone based on past price history, to understand the reasons why we have to think about the pschology of the market.


first we have a huge downtrend which has been in place for long time, this means that lots and lost of people are currently short in the market.

so if the direction of the market needs to change that means that somone has to place a buy trade big enogh to consme all the sell orders entering into the market.

willo123 Oct 27, 2015 11:05am | Post# 5

Whoever brought must have a lot of money otherwise the market wouldn't be able to move very far.

The thing we don't know about this zone is whether the move up is due to a large entity placing a buy trade with the expectation of making a profit or a large entity taking profits on a position which is causing the market to move up

If the market returns to this level we would expect that its going to move up again, not because there are limit orders placed there {again what common s+d analysis teaches} but because we know that someone with a large amount of capital came into the market and pushed price up ,what would be the point of consuming all those sell orders if your expecting price to move lower in the future?

willo123 Oct 27, 2015 11:06am | Post# 6

brb going for a smoke

willo123 Oct 27, 2015 11:16am | Post# 7

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awaiting price action in these area's

willo123 Oct 27, 2015 11:28am | Post# 8

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Not much happening on EUR/USD think this will drop again soon

willo123 Oct 27, 2015 11:30am | Post# 9

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willo123 Oct 27, 2015 11:58am | Post# 10

Just going through the book again realize that there are more mistakes lol sorry about this .

At one point it says "if you read my last book" the reason for that is that to begin with there were two books which i had made, the one you can download was meant to be the second, the first was more of an introduction into oandas order book tool and how to read the information it presents.

I decided to scrap it when i realized most of what i said was already explained better on the oanda website and the book itself was only like 5 pages.
Again sorry for this.

willo123 Oct 27, 2015 12:14pm | Post# 11

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this EUR/USD 1hour , what we are looking at here is the move lower into the daily demand zone i posted earlier , you can see that the overall market structure of what we see on the daily chart repeats itself at the end of this down move even though we are seeing this on a completely different time-frame.

we get a move up a small swing down then another move up which terminates below the high of first move up, the market then falls into the area and proceeds to move higher, essentially we have market structure repeating itself on different timescales.

willo123 Oct 27, 2015 12:22pm | Post# 12

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these images show it better
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willo123 Oct 27, 2015 4:08pm | Post# 13

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The blue area's are zones that the market has been away from for quite a long time , the red areas are zone that the market revisits quickly after forming, its clearly obvious that levels the market returns to quickly have a higher probability of working out than the ones based on past price history.

Typical s+d teaching says that the longer the market's been away from a zone the more probable it is that it will turn when it returns, this image clearly shows that this isn't the case.

willo123 Oct 27, 2015 4:30pm | Post# 14

What It Means To Participate In A Zero Sum Game


Forex trading unlike stock trading is a zero sum game, a zero sum game essentially means one person's gain is another persons loss.

This is true for all participants that are in the market for speculative purposes, it doesn't matter if your a huge institution like jp morgan or a retail trader the only way for you to make money is if you take it from somebody else the more people that lose money the more money you make this is undeniable fact and is mostly why trends exist in the market.

This means that when you look at your charts you needs to be figuring where traders are likely to lose money, most retail traders are trading and making decisions based on price, when the price does not matter, what matters is what the price means to other people in the market.

willo123 Oct 27, 2015 4:50pm | Post# 15

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Lets say you trade pin bars, a common method used by many price action traders to predict a change of direction in the market if i know that 1000 traders have sold this pin bar expecting a down move then i know that if i come into the market with a big enough order i can push price up against them, if i push the market against them enough then they will eventually close their trade resulting in me making the money that they have collectively lost.

This is how you need to be thinking about the market, focusing on things like indicators and price action completely misses the underlying structure of the market.

A common thing people tend to say in relation to technical analysis is that if enough people believe in something like a resistance level then it become a self fulfilling prophecy, this is the exact reason it wont work because the big players know that if enough people do the same thing like sell at resistance then if they do the opposite they can make a lot of money you would do exactly the same if you were in that situation.
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willo123 Oct 27, 2015 4:53pm | Post# 16

look at this image and ask yourself who lost money when the market fell?

Dane Oct 27, 2015 4:54pm | Post# 17

Hey there,

Congrats on the new thread.

I've been interested in Sam Seiden and others who trade supply and demand. Of course they go into a bit of detail on 'odds enhancers" which have you qualify trade set ups so you only take the high probability trades.

Look forward to hearing more from you...

Dane...

willo123 Oct 27, 2015 5:25pm | Post# 18

Thanks for the reply mate

Was beginning to think no one was interested lol

The problem with the sam seiden method of supply and demand is that its backwards to the way it should be traded.

Seiden says that the strength of the move away from the level is important and it is.... only the opposite way around.

A strong move away from a level does not mean that its any more likely to work out than a zone which has a small move away, the deciding factor is where that level is found in the context of the trend on the time frame your observing.

simond2002 Oct 27, 2015 6:03pm | Post# 19

the deciding factor is where that level is found in the context of the trend on the time frame your observing.
Yep, that's the bit Sam doesn't talk about. It's the most important bit.

Dane Oct 27, 2015 6:10pm | Post# 20

Hey,

Interesting use of the order book as a proxy for what potentially other traders are thinking/doing, like it!

I've just moved onto ctrader as a platform which gives 1/2 level depth of orders and liquidity. Again it's just a proxy of what's happening at my broker but I'm watching how price moves when compared to the liquidity.

I had a quick read of the book and it's nice and clear and to the point, nice job.

Dane...


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