The Equilibrium, a key to success!

Bear or bull trap?


Hello dear traders,

you've heard or read it many times, what is a bull or bear trap? It is supposed to be a trap in which the investor, who expects falling or rising prices, invests on the basis of his analysis and subsequently turns out to be a misjudgment. Are these traps really, or is that just a myth?

Let's first look at an H4 in the EURUSD from January 2018 to the end of April 2018.



At the beginning of the year there was a strong uptrend, at point A a strong equilibrium was created, after which the price continued to rise sharply. There I have marked a resistance zone. The price was 1.255 (point B) and then came into my resistance zone at point C for the first time. The course was rejected and a great equilibrium was born. Thereafter, the price moved back to the resistance line and broke through at the point D. This point D we now look more closely at the M15 chart.



Due to the price development, I refined my in H4 pink drawn resistance line with two blue lines. In addition, I drew two more blue guides. From point 1, the course went slowly down. Shortly before the lower high resistance line he ran slowly up again. A clear equilibrium.
There are 3 different states in the market.

1. Offer outweighs the demand = price drops
2. Demand outweighs the offer = price rises
3. Supply and demand are balanced

1. Offer = Seller (short)
2. Demand = Buyer (long)

The quantity available on the market represents the supply, the demand is the quantity that the buyer would like to purchase. In the stock market environment, the price strives to find a so-called equilibrium. At that moment, buyers and sellers are equally satisfied until an imbalance rebalances in favor of supply or demand. Then the prices rise or fall again. These competing factors (supply and demand) meet each other in all markets and regulate the price.

In the stock market environment, the price strives to find a so-called equilibrium. At that moment, buyers and sellers are equally satisfied until an imbalance rebalances in favor of supply or demand. Then the prices rise or fall again. At point 2, the course came after point C (Figure 1) for the second time in the resistance zone. He was a little more dismissed and ran into my drawn blue zone (point 3). From there he ran back down to the point 4 and came back into the resistance zone. This time around, the course was not so heavily dismissed and started a third time to break the zone. Some traders now make the mistake of placing a sell stop order below point 4. That would have gone well for just under 10 pip at point 5, after which the price went up by 66 pip (to point 6) and would have stopped many traders. Pay attention to what the course does after entering the blue resistance zone at point 3. The course was turned down, came into the large resistance zone and then ran back up. There he was rejected again and ran back into the big resistance zone. By now you should have noticed that the selling pressure is not strong enough to break the resistance zone. That means there are still buyers who need to be satisfied. Only at point 6, the buyers were satisfied and the seller could prevail. As the course went up again I realized that he could run down to the red zone at the latest. If you look at the overall picture in the H 4 Chart, it will be clearer. The upper red zone was therefore also a very strong resistance zone. So you could have taken the risk to trade down from that zone, or wait until point 7. Once the price broke the blue resistance line at point 7, you could trade down.

There is a fixed rule for me. I basically do not buy or sell in or after such a strong zone, but always far ahead. As the price tends towards this strong zone, I am able to set my stop to zero relatively quickly, and wait for what happens. Of course I can not know how the course develops exactly. The advantage is, as soon as the course comes back I am stopped out and have lost nothing. I can repeat this until the price breaks through the strong resistance zone and my plan with it rises. Some traders are also going to go below the resistance level above the entry level. It should be noted, however, that the course is only strong through the resistance line, shortly thereafter comes back the pullback. If I get in there that is not beneficial.

Twice the price has entered this strong resistance line and many traders have assumed that it would go through the third time. Of course, the big players knew that at the moment. As I have already written in some posts, is a trade of a big player is particularly successful if he takes as few traders with up or down. But you have to lure the other dealers first on the wrong track and then act in the opposite direction. This will stop all unwelcome traders and the big player can continue my way unhindered up or down. From the point of view of still young traders, there is a bear and a bull trap.

You can also see it differently. Three times the price has entered the strong lower resistance zone and three times there were not so many sellers on the market that the price could break through the zone. Therefore, the course had to run once again up to find enough sellers there. At point 6, enough sellers entered the market to push the price through the resistance zone. This can also be clearly recognized by the strong bearish candles. That's why I analyze supply zones and demand zones with the Equilibrium. This makes it faster to detect alleged bear and bull traps. Indicators are less reliable, at point 2,4 and 5 you have shown a clear downtrend while at point 6 a clear uptrend has been shown.

The dramatic thing is that the process is the same again and again, after some 10,000 hours of trading, you will experience the same thing. But you can abbreviate the whole thing by dealing with the Equilibrium. Record your supply and demand zones and quickly see where the price can possibly go. Of course, this is no guarantee because the price is always purely random, but the probability of making the right decision is significantly increased. I hope I could give you a little insight and wish you a nice weekend.

best regards

It depends on your perspective………………….to those who understand the basic "Laws of Supply and Demand" it's just MYTH, it only becomes a trap for those who think in straight lines……..

If you foolishly believe :
Price rises due to an increase in demand
Price drops due to an increase in supply

Then of course the investor, who expects falling or rising prices, invests on the basis of his analysis and subsequently turns out to be a misjudgment.

That linear type thinking goes against the basic "Laws of Supply and Demand"

Retail traders think in straight lines…….they "believe" there is a direct (linear relationship) between Price and Supply/Demand. That makes them uninformed, and predictable, and easily exploited by the informed.

But then again, an Investor isn't a Trader either………..

You postulate that price rises due to an increase/imbalance in Demand

But the "Law of Demand" (economics 101) shows that's not true…………..

A. The Law of Demand
The law of demand states that, if all other factors remain equal, the higher the price of a good, the less people will demand that good. In other words, the higher the price, the lower the quantity demanded. The amount of a good that buyers purchase at a higher price is less because as the price of a good goes up, so does the opportunity cost of buying that good.
Read more: Law of Supply and Demand: Basic Economics https://www.investopedia.com/univers...#ixzz5OYZB807T

the higher the price, the lower the quantity demanded
Anyone who knows how Auction Markets operate, knows price rises to cut off the flow of Buyers/Buying

You postulate that price drops due to an increase/imbalance in Supply

But the "Law of Supply" (economics 101) shows that's not true…………..

B. The Law of Supply
Like the law of demand, the law of supply demonstrates the quantities that will be sold at a certain price. But unlike the law of demand, the supply relationship shows an upward slope. This means that the higher the price, the higher the quantity supplied. Producers supply more at a higher price because selling a higher quantity at a higher price increases revenue.
Read more: Law of Supply and Demand: Basic Economics https://www.investopedia.com/univers...#ixzz5OYZB807T

the higher the price, the higher the quantity supplied
Anyone who knows how Auction Markets operate, knows price drops to cut off the flow of Sellers/Selling

Price fluctuates regardless of Supply and Demand……….

It's being able to differentiate when price rises/falls due to a shift in demand/supply curve, and when a price rises/falls when there is no shift in the shift in demand/supply curve.

What you see on the price chart are the (after) "Effects" of the changes /shifts in the supply & demand curves, not the impetus.

If you want to see shifts in supply & demand you need to be looking a graph of S&D, rather than a price chart.


Supply and demand and equilibrium price are all NONLINEAR FUNCTIONS of price……………….
The solution to Supply and Demand is given by a nonlinear equation…………………….
We know it's nonlinear function, because it's data plots a CURVE……………………………..

NONLINEAR PRICE EVOLUTION By G. CAGINALP Mathematics Department, University of Pittsburgh, Pittsburgh, PA 15260-0001

"However, the demand and supply are generally nonlinear functions of price. We show that the information on this nonlinear variation of demand and supply leads to a more accurate description of price evolution toward equilibrium. With this additional information the optimal forecast for the price of the good or asset is given by a nonlinear equation. This yields an advantage to traders utilizing all of the available information on supply and demand functions, rather than simply the value at the current price………….."


Supply & Demand
In microeconomics, supply and demand is an economic model of price determination in a market. It postulates that, holding all else equal, in a competitive market, the unit price for a particular good, or other traded item such as labor or liquid financial assets, will vary until it settles at a point where the quantity demanded (at the current price) will equal the quantity supplied (at the current price), resulting in an economic equilibrium for price and quantity transacted.

Graphical representations
Although it is normal to regard the quantity demanded and the quantity supplied as functions of the price of the goods, the standard graphical representation, has price on the vertical axis and quantity on the horizontal axis.
Since determinants of supply and demand other than the price of the goods in question are not explicitly represented in the supply-demand diagram, changes in the values of these variables are represented by moving the supply and demand curves (often described as "shifts" in the curves). By contrast, responses to changes in the price of the good are represented as movements along unchanged supply and demand curves.
Pasted from <https://en.wikipedia.org/wiki/Supply_and_demand>


What is "equilibrium" "equilibrium price" and in what "Context" is it used in "Supply and Demand"?

The price that makes quantity demanded equal to quantity supplied is called the equilibrium price. It occurs where the demand and supply curves intersect .
Pasted from <http://www.dummies.com/education/eco...ly-and-demand/>

(Did you notice the "Context" does not refer to locations on a price chart)

equilibrium price
the price that balances quantity supplied and quantity demanded. And the price at the point of intersection of a supply and demand curve. Sometimes called the market-clearing price because at this price everyone in the market has been satisfied.
Pasted from <https://quizlet.com/47239203/chapter...n-flash-cards/>

equilibrium
a situation in which the market price has reached the level at which quantity supplied equals quantity demanded. The point where supply and demand curves intersect.
Pasted from <https://quizlet.com/47239203/chapter...n-flash-cards/>

A Linear Price chart and a Nonlinear S&D chart
Two completely incompatible charts
Supply & Demand has price on the vertical and quantities on the horizontal
MT4 Price charts have price on the vertical and time on the horizontal


Supply & demand is a nonlinear function, a nonlinear system of equations can not be solved, graphed, interpreted, or calculated using a linear systems of equations. (STRAIGHT LINES) This isn't an opinion, it is a fact.

Linear Equations

1. A simple linear equation is of the form: y = mx + c
2. A linear equation looks like a straight line when graphed.
3. It has a constant slope value.
4. The degree of a linear equation is always 1.
5. Superposition principle is applicable to a system characterized by a linear equation.
6. The output of a linear system is directly proportional to its input.

Non-Linear Equations

1. A simple non-linear equation is of the form: ax2 + by2 = c
2. A non-linear equation look like a curve when graphed.
3. It has a variable slope value.
4. The degree of a non-linear equation is at least 2 or other higher integer values. With the increase in the degree of the equation, the curvature of the graph increases.
5. Superposition principle does not apply to the systems characterized by non-linear equations.
6. The input and output of a non-linear system is not directly related.

Supply & demand is nonlinear, a nonlinear equation cannot be solved or measured using linear functions (straight lines & price charts)

The distance between 2 points/price is a "Direction" (linear function…….. measurement along a line) , not an "amount"

Supply & Demand is not a direction…………it is an "amount"

Just a little "Food for thought"

[quote=mzvega;11384318]{quote} It depends on your perspective……

Hello mzvega,

Thank you for your opinion and your food for thought, I am always happy to hear the opinion of other traders, because I always like to learn.
I am particularly pleased that you remain polite, because after all this is about the matter and not about personal sensitivities. I am very impressed, because if someone read your contribution, it all sounds very logical. You rely on science and assume that these scientific statements are all correct. Basically, I can also agree with you in many things.

Every person who has completed an apprenticeship or a degree course knows it from personal experience. Theory and practice are often two different worlds. In principle, recognized science is nothing other than what most people have agreed on. Until one day someone know better, then all have to agree again.
It's not about being right, but I'm more glad about it if I'm right in trading. Explaining this procedure in a simple way is sometimes very difficult, but as soon as you explain it scientifically, nobody understands it anymore.

Science is based on possible theories that are either confirmed or refuted. If there were no theories, there would be no basis for discussion to refute them. Trading has little to do with previous scientific findings, because trading is a pure chance product. Of course, you can calculate odds, but it brings little advantage in trading.
If your or my statements were correct, it could be used to create a secure strategy that would overshadow any existing trading system. Unfortunately, this mean that neither science nor you or me are right. Science is not bad because there are wrong assumptions, but a good development process to get closer to the truth.
I find that exciting, because it leads to great dealers like you and many others who set up theses and strategies and act accordingly. I would never discuss with you that you are wrong, because it could well be that you are correct in Contrary to all scientific evidence.. And that's exactly where we are at the point:

Contrary to all scientific evidence

Science is not the biggest mistake of life, but the conclusions we have made. So the problem is not science but man, because he is wrong. The old thesis, "The earth is a disk," was also refuted, just as it was believed for 40 years that plants can not absorb solids or liquids through their stomata.
The scientific interpretation of supply and demand is only what has been agreed upon, but it does not mean that this interpretation is correct. Every trader has his own opinion and works hard every day to learn and develop. And that is exactly what will help us all, because movement brings us all together forward. Exactly there are the many great blogs of successful dealers in FF.

Thanks again for your very valuable contribution and a continued success in daily trading.

best regards

Hello dear traders,

Two weeks ago, I already charted four key resistance and support lines in the EURUSD Daily Chart.



The course has gone through the red support line and has changed its course exactly up the blue line.



Now let's take a closer look at the price history in H4.



From point 1 the course has gone down 160 pip and has found a small resistance on the red line. After that he has run another 160 pip to the point 3. There he made a U-turn and set his course up. After 150 pip, right at the beginning of the red line marked, there was a small reset of 40 pip. You realize how important it is to draw in the smaller time units its resistance zones and support zones.

If we actually had a stronger uptrend now, the price would now have to go up through the red zone. The upper green line represents another resistance. From today's Daily Open, the price could go up another 80 pip until the next strong resistance emerges. If the downseller is then turned down in the red zone and continues up its course, an uptrend could actually take shape. But it is not so far and therefore we have to wait a bit longer.

best regards

Your own blog



Hello dear subscribers,

Many subscribers one day even plan to post a blog to FF, or have already done so. It's exciting, insanely interesting and I can only animate you. In addition to the aspect that you can help other people, you also help yourself. There is a clear difference just to act or explain to others how to act. After 440 posts, I became aware of a lot of what I intuitively did before. This made many things clearer. However, it is also a big challenge that requires a lot of time. The articles that are published should be entertaining and educational. Everyone should be able to understand the strategy and you should write simple and understandable. A major hurdle is the language barrier, English is the required main language. To write an article in his native language is still reasonably manageable, it becomes difficult if this article then has to be translated into another language. This is also a challenge, as many words can not be translated correctly. If two different members from other countries exchange information in English, misunderstandings can quickly ensue. As a blog owner you are a journalist, writer, moderator, graphic artist, supporter, coach, communicator, arbitrator and much more.

My blog has been in existence for 229 days, and during that time I've published just 440 posts with 530 images. There are 13 articles per week with 16 chart images. A lot of work is to create the chart images and to describe in detail afterwards. That can quickly be 30-40 hours per week. There I admire Ata from the blog "EURUSD only". He is present every day for 8-10 hours in his very successful blog and has a lot of work with it. Sure, he'll be at the head of FF in a year or two. And rightly so, because he offers many traders a current and very interesting platform. Maintaining and developing a blog makes the writer unselfish to support other members. I've enjoyed doing that so far, because I know that it helps many traders and the majority of traders and subscribers have thanked for it very often and expressed their appreciation. This confirms the time-consuming work and for that I would like to thank you once again.

I find FF an excellent medium to expand our knowledge and to absorb and implement great ideas from successful traders. Unfortunately, there are sometimes less beautiful experiences in many other blogs, as a blog writer you should be prepared for it. When you write a blog, there are people who do not like it that much. They come to your blog and want to make trouble. Of course, these people just come to correct you. What causes people to go into other blogs and show the world that the blog writer is stupid and has absolutely no idea? It's about vanities, especially about envy. What can cause envy? There are many reasons, interesting posts, positive and friendly climate in the blog, number of subscribers, success of the blog writer or a thousand other reasons. If I really want to help a blog writer, I write to him personally and do not put him on his own blog as ignorant. It's clear that someone who criticizes in this way wants to do less to help, but to show "I'm better, smarter, and more successful than you." Whoever criticizes makes advertising in foreign blogs.That's also a kind of indirect recruitment of new members: "Look how smart I am and come to my blog, because you at least learn how to do it right." This success, however, is short-lived, because every beginner quickly realizes whether the information helps him or not. Basically, you often have to ask yourself, where the smart aleck, who know everything get their knowledge. If he himself wrote and published a diploma thesis on this topic, a link to his diploma thesis would certainly help. But the opposite is the case, the science is brought to the fore and should prove that the smart aleck is right.

If one cites unchecked scientific papers, one should not forget: The scientists never agree with each other. What one asserts refutes the another. Therefore, most scientific papers can often be challenged with other scientific papers. It only gets bad if you yourself are not a scientist in this field. Thus, one is not able to distinguish scientific statements from each other and thus make no weighting. (You can do that, but that would not have a scientific background anymore)
Do not be fooled by such written off things. I have respect for those who can quote their own dissertation, but not those who simply quote things whose veracity they are unable to validate because they lack the scientific background. The bad part is that the longer these people give these non-original wisdom, the more they believe in it. But now comes the hammer.

The critic will say: No, I just want to protect the subscribers from this charlatan. If they trade false information, they all lose a lot of money, so I feel called to save those subscribers with my in-depth knowledge. Really impressive, a real Robin Hood. This, however, questions the responsibility of the subscribers. I am convinced that the beginners are very critical these days. Any reasonable person would try a new system in the demo account before using his hard-earned money.
When creating your own blog, do not take everything seriously. In my blog you will read over and over again that I question my statements myself and never claim that I am right, or that my way of acting is the absolute novelty. Not that we misunderstand, knowledge is important, and people who use their knowledge to help other people earn respect and recognition. Unfortunately, foreign knowledge is often used to satisfy vanities. If a smart aleck has taught you how stupid you are, take it easy. At some point, this smart aleck sits in front of his screen and has to manage his own loss trades.

Take a look at his blog and you'll find that there are some people on the Ignored list. Then you should be clear. If you meet a ghost driver on the highway, you're probably on the right track. If there are 10 ghost riders, you should ask yourself if you are still on the right track. Actually, these blogs should be used at FF to share opinions or experiences. If someone looks around your blog, there are only two ways, he uses that information or he leaves the blog. If a trader claims that the RSI is the most important indicator, I would never discuss it with him. After all, he has to act with it, not me.

If someone criticize the way you act, that is a great compliment, because it shows that you are going the other way and you are not following existing rules. This is also urgently needed, because since the stock market and the forex market exist, millions of systems have been tried and no system is so successful today that everyone wants to trade with it. This means that everything that has been collected so far is not really successful. After all, there are 3-5% of all traders who trade successfully, but this is less due to any indicators or systems, but to the experience and intuition of the successful trader. This intuition is hard to explain, you have it or you do not have it.

The stock market and the forex market are a pure chance product. If more contracts or shares are bought than sold, the price goes up or vice versa. No person and no computer knows, how many buys or sells. The only thing you can do is to suspect. This means trying to improve the probability in his favor. Of course, there are formations or figures that appear again and again, but in the end, the market remains a random product. You can scientifically analyze trading as well as roulette, but in the end that does not bring you more profit or loss. The pro is just as smart as the beginner. The only difference between a professional and a beginner is the experience and it has something to do with time. And this is exactly the time you have to take in order to possibly succeed. Unfortunately there is no scientific guarantee for this.

That's why I would be pleased if there are more courageous dealers who publish their own blog. Have courage and publish your first blog, I think many of you can help others. It is not always about the trade, psychology, courage, perseverance and success are also important issues that should be considered. If you have any questions or need help creating your own blog, I'll be happy to help you as far as I can. Since I can not help everyone, I would like to limit this to the members in this blog.

I wish you a lot of success.

best regards

Intermediate

Hello dear traders,

Shortly an intermediate to the EURUSD

60 hours ago I posted the following chart picture with text



If we actually had a stronger uptrend now, the price would now have to go up through the red zone. The upper green line represents another resistance. From today's Daily Open, the price could go up another 80 pip until the next strong resistance emerges. If the downseller is then turned down in the red zone and continues up its course, an uptrend could actually take shape. But it is not so far and therefore we have to wait a bit longer.

Result and analysis



The course entered the red zone shortly after my release. In the Daily Chart you can see that the price is running strongly through the red zone( point 2). My guess was that in the green zone (circle at point 7) comes to a next strong resistance. Quite correct I could not determine the zone. (Between point 6 and 7) Likewise, the course did not return to my red resistance zone as expected, but was previously rejected (point 7). I had to draw in more guides. As expected, the course then ran into my blue zone, (point 8) where it was turned down by 85 pip. Overall, the price went up by 185 pip from the red to the blue resistance zone. In this area you could settle some interesting trades.

Conclusion:

My own definition of supply and demand may not meet the usual scientific requirements, but it works curiously. Possibly by luck, but if one over 65% of the zones correctly draws one can call this hit quota not necessarily as luck. Here I work with three time units.

 

1. MN or W1 for the parent trend
2. D1 or H4 for the middle trend
3. H1 or M15 for the short-term trend

Depending on the volatility or candle formation, I use these individual time units to draw my supply and demand zones. In the M5 chart I'll handle my positions. As Counter Trend Scalper I often act against the trend, which has the advantage that I am very fast in the plus. With a quick stop zero strategy you will be quickly stopped out but will not lose you. When a turnaround begins you are one of the first in the game and can run and manage the trade. This requires exact zones, which come into play over three time units. For a better overview, you can mark these zones in different colors. Optimal are the zones that occur simultaneously in all three time units. One is thus able to refine the large zones. This gives you more accurate entrances. Pay attention to the strong price developments, when a price goes so high up or down it breaks through an invisible strong zone. This zone must be found and marked in the respective time unit. In addition I have already posted a detailed blog with the Momentum indicator as an aid.

The next hurdle is now the blue resistance line and the overlying red zone. If we come across it, an uptrend could continue.

I wish you much success today

Dear Bionics,

I'm sorry. I am writing a sentence using Google translation. So I think it is difficult to read my sentences.
I am learning your system. I seemed to have several types of equilibrium zones that you draw. I will post an example to clearly tell.




In the first image (Post187), you draw a zone on the chart using the candle's body. In the second image (Post590), you draw a zone on the chart using the candle wick. How do you use these zones differently? Do you have any basic rules? Or are you drawing zones in a sensation based on experience?



Currently, I do not know how to use it properly, so I draw a zone on the chart using only the candle wick. Now I drew a zone on EURUSD chart myself. The red zone was drawn using the time axis of H4. The purple zone was drawn using the time axis of H1.

Best regards,

[quote=Xinobi;11407795]Dear Bionics,


Hello Xniobi,

First of all, welcome to the blog: Equilibrium a key to success. I am glad that you are dealing with the Equilibrium and I would like to write you a few sentences about it. Basically my way of doing trend reversal is based on working without standard indicators. However, I do work with auxiliary indicators that give me some additional information. This type of trading is much more demanding than with two MA, but it takes more time to achieve satisfactory results. Analyzing the pure price chart is a great challenge, as the formation of candles is represented differently in each time unit. The larger the time unit in which a candle is formed, the more accurate the information. But the larger the time unit, the higher the fluctuation range of a candle. To derive information for an Equilibrium from this is not always easy.

At the beginning of my contributions, I first tried to show the reader a feeling for the Equilibrium. It's about the 3 different states in the market.

1. Supply dominates demand
2. Demand dominates the supply
3. Equilibrium

The first picture was to identify the equilibrium and derive a possible scenario for the future. Therefore, the visibility of the wicks was reduced and the momentum indicator made the strongest candles visible. This would make it easier and faster to identify an Equilibrium. The lines that you draw to the right from equilibrium are somewhat inaccurate and can only roughly determine resistance levels.

If there is an uptrend in the market and then an equilibrium is formed, it means that supply and demand are equally satisfied. This does not mean that the course has to go down again. Equilibrium means that buyers and sellers agree, but it also means uncertainty about where to go next. Within equilibrium there are small price fluctuations. (Of course there is also large equilibrium, in higher time units, we do not want to take this into account).

When a course goes up, it can suddenly turn down, continue up, or go into equilibrium. When the course is in equilibrium, it can only run up or down from this range of equilibrium. That's why I pay more attention to the Equilibrium. However, equilibrium does not always result in a turnaround. I basically do not work with candle formations or pictures, because the candle formation in every chart image is purely coincidental. This makes the Equilibrium more interesting for me.
The determination of support and resistance lines is often based on empirical values with the help of Equilibrium and with the help of supply and demand. Crucial here are the above-average price movements up or down. When a price moves sharply up or down, the price breaks an invisible resistance line. Exactly this invisible resistance line must now be found. The likelihood of this line returning as a resistance at a later date is very high.

In the second picture you can see how I try to refine and narrow the zones. As Counter Trend Scalper, I often act against the trend, which has the advantage that I am very fast in the plus. This trading offensive is very dangerous as I often go down in a strong uptrend. For less experienced traders, I'd rather recommend longer term trades with the trend. Scaling as a beginner against the trend is pure money destruction. It takes at least 20,000 hours of trading experience to be profitable. So it's perfectly normal that you can not handle this kind of trading in the beginning. For that you need a lot of time and experience.

Over 3 months ago, on May 17, 2018, I recommended 10 zones that were relevant to me at that time. (Post 560)

https://www.forexfactory.com/showthr...1#post11070941


Let's take a look at the price history in an H4 overview.



We only pay attention to the zones, as the course has run out of the zone at some point. If you draw the lines in your M15 chart image, you will make an interesting discovery. These zones have remained active to this day. Is it coincidence or is the way of determining a zone an interesting alternative? Not all zones worked well, but that's because I usually correct my zones every day. These mapped zones were not corrected over 3 months.

Sometimes I draw zones that I discard a few hours later due to the current price history. So trading means permanent change of the zones by the current price course. It is not a system that can be defined with certain rules. A course is not subject to any fixed rules. The price history in the chart is purely coincidental, as we never know how many traders buy and sell at the moment. Nevertheless, we can see the traces of the great traders and draw conclusions for the future.

With time and a lot of experience you will be able to make up to 75% correct decisions. In addition, the risk / reward ratio must be in a profitable range in order to generate a high expected value. This means you have to draw in your determined zones and see what happens. From this you will learn and you will better place the next zones. To speed things up, in the past, you can start drawing your zones and then scrolling to the future. You should, however, take a currency pair whose price history you do not know by heart. Limit yourself to the majors.

Every trader has his system and opinion on the course and there is nothing to discuss. Just the fact that you have the pure course without standard indicators in your chart, sets you apart from many traders. You're absolutely on the right track, but unfortunately it takes longer than working with 2 MA or the MACD and RSI. But you will be more profitable over time and that's exactly what matters.

I wish you great success.

best regards

Hello Bionics,

Thank you for the detailed explanation. I am grateful to you.

After I read your article, I started training. I painted the zone without seeing future price course as same as actual battle. But it was a very difficult training. So I decided to lower the level of training. At the moment, I draw a zone while watching the future price course. However, I'm not sure if I'm doing the right training to hone the skills of the Equilibrium system. That's why I want you to see my training.




I first look for a market where there was strong demand or supply. And then I draw the zone in equilibrium which I think is important within that range. In equilibrium the price does not move much. Price rises or falls sharply after equilibrium. I am deciding the zone while conscious of these points.

Best regards,

Deciding zones


Hello dear traders,

Let's take a closer look at the offer zones and demand zones in the monthly chart.



In 1980 there was a very strong offer zone at point 1 which pushed the price down to 0.56. There was then a strong demand zone to 1.45. Thereafter, the price was pushed to 0.86. At point 2 there was a strong demand zone which brought the price up to 1.60. From 1.60 the price went down in waves. The strongest demand zone (at point A) was terminated precisely in this green zone. There was an equilibrium and at point B a strong demand zone was created which ended exactly in the green line. Then the price ran to 1.255 and was pushed down again. At point C, there was again a strong demand zone. Between point B and C, at the beginning of 2017, a new uptrend started at 1.03. From 1.255 to 1.13 we speak of a pullback so far. It looks like the end of the pullback is reached in the green line (point C).



In the daily chart, we see the strong demand zone which has brought the price up sharply. This was followed by a pullback. This pullback is now back in a stronger demand zone (point 3). I recommend keeping this zone in mind. You see 3 blue zones point 1,2,3). These zones symbolize a strong demand. Maybe the course could run down again. The purple zone (point 4) would be another demand market, which could then be crucial for a further course.

However, the price is now on a daily chart in a demand zone. If the dealers do not agree, we will first see an equilibrium. From this current line, the price can only go up or down sharply. If the price goes up the first blue line (point A) could be breached and the price will start another pullback on the red line above (point B). If the course continues down, the purple zone would be a drag. The two lower blue lines are further strong demand zones, bringing the price up there at the latest. On a yearly chart, we are still in a strong uptrend. It looks like the pullback is over and the uptrend could continue. We have done it, if the price has run to 1.287 and pullback the price at 1.25 back into a demand zone. Then comes the 1.399 within reach.

These are all speculations and only my personal opinion. As humans are mistaken on a regular basis, we always have to keep an eye on the course in smaller time units and look for offer zones and demand zones.

I wish you a successful week

[quote=Xinobi;11432400]{quote} Hello Bionics, Thank you for the detailed explanation. I am grateful to you.



Identify daily chart zones


Hello Xinobi,
hello dear traders,


First of all many thanks for the nice compliment and the confirmation of the demand and offer. It's hard at the beginning, but it works well for the start. You should keep in mind that the strong price moves up or down break one or more strong invisible zones. You can continue to draw some of your zones, and you will see if the zone is no longer accepted by the course.

Let me give you a concrete example (EURUSD 2015 to 2017). The basis for this should be a daily chart.



We start at point 1. Where the red candle starts, we see a lower wick to the left. This means that the initial supply market was rejected. With the beginning of the red candle, the supply market has then prevailed. This zone is now drawn. The course now runs to zone B which we will look at later. Then there is a demand market. Right next to the first green candle (point 2), you can see two upper wicks. Here the demand market was rejected twice. For me, a zone number 2 is created here. After that, the demand market runs to zone 1 (at point 3) and is rejected there. In zone 4 there is a short-term demand market which runs up to zone A where it is heavily rejected. That could have been a typical trap of high-frequency traders.

The price is pushed up at short notice, at point A the trade is sold at a profit and another sell order is opened. That pushes the price down sharply. The course was now further down and there was another Zone 5 which was not easy to recognize. For that you had to go into a lower time unit. From point B, the course was now down. As soon as a demand market arose again, probably these high-frequency traders tried the trick a second time. The course was pushed up to point 5 and then went down sharply. On the way down the zone number 6 was created. The supply market ran to the lower blue line. This resistance zone originated in the nineties and was confirmed again at the end of 2002. Between point 6 and point 7, you may see that the high frequency trader has tried the trick a third time. The course went up again and was then strongly rejected. However, when the course came in the blue line, he was strongly pushed up. I've found that the big players try their tricks until it stops working. After that they choose other zones. One can see very nicely and clearly that afterwards this kind of fake trades did not take place anymore.

From this blue lower resistance zone, the price initially went up. At point 7 there is another zone that I additionally marked in zone 6. In the further course, the zone number 8 and number 9 was created. The previously marked zones worked perfectly up to point 9. Even after point 9, the zones continued to be effective, but the zones became somewhat weaker. Unfortunately, some zones can not be identified at first glance, so you have to work here in several time units.
Let's take a look at where Zone A and B come from.
For that we go back to the beginning of 2015.



Point 1 creates a strong supply market, the price is going down sharply. Now look at points 2,3 and 4. Here the resistance line A is confirmed. Let us now come to resistance level B. You will see a small equilibrium at point 5, after which a strong supply market will emerge again. From point 6 onwards, a strong demand market is emerging that pushes the price up to resistance level A. Points 7 and 8 confirm the resistance line B. Before point 9, the resistance line is severely broken and then there is a very strong demand market. From point 0, this resistance line becomes active and the course then goes up very sharply. You can certainly mark the resistance lines yourself and see how the course reacted. However, I also have to say that my daily chart goes back to 1971. I will show you how to update your data in Post 149.

https://www.forexfactory.com/showthr...3#post10714563

Data updating should be done wisely, back up your MT4 data first.


The upper resistance 1.13400 and 1.12955

The mean resistance 1.08314 and 1.08035

The lower resistance line 1.03525 and 1.03048


Please note that we are here in the daily chart so the zones with up to 50 pip are relatively large. Since I work as a Counter Trader with stops of 5 Pip, it is inevitably crucial to switch to smaller time units. Nevertheless, as a trader, I need the overriding trends to make a concrete investment decision.

I did not find this concrete way of detecting zones in the same way. That's why I'm sure I'm on the right track. However, this way requires a lot of training and endurance. However, it is not a Holy Grail, and I am often misguided or wrong. No one can say for sure where the course is going because it is always purely coincidental. The majority of my zones work and give me an expected value that more than satisfies me. One should not, however, ignore the fact that in today's times trading is as demanding as being a doctor, lawyer or architect. And to do this activity you need a lot of time and training. A specialist needs at least ten years and then the right learning begins. So do not be sad if it does not work right away. That would be too easy, because then everyone could do it. And if everyone could, the stock market would not be worthwhile anymore. To be honest, I'm very happy that it's so damn hard to make a profit.

At the beginning I also had to pay a lot of training money until I made money with my way of trading. If I'm right in 70% of my investment decisions, that means that 30% of my investment decisions are incorrect. That's why you have to be willing to lose 30% to win 70%. Basically, this is a good statement, however, if the losses are often behind each other, this may already become a stressful situation. That's why proper money management is the key to success. You already recognize being a trader is one of the most demanding professions in the world. If you belong, you can be very proud.

I wish you a successful trading week

Best regards

Experiment with 1 candle per month

Hello dear traders,

Supply and demand zones are my basic framework in daily trading. There are exact supply zones and clear demand zones. These zones have nothing to do with time or price lines and are formed arbitrarily and randomly, since the price formation also happens to be random.

Today I would like to show you a very interesting experiment on supply and demand. For this I have selected a relatively small period from May 2017 to today in the Daily Chart. I would like to make the offer zones and demand zones from a single candle. This is an unusual path, but the result is still impressive.



Here's a normal daily chart with a momentum indicator. All candles were dyed gray. The momentum indicator now has the task of highlighting all candles with a minimum size of 100 pip. This results in this chart image.



Next, I have marked the strong candles from 100 pip color and drawn from it an area in the future. Now you can see very well how the green areas work as resistance or support. When the price of 1.255 went down, there was an equilibrium in the second area from below. This zone was very strong as immediately afterwards another zone was formed.

After the Equilibrium, the course went down again until it went to the strongest bull zone (point 1) and was turned up there. (Point 2). If the course breaks through a green zone, that zone would automatically turn red, creating a bullish resistance. It can be seen very well, as the course after the Equilibrium runs to point 2 and then again strongly upwards, he was stopped briefly in the green zone and it was again a small Equilibrium.



Next I marked the beginning of the strong bullish candle with a green line. Interesting to see how the course responds to these lines.



The same you see now in the area of strong bearish candles. You can see very well how the course responds in these areas.



Then I also marked the beginning of the strong bearish candles with a red line. The course reactions are also very interesting to watch.



Let's get to the overview. The resistance lines marked with the blue arrow come from the past. The green and red areas were partially drawn over each other. Although it is a bit confusing, it is still interesting to see how the course responds to these resistance zones and support zones. More interesting is the picture in the weekly or monthly chart. This makes it even easier to see the long-term zones. It is interesting that in a period of just under 15 months, we only marked 15 strong candles. Of course, these are just rough resistance areas that do not work exactly to the point. But still a very interesting aspect.

A very special attention I would throw on the strongest bearish candle that was created on 14.6.2018. The course has not yet managed to overcome this candle. After entering the bottom green zone on August 15, 2018, the price was pushed up sharply. Since the price has gone up from 1.03, the lower candle is one of the strongest candles. The next important and decisive factor will be to overcome the 1.179 and accept the 1.179 as a dragback pullback. As the 1.255 price went down, breaking the strong 1.20 candle, we will probably encounter strong resistance there.

I like to work in the M15 with this kind of zone marking and have had a very good experience with it. Try to draw yourself these zones with strong candles and watch the rest of the course. I am convinced that these zones will be an important service to you in the future. Even if you do not create supply zones or demand zones with a candle, the results are still interesting. The fact is that this chart image, which was created from only 15 candles, would have given one or the other hint. And every clue can help us to increase our expected value in the future.

I wish you a nice weekend and a great start to the next week.

best regards

Where is the middle of EURUSD?

Have you ever wondered where exactly the concrete middle of EURUSD lies? This question I once pursued for fun.



On 01/01/1971, the EURUSD's lowest converted rate was 0.5365, the highest ever EURUSD rate was 1.6038. Adding these numbers and deriving the arithmetic mean results in a value of 1.0697. But this value can not be correct because the price is composed of many different individual values.



A monthly candle is very informative because it represents the largest unit of time in our chart. From 01.01.1971 to 31.08.2018 574 months have passed. For these 574 months I evaluated all data sets on Open, High, Low, Close and Volume in EURUSD. Regardless of whether one forms the mean value of the individual values Open, High, Low, Close or balances the average of Open and Close with the mean of High and Low, the result remains almost always the same.



In the novel The Hitchhiker's Guide to the Galaxy, a supercomputer named Deep Thought has given the answer 42 after a few million years of computing time to the question "life, the universe and everything". The answer to the question where is the middle of EURUSD is: 1.0680. With that you can start in any case more than the answer 42.



The volume in the EURUSD first rose to just over 200,000 shortly before the introduction of the EURO. So let's take a closer look at this time.



After the introduction of the euro over 6 years passed until the volume first broke through the 500,000 mark. At the beginning of 2016, we peaked at just under 4,000,000. This makes the EURUSD one of the most successful currency pairs in the world today. Of the 5 trillion euros that are converted into currency trading on a daily basis, the EURUSD has the highest value of more than 25%. That's the most important insight to me about the volume.



Therefore, we consider the time frame from 01.01.2002 to 31.08.2018 to calculate the mean value in this period. The lowest price during this period was 0.8570, the highest price at 1.6038. The mean of this gives 1.2304. In fact, the middle is at 1.2525. The candle that has formed in this period can be seen on the chart image. It is a strong bullish candle that is back on the uptrend after a long pullback.



With the introduction of the euro, the right candle was formed. Now I have the remaining period divided and formed two more candles. You can see very well a strong upward trend and then a doji which shows the uncertainty. With the introduction of the euro, there was again a strong upward trend. Definitely, we are currently above the middle of 1.0680 of the entire period and below the middle of 1.2525 from the launch of the EURO.

What happens next?

In the EURUSD there are no top and bottom and therefore unfortunately no middle. When the EURUSD reached 0.80 shortly before the euro launch, no one could imagine that the EURUSD doubled to 1.60 just 7 years later. Likewise, no one today can imagine that the EURUSD may one day be at 2.30, or maybe even 0.57 again.

Since there is no top and bottom, the price does not matter. That is also the reason why I often do not know what price the EURUSD currently is. Decisive for me is how a candle develops and with it the course. This results in demand and supply and, in the case of unity or uncertainty, an equilibrium. The current price therefore has no relevance for me. In the same way, I do not pay attention to volume. In a market where there is no top or bottom, only the demand or supply is the limit. A price can never be oversold or overbought, so for me, indicators like the RSI are a relic of the past. The price always moves up or down in wavy lines, so I do not care if the EURUSD costs $ 0.50 or $ 1.60. Of course you have to adjust the number of contracts, but on average it does not really matter.

We then earn money when we identify a demand market and get on time with a BUY order and exit at the latest when the price enters a strong supply market.
We then earn money when we identify a supply market and get on time with a sell order and exit at the latest when the price enters a strong demand market.
That's the only secret, but unfortunately that's not always that easy. Forget about the top and bottom, the price, the volume and all the standard indicators. Let's look at supply and demand and success will prove us right. We do not fight against other market participants in this market, but only against ourselves.

best regards

Outlook EURUSD

Hello dear traders,



The EURUSD is still in a sideways phase. At point 1, we see a strong demand market up to point 2. From there, the Bears controlled with a supply market to point 3. The strong demand zone brought the price up, but the pressure from above was too strong. At point 4, the price moved further into the strong demand zone and the price rose. The sellers do not seem satisfied yet. Possibly, the price could rise again somewhat towards point 5. Nevertheless, I believe that the price only in the lower green demand zone at point 6 finds enough power and buyers to bring the price higher to the top. However, should buyers now find themselves, this would be possible after a small reset.



On the daily chart there was a strong demand market in point 1, but this was offset by a strong supply market (point 2). The demand at point 3 failed to break the red zone upwards. The pressure from above was too strong. At point 4 there was another downward pressure and from point 5 on demand was finally so high that the price went up. The red zone could not be broken. This means that the sellers were not satisfied yet. In the last 3 days, a demand market was active, the question is whether it is enough to bring the course over the red zone. Maybe the course has to go down again to find enough buyers, then we have good chances to break the red offer zone. Then the way would be free to 1.28.

I wish you a successful day.

best regards

Would love to see your analisys in the 5 minute chart if possible!

Possible zones as a template

Hello dear traders,

Enclosed a chart image from the Daily Chart to describe the current situation.



At point 1 you can see the strong supply market in the daily chart, which pushed the price down sharply by 280 pip. Before this strong downward movement there was a strong demand market at point 2. I once marked this strong demand market with a blue line. You can see how well the course responds to this blue zone. After this strong supply market there was a short pullback upwards. However, at point 3 we see another strong supply market down. That was already an indication that the downward trend was not over. The demand market failed within the blue line and the supply market pushed the price to the point 4. There we see another strong supply market which failed, however, on the lower resistance. The course recovery could be seen very nicely at point 5. There formed another green resistance zone. Again, strong demand failed within the blue zone and was pushed down. The green resistance zone gave the price a new boost. At the first entry into the green zone, the demand could not develop properly therefore the course had to penetrate a little deeper into the green zone.

Only then were the sellers satisfied and the buyers were able to take over the helm again. Possibly, the buyer's confidence could now be so great as to break the blue resistance line at point 6. When this first step is done, the next challenge is to break out of the red dashed square. This red dashed zone represents a strong supply market that pushes the price down. From the light blue zone begins a demand market which started on 25.8.2017. (Point 7). The point 8 was created on the 11th of January 2018 and the point 9 was created on the 12th of January 2018. Although zone 7 is not yet a demand zone, there are still some supply zones within this zone. From point 8 and 9, the demand market will become stronger, where stronger price increases could then take place. Crucial now is whether the course manages to break the blue resistance zone. But now all buyers are required. As soon as the blue zone is recognized as a resistance zone during the return, we have good chances to see further price increases.

I have created a template for you. Please copy this template into your MT4 Template Order. Additionally copy the momentum indicator into your indicator directory. After the MT4 has been restarted, download the template into your screen on the Daily Chart.

I wish you a successful trading week

best regards

Hello emicovi,

First of all, welcome to our blog and thank you for your request.
For your question note the following information.

I work with 3 time units.

MN or W1 for the parent trend
D1 or H4 for the middle trend
H1 or M15 for the short-term trend


Depending on volatility or candlelight, I use these individual time units to plot my supply and demand zones. In the M5 I open and close my positions.
Of course, I also draw supply zones and demand zones in the M5, however, these zones are very inaccurate and not very meaningful. Decisive are my zones for the overall trend, the middle trend and short-term trend. For me, the zones I draw in the M5 are the ultra-short-term trend and are only noticed when these zones match the parent, middle or short-term trend. So it may well be that on my M5 Chart 20 zones were drawn, of which, however, are again erased 50% in the course of the course. In addition, my way of working is different than that of many traders. Basically, I also try to act with the trend, but I often act against the trend. The short-term pullbacks are a safe source of income for me, as I am one of the first in the market, rarely in minus and the short-term pullback can usually take complete.
Thus, I often draw zones, which I can act against the trend in the short term. However, this pullback is often of short duration, until it then continues with the parent trend. If you misinterpret these zones and act on them, you lose money. The larger the time unit, the more accurately one can determine the supply market or demand market. Since I work with very small stops of 5 pip to achieve an above-average opportunity-to-profit-ratio, I have to localize supply and demand in smaller time units. However, these zones are currently being matched against the parent zones. If I post an M5 with supply zones or demand zones and you act accordingly, you may lose money. In addition, not all zones will work because I will delete more than half in the course of the course.
In the next few days I will try to post an idea how to possibly proceed here.

I wish you much success today

best regards

Bionics,

I have been adopting the POC approach to trading and I have to say, it has opened up a door to so many opportunities. I must thank you for that. I am still practicing my zones and perfecting the entry techniques - as you state earlier in this thread the real way to make a profit is knowing how long to hold these well timed entries and that is my next step on this journey.

I have a question in regards to time of day. I did a recent analysis on EURUSD and have drawn the following conclusions:
1. POC points are typically created 2 hours before the US Open up until the London close.
2. Whips into the POC for optimal entries occur either during the first half of the London session, at the US Open, or at the close of the London session
3. POC points are broken 2 hours before the US Open through the US Open, or later on in the day after the London Close. Basically the same time frame that they are created.

I would like to hear your analysis on for the time of day that you expect to take a trade from an S/D zone. These would be for major ones (on the 1 hr) that can be held for ~40-100 pips.

[quote=macadamia18;11502206]Bionics, I have been adopting the POC approach to trading and I have to say, it has opened up a door to so many opportunities. I must thank you for that.


Basic trading approach

Hello macadamia, hello dear traders,


I am very pleased that your trading approach with the Equilibrium promises success and opens up many opportunities for you. For me, the area of supply and demand has for many years been the only trading approach to trading profitably. I also think it's great that you experiment to find your own strategy, that's the way to go. If you look at your analysis, you could assume that there are rules in Equilibrium that always occur in similar time units to create a consistent trading approach. Unfortunately, trading in EURUSD is random and there will not be a day when the candles are the same.



You have set a rule: POC points are created 2 hours before the US Open until the close of London. I once created a chart image for you in H1 over a period of about four weeks. The blue fields mark the period 2 hours before the US Open until the close of London. In H1, the average size per candle is 15 pip. The red and green candles that are visible here correspond to about 30% of the average pip during this period. This would make it easier to identify an Equilibrium. The period of time you have selected is one of the strongest periods in a day. You can also see that in the picture. Whenever a strong price goes up or down it breaks a very strong resistance line. This resistance has to be localized because it is very important for the future. From this I derived a very interesting experiment.



Your set period (2 hours before the US Open to close to London) I have now build a new candle. At point 1 we take the first candle that goes up high. To the left of point 2 we can see how the course was strongly rejected. From this rejection, I draw my resistance line A which goes up through the strong course. We have now drawn a zone that seems to have an interesting effect on the course.



Let's take a closer look at the beginning of Zone A in the M15. At point1 we can see how the price goes up strongly. At point 2, the price is turned down sharply and then goes down. Somewhat below it creates a strong equilibrium lasting over 1 hour. This zone also has an effect at a later date. One sees very nicely when the course enters zone A for the first time, how strongly it was rejected. A 5 pip stop would have been enough to reach 50 pip. That's a very good opportunity-to-risk ratio.



My first basic approach was to find out in which time it is worth trading. For that I have created two time zones. The red zone is equal to 21:00 CET to 09:00 CET. The gray zone is 09:00 CET to 21:00 CET. It can be seen that the gray areas are much more interesting to action. This is also clear because within the gray zones the market of London and the USA are included. Often the market starts already from 07:30 CET after Asia has left the market.

On the basis of the reactions from Asia after the Close of the USA one can estimate a little whether the day will be interesting or not. From 6:30 CET to 7:30 CET I record my new zones in different time units. From 7:30 CET to 11:30 CET I'm in the trade. Usually it continues from 13:30 CET and depending on market conditions to the US Close. Incidentally, it is a mistake that happened on Friday night not much, just there I have often been able to do the interesting trades.

To come back to your established rules. There is no right and no wrong in this case. If you have worked out certain rules for you that will help you in daily trading and keep you going, use them and do not let others tell you that it's wrong. Every trader is responsible for himself and therefore he has to define and obey his rules. It is completely normal that it takes a while until you have found your way for you. I myself have spent over 10,000 hours with the Equilibrium to define concrete rules for me. However, you have already recognized within a short time how efficiently you can trade with the Equilibrium. Now it's just a matter of turning a few screws to be really efficient.

I wish you a lot of success

best regards

Before the weekend begins

Hello dear traders,

From 1.03 the uptrend started to 1.255 then there was a bigger pullback to 1.13 now we are back in the strong uptrend towards 1.28.



In H4, the price has not yet broken the 1.18-1.185 resistance level. The red circle (top left) had a strong supply market, pushing the price down to 1.13. At 1.13, there was a strong demand market which has failed to lift the price above the 1.18 / 1.185 mark. There may be another small setback until buyers decide to breach the 1.185 mark. On a yearly chart, we are still in a stronger uptrend. From 1.263 to 1.287, there is strong resistance that can push the price down more. From 1.185 the way to 1.28 is likely to be free. Of course always under the aspect that we move up in wavy lines. Next week, I have some interesting information on the topic, Trading Desk and a few tools that make trading easier.

I wish you a great weekend
best regards