(binned per thread starter’s request) Winston's Supply and Deman

The facts are very well established on this topic. Really not arguable. Markets are fractal in nature.

https://elitecurrensea.com/education/fractal-fib-wave-patterns-explain-market-psychology/

https://en.wikipedia.org/wiki/Behavioral_analysis_of_markets

May I say that forex market is made to be traded?
Tickling you?
I pursue you.
I agree with Winston.

I'm honored that a few have chosen to follow and participate as I journal my observations, discoveries and successes using my own unique take on supply and demand trading. The concepts I have presented here are applicable across ALL time frames because of the fractal nature of financial markets. I suggest anyone wishing to argue this do so in their own thread. But please not here. Thank you.

*There are many ways to trade. No matter how one trades if profitable then that is really all that counts. Proving profit ability is unnecessary and is IMO very personal. Even those who believe and show live money trades as a badge of honor rarely if ever show their bottom line. It doesn't matter if you can show 10 profitable trades in a row because this doesn't mean you are profitable.

*My style is somewhat laid back. Rather than entering into and managing multiple trades at once I look for one trade at a time.

*I look at one time frame. Multi Time Frame (MTF) analysis IMO is unnecessary, stressful and gives false assurance as does so-called top-down-analysis. Busy work IMO. Again if this is what you do and it is working then more power to you. I'm just leading up to a very simple and unstressful way to analyze and trade markets.

*I trade in the moment by analyzing what is happening right now.


^Look at the chart below. Notice you can clearly see each price bar and I'm relatively unconcerned about what happened 2 or 3 days ago. One thing Iwill do is look at the trend but only in the time frame I'm looking at. In this case my concern is only that price is making relatively HHs and HLs.

^At left is a pink arrow pointing to a bearish WRB that began a supply level. Price drops quickly and returns to the level rather quickly. As I've explained before it is often better to see how price reacts to previous levels rather than assume how it will react.

^Price goes through the level to the upside with a bullish WRB flipping supply to demand.

^The HH that results is crucial to my faith that the demand level has a high probability of acting as demand and an entry is reasonable.

^Before entry I plot my SL and my profit target. Mine are always 3:1. I always use 3:1. Once the trade is filled I let it run win or lose. I don't have to sit around watching it. Often I don't even see the result until hours later.

^Lot size is personal and should be based on one's fund availability and money management plan. I'll just say I enter with an amount that will make the trade worth while.

^This particular trade is only about 30 pips and for me it's perfect. I don't need more than one or two of these per week to make trading worth my time.


This is the context in which the above scenario occurred. Hmmm. Interesting!

The Value of 3:1

*What does 3:1 mean?

*First it means that every trade I take that my profit target must be 3x my stop loss.

*3:1 is four trades. Therefore it implies that by winning one out of four trades that I can at least be a breakeven

*Three losses can be made up with one win.

*One win requires three losses to get back to breakeven.

*Two wins requires 6 losses to get back to breakeven.

*Two losses can be made up with two wins.

*Exiting prematurely whether one is winning or losing a trade destroys one's R:R.

*3:1 does not imply a fixed stop loss or profit target therefore one needs to maintain a chosen R:R for a considerable period of time to fully realize it's value.

Understanding the value of employing a consistent R:R in one's trading:
*Do the math. Check out 1:1 and 2:1. Check out 0.5:1.
*Using a consistent R:R will reveal the truth about your trading strategy.
*R:R for scalpers can be devastating.
*Those who enter and exit multiple trades per day and perform a R:R analysis of all their trades will be enlightened although disappointed because of the realization that all their efforts are nothing more than busy work.

Reality of Trading Higher Time Frame

I've previously stated my view on R:R and that I personally use a minimum of 3:1. A full understanding of R:R will illuminate the inherent deficiencies in using a R:R of less than 3:1. If you haven't done the little homework required to get this then you may now have the reason why trading profitably may not be working out for you.

*Assuming 3:1 R:R I want to reveal the reality of trading higher time frames in contrast to a lower time frame such as a 5 minute or even less time frame.

*Below is a GBPUSD 240 min chart. This is a typical trade showing a fairly tight SL given the context of the trade and the structures available to put a well-placed SL.

*This SL is about 85 pips! Yes the reward is quite good...about 255 pips. The trade would have taken about 5 1/2 days and in this case went straight to target with zero drawdown and little pullback during the ascent to target. A 4:1 or higher was possible.

Nothing wrong with this trade at all. The questions to ask oneself are:
1. Can you take an 85 pip SL hit and if so could you do it 2 or 3 times in a row?
2. Are you prepared to sit on a trade for several days waiting for profit target or stop out?
3. If the trade goes to 2:1 before hitting profit target and begins to turn will you stay in or exit prematurely?

I'm not against trading with higher time frames if you're able to. In fact they can be quite relaxing since they may take several days or more to conclude. The reality of trading them is the need for an appropriately sized trading account and the ability to tolerate generously pip sized stop losses.

USDCAD 15min for context

Profit target filled. One trade. 3:1. No scalps. No multiple in and out shenanigans. No stress

For context. This is how you identify a trend. You don't need the 60min, 240min or daily. Forget MTF analysis and stick with the time frame you like. So much less stressful.



*Price went through the shelf with a nice bullish WRB (pink arrow) but no pullback for an entry. I avoid entering on the breakout so in this case had to pass.

Price clustered (flagged)at the WRB top then proceeded quite bullishly to bounce from supply. This would have been a reasonable entry in this context given that price is likely to proceed to the next supply level above. A 5:1 trade with low risk.

I started a discord channel. Don't know how often I'll be there but I'll give it a whirl. PM me if you're interested.

hello i want to join your discord, but i cant write to private message

https://discord.gg/RZ9WrGqg

For the sake of everyone take the 15-20 minutes it will take to read this thread before joining the discord channel.

In addition if you are new to supply and demand you might start reading Redsword11's thread "Price is Everything" just to get a feel for it.

This way we don't need to go over the basics of s/d.

Once you read this thread you'll know that my take on S/D is not the same as Reds or anyone else's but the basics will be there.

Thanks!

It's important to consider how a pair is trending. Multi-Time-Frame analysis is not needed to determine this trend. So in this case the 15 minute NZDUSD is shown zoomed out to capture the trend. If one looks at a higher time frame to see a larger trend then one is creating an unnecessary distortion. Keep it simple - - analyze and trade one time frame. Given how this pair is trending it is prudent to consider buying rather than selling.


Looking in closer the WRBs shown take out structure to their left making them more important than other WRBs. WRBs often emanate from a coil or cluster. Even though I tend to mark the base of the WRB itself at times I may include the coil/cluster as it is where the WRB came from.

In this case price was moving up with WRBs leading the way. Pullbacks to the bases of these WRBs may but not always provide trading opportunities. Each chart must be analyzed by the individual trader and the trader must make that decision. There are no hard rules for entering on such pull backs.

Eventually price will reverse and take out a previous WRB as was the WRB at the top of this chart. In this particular case a the last WRB was taken out to the downside and bumped into the WRB demand base below then it bounced where it took out the previous WRB creating a potential counter trend trade. Risky IMO but if one is to do it then this is one way.

Currently a very large WRB is seen at the bottom and it took out the WRB to its left and price is now stalled. Despite this WRB I do not consider it a "trade signal" to go short if and when price tests its base. I will watch how price reacts to it.

Having started a discord channel/room I've been privy to some very good questions that highlight to me the importance of developing a systematic approach to trading. Below is an outline I'm going to use to tackle what is basically my systematic approach to trading. Although it is systematic it is not a system. I hope it will help.

DEVELOPING A SYSTEMATIC APPROACH TO TRADING

1. Trends.
*Basics: Definition of a trend.
*Components of a trend: Impulse leg and Corrective leg. Swings. Relativity of swings. Pivots.
*Trend misconceptions: The fallacy of multi-time-frame analysis.
*Trend following. When does the trend end/begin and does it matter?

2. Application of Supply and Demand to trends.
*Definition of supply and demand. Relation to buyers/sellers.
*Evidence of Supply and Demand on a price chart. What are zones and are they really that important?
*Levels of Supply and Demand: bar/candle level, structural level (micro/macro)

3. Price Action
*Definition
*Price action that matters and makes sense: bar/candle level, structural level (micro/macro)
*Price action in pivots

4. Trading
*Entries and exits
*Entry techniques

5. Risk management
*What is it and why bother?
*Application of risk management.
*How it reveals the truth.

DEVELOPING A SYSTEMATIC APPROACH TO TRADING

TRENDS

Definition: A trend is made up of higher highs and lower highs in an uptrend and lower lows and lower highs in a downtrend.

A new high verifies a previous low in an uptrend
A new low verifies a previous high in a down trend


The impulse leg is the leg that creates a new high or new low.
The corrective leg is the leg that pulls back

DEVELOPING A SYSTEMATIC APPROACH TO TRADING

Example