Supply and demand in a nutshell by Alfonso Moreno | Page 22 | Forex Factory

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Supply and demand in a nutshell by Alfonso Moreno

  • #421
  • Edited 8:33am Jul 9, 2013 8:23am | Edited 8:33am
Planned 2 trades to go short on GBPCAD.

- First one is on H1 speedbump supply after last week low (red beads on my charts) has been solidly broken with momentum
- The second one is a H4 short which has been drilled down to the H1 chart for a lower risk entry. Why? I switched to the H1 chart and saw level on top of level on H1, in this sceneario I always try to go for the upper zone of supply.

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The D1 demand is further down. So there is enough room for a nice risk reward.
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Set and Forget supply and demand trading community
  • #422
  • Jul 9, 2013 11:42am Jul 9, 2013 11:42am
Quoting panoramia
Planned 2 trades to go short on GBPCAD. - First one is on H1 speedbump supply after last week low (red beads on my charts) has been solidly broken with momentum - The second one is a H4 short which has been drilled down to the H1 chart for a lower risk entry. Why? I switched to the H1 chart and saw level on top of level on H1, in this sceneario I always try to go for the upper zone of supply. {image} {image} The D1 demand is further down. So there is enough room for a nice risk reward. {image}
Hey alfonso, I was going to ask you why we take trades that are within the D1 supply or demand zone that are not original Levels when a new level is forming. What i am trying to say is, when a new level is forming within a D1 supply or demand, and that new level that is forming is not an oringial level, why do we still rely on that level for reversal?
Thank you for your help
  • #423
  • Jul 9, 2013 1:06pm Jul 9, 2013 1:06pm
Hey Derek,

We will use original levels when we're doing set & forget, like the H4 supply area on GBPCAD. The level is located on H4, it's original on H4, it does not matter if on H1 is not original. But you are asking a different thing... Let me explain it...

If we can't set & forget on a level because it's not original, then we will wait for a BRAND NEW level of supply or demand. This new level needs not to be original, only fresh. This new level will confirm that there are willing buyers or sellers in the area, depending on the direction you want to trade. New levels formed on D1 SD zones do not need to be original, you need original levels for set & forget type of trading, not for confirmation. You'd be waiting for a new level to confirm that there are willing sellers, so the new level does not need to be original, only fresh in the direction you want to trade.

Hope that I managed to put it accross clearly
Alfonso


Quoting Sdprice
{quote} Hey alfonso, I was going to ask you why we take trades that are within the D1 supply or demand zone that are not original Levels when a new level is forming. What i am trying to say is, when a new level is forming within a D1 supply or demand, and that new level that is forming is not an oringial level, why do we still rely on that level for reversal? Thank you for your help
Set and Forget supply and demand trading community
  • #424
  • Jul 9, 2013 4:47pm Jul 9, 2013 4:47pm
Quoting panoramia
Hey Derek, We will use original levels when we're doing set & forget, like the H4 supply area on GBPCAD. The level is located on H4, it's original on H4, it does not matter if on H1 is not original. But you are asking a different thing... Let me explain it... If we can't set & forget on a level because it's not original, then we will wait for a BRAND NEW level of supply or demand. This new level needs not to be original, only fresh. This new level will confirm that there are willing buyers or sellers in the area, depending on the direction you want...

Thanks alfonso, much appreciated, i understand now.
I have a trade set up for the USD/JPY, for a short entry at the D1 distal level which is also on the 4h for an entry. What do you think of this for a set and forget. the level is an original and fresh level?
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  • #425
  • Jul 10, 2013 2:55am Jul 10, 2013 2:55am
Hi Derek,
Take a look at the origin of that H4 supply level on USDJPY you selected as original. It's a reaction to a level in 2008. Originally it was a nice short opportunity, speedbump supply, retest and dropped like a rock. At the origin it is not fresh. It held in present time, and now price would be hitting that level for the 3rd time.

What does it mean to the kind of trading I'm doing, I have to wait for some kind of confirmation, brand new H1/H4 supply level in the area or engulf pattern absorbing some previous lower timeframe demand.

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Could that level work without confirmation? Yes, of course. But my trading plan won't allow me to short there in set & forget.

This is the H4 supply level recently. There was 1 hit and now we'd be hitting it for the 3rd time. This is why it's unfilled. It's also 48 pips wide, too wide for a set&forget without drilling it down to H1 or a fix number of pips.

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So, I'm waiting for:
1. Confirmation type of trade at that area to go short
2. Solid break of the highs to keep on buying on fresh demand areas, which is why I have an alert with SB BUY, it's not a normal alert, price has to break that area with strength/momentum, I use H4 20 EMA. By doing that, I avoid many fake breakouts

Quoting Sdprice
{quote} Thanks alfonso, much appreciated, i understand now. I have a trade set up for the USD/JPY, for a short entry at the D1 distal level which is also on the 4h for an entry. What do you think of this for a set and forget. the level is an original and fresh level? {image}
Set and Forget supply and demand trading community
  • #426
  • Jul 10, 2013 3:47am Jul 10, 2013 3:47am
I had a loss yesterday trying to short on a H4 original level of supply on CADCHF at the D1 supply proximal line . Broke it by a few pips and now it looks like it started to drop after some consolidation above the level. But well, losses are part of the game! Next one!
Attached Image (click to enlarge)
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Set and Forget supply and demand trading community
  • #427
  • Edited 5:31am Jul 10, 2013 4:44am | Edited 5:31am
Planning a short on EURJPY.

The support area was absorbed by price action, so I am going to try a short at the H4 supply level. There is lots of room to previous supply.

On H1 the level is very similar. There is a H1 speedbump supply before my entry but it has no profit margin (minimum of 3:1 my SL risk in pips), and departure is not good enough, so I'm going for the H4 level which was when the decision was taken to absorb support on the left side (red rectangle)
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Set and Forget supply and demand trading community
  • #428
  • Jul 10, 2013 5:24am Jul 10, 2013 5:24am
Quoting panoramia
Planning a short on EURJPY. The support area was absorbed by price action, so I am going to try a short at the H4 supply level. There is lots of room to previous supply. On H1 the level is very similar. There is a H1 speedbump supply before my entry but it has no profit margin, and departure is not good enough, so I'm going for the H4 level which was when the decision was taken to absorb support on the left side (red rectangle) {image} {image}
Hi Alfonso,

what do you mean with "has no profit margin"?
Thanks.

Regards,
Peter
  • #429
  • Jul 10, 2013 5:33am Jul 10, 2013 5:33am
Hi Peter,
I require a minimum of 3:1 my SL risk in pips in order to validate my entries. When I say there no "profit margin", it means there is no 3:1 profit. If level is 30 pips with wiggle room + spread included, I need at least 90 pips room or more from my entry point to the price area where price started to bounce.

Sometimes I do 2:1 when there has been a solid break of an area with momentum or a new trend is starting, never when price has been running in one direction for some time. But if there is no solid break of an area, I always go for 3:1 profit margin or more.

Hope that answers your question
Alfonso

Quoting Forex Lion
{quote} Hi Alfonso, what do you mean with "has no profit margin"? Thanks. Regards, Peter
Set and Forget supply and demand trading community
  • #430
  • Jul 10, 2013 5:44am Jul 10, 2013 5:44am
Quoting panoramia
Planning a short on EURJPY. The support area was absorbed by price action, so I am going to try a short at the H4 supply level. There is lots of room to previous supply. On H1 the level is very similar. There is a H1 speedbump supply before my entry but it has no profit margin (minimum of 3:1 my SL risk in pips), and departure is not good enough, so I'm going for the H4 level which was when the decision was taken to absorb support on the left side (red rectangle) {image} {image}
Alfonso,

I understand your plan. Just want to ask you why you haven't draw a demand zone (speedbump I think) on the left in this H4 EURJPY, exactly between 127.90 and 128.11. Am I right? Is there a DZ? Price has just retraced from those level.


thanks
Toni
  • #431
  • Jul 10, 2013 5:52am Jul 10, 2013 5:52am
Quoting panoramia
Hi Peter, I require a minimum of 3:1 my SL risk in pips in order to validate my entries. When I say there no "profit margin", it means there is no 3:1 profit. If level is 30 pips with wiggle room + spread included, I need at least 90 pips room or more from my entry point to the price area where price started to bounce. Sometimes I do 2:1 when there has been a solid break of an area with momentum or a new trend is starting, never when price has been running in one direction for some time. But if there is no solid break of an area, I always go for...

ok, I see, you mean there is not enough space until the demand level on the h4 time-frame, where price could be rejected?
  • #432
  • Jul 10, 2013 5:55am Jul 10, 2013 5:55am
Quoting forexdaist
{quote} Alfonso, I understand your plan. Just want to ask you why you haven't draw a demand zone (speedbump I think) on the left in this H4 EURJPY, exactly between 127.90 and 128.11. Am I right? Is there a DZ? Price has just retraced from those level. thanks Toni

Hi Toni,

yes, this is the level I mentioned...
  • #433
  • Jul 10, 2013 6:35am Jul 10, 2013 6:35am
Quoting panoramia
I had a loss yesterday trying to short on a H4 original level of supply on CADCHF at the D1 supply proximal line . Broke it by a few pips and now it looks like it started to drop after some consolidation above the level. But well, losses are part of the game! Next one! {image}
Alfonso,

Wasn't it too risky? As I understand this was against H4 trend. No supply levels been respected....

Sorry if I'm wrong. Just starting to get the SD system basics concepts.


thank you again
Toni
  • #434
  • Edited Sep 18, 2013 6:35am Jul 10, 2013 8:14am | Edited Sep 18, 2013 6:35am
Peter, I mean that from the supposed entry price for a short and the place where price has started to reject (possibly reaching my entry), there would not be 3:1.

The attached screenshot explains it much better, you decide your minimum profit margin (risk/reward): 3:1, 2:1, 5:1. The bigger, the better.


Quoting Forex Lion
{quote} ok, I see, you mean there is not enough space until the demand level on the h4 time-frame, where price could be rejected?
Set and Forget supply and demand trading community
  • #435
  • Jul 10, 2013 8:17am Jul 10, 2013 8:17am
Hi Toni,

It was not risky for me, I mean, trading is always risky, it was a valid trade according to my rules and trading plan. Nice departure, at the D1 proximal line, original, nice risk/reward (profit margin). The only thing I didn't like about it is that it was a loss But that's part of the game after all.

It was a counter-trend trade, I lean only on original levels for counter trend, this one was. I didn't break the rules, I just had a loss. I expected it give me 5:1 or so, but it didn't. Every turning point is always a counter-trend on the selected timeframe after all. It was a level on the D1 timefarme, so I took the risk.

Alfonso

Quoting forexdaist
{quote} Alfonso, Wasn't it too risky? As I understand this was against H4 trend. No supply levels been respected.... Sorry if I'm wrong. Just starting to get the SD system basics concepts. thank you again Toni
Set and Forget supply and demand trading community
  • #436
  • Jul 10, 2013 8:40am Jul 10, 2013 8:40am
Hi Alfonso,

thanks for explanation, I understand this.

Maybe we are talking about different entry points, could you please mark the entry point (zone) you would not trade because of "no margin" opportunity.
I tought you mentioned a possible short-entry when price reached at 128.573 again?

http://www.forexfactory.com/attachment.php?attachmentid=1230302&stc=1&thumb=1&d=1373449532

regards,
Peter
  • #437
  • Jul 10, 2013 9:19am Jul 10, 2013 9:19am
Hi Peter,

No, 128.57 was not an entry, I was not waiting for price to retrace to that price in order to short, there was no profit margin (Risk/Reward), not even a 2:1.
Price started to retrace there, no profit margin, no 3:1. There is not even 2:1, so it's not a trade.

It looks like the H1 speedbump was not respected as I had mentioned. It could have worked, but R/R rules prevented me from taking it.

I have a short on H4 supply area, H4 trendline is down, but if I get a full candle (OCHL) above the H4 trendline, I will cancel my H4 trade.

Quoting Forex Lion
Hi Alfonso, thanks for explanation, I understand this. Maybe we are talking about different entry points, could you please mark the entry point (zone) you would not trade because of "no margin" opportunity. I tought you mentioned a possible short-entry when price reached at 128.573 again? http://www.forexfactory.com/attachment.php?attachmentid=1230302&stc=1&thumb=1&d=1373449532 regards, Peter
Attached Image (click to enlarge)
Click to Enlarge Name: Screenshot1.png Size: 146 KB
Set and Forget supply and demand trading community
  • #438
  • Jul 10, 2013 4:06pm Jul 10, 2013 4:06pm
Hi Panoramia,

I am huge fan of cars and I recently visited France and embarrassingly this was the one word that I used very often when I was there and it kinda stuck with me now. Hence, my choice of login name. Anyhow back to the real world of trading, i do have a number of questions which I hope you will be able to help make it understandable.

(1) S/D Zones - I had another breakeven week with profit from AUDUSD but losses from EURJPY, EURUSD and GBPUSD. I am still not able to correctly identify the turning points of price and it has been very challenging and at times, frustrating. I do hope you can share on your experience with S/D zones identification.

(2) Consistency - There are many different pairs in the forex market and I do understand you trade a great number of them. How do you manage the ones that you have made an entries with?

(3) Treadlines - There are many different ways of drawing treadlines and how it does have an impact on increasing the probability of the trade. Do you wait for price to reach the treadline which coexist with the S/D zones for entries and if price do break the treadline, do you consider it as an change of tread?

I do apologize in advance if my questions above sounds somewhat repeatable from your threads or videos but I very much appreciate if you could explain or clarify further on them as these are the issues that I have been facing with my trades.

Thank you and have a great day.
  • #439
  • Jul 10, 2013 6:48pm Jul 10, 2013 6:48pm
Hi Alfonso,

Just an observation, the supply gets taken out by a couple of pips, is this supply now invalid and is the demand now in control on that EurJpy chart ?

I am sure you said somewhere that you wait for 2 supply zones to be taken out before you determine that demand is now in control.

Can you please clarify, as I have often seen supply or demand spiked by only a couple of pips over ( false breakout ) to reverse strongly from there as
if the supply / demand was still intact.
It never gets easier, you just get better
  • #440
  • Jul 10, 2013 7:38pm Jul 10, 2013 7:38pm
Quoting Voiture_10
Hi Panoramia, I am huge fan of cars and I recently visited France and embarrassingly this was the one word that I used very often when I was there and it kinda stuck with me now. Hence, my choice of login name. Anyhow back to the real world of trading, i do have a number of questions which I hope you will be able to help make it understandable. (1) S/D Zones - I had another breakeven week with profit from AUDUSD but losses from EURJPY, EURUSD and GBPUSD. I am still not able to correctly identify the turning points of price and it has been very challenging...
Hi Voiture,

Firstly, a break even week is not too bad at all and you should be encouraged by this.

I think the your best way forward especially if you are uncertain of identifying turning points is to post some of your own charts and include your analysis. That way Panorama and others can give you detailed feedback .. it's very hard to see where you are having trouble without seeing your charts.
If you act surprised, then you probably missed something
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