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Supply and Demand Zones

  • #1
  • First Post: Jan 12, 2010 5:43am Jan 12, 2010 5:43am
Hey guys, does somone know how to define supply and demand zones? Is there a more objective way of defining them? What excalty do they have in terms of supply and demand forces? And how can they be used to our advantage?

I dont seems to be able to find much on this subject... If somone could again shine some light for this newbie...
Life is a school for the soul
  • #2
  • Jan 12, 2010 6:10am Jan 12, 2010 6:10am
Try Support and Resistance. The two are essentially the same thing.
  • #3
  • Jan 12, 2010 6:11am Jan 12, 2010 6:11am
Check out the Sam Seiden stuff - google him!!

Regards Chris
  • #4
  • Jan 12, 2010 6:47am Jan 12, 2010 6:47am
Don't search using, "supply and demand zones".
Instead search using, "support and resistance". You'll find a lot more information on S/R levels than you would supply and demand zones.
  • #5
  • Jan 12, 2010 10:31am Jan 12, 2010 10:31am
I second Sam Seiden's work. It's as good as anything out there for identifying and trading Supply and Demand.

http://www.fxstreet.com/search/contr...1-e9bf77216d2f
  • #6
  • Jan 12, 2010 12:07pm Jan 12, 2010 12:07pm
Quoting Dopey
I second Sam Seiden's work. It's as good as anything out there for identifying and trading Supply and Demand.

http://www.fxstreet.com/search/contr...1-e9bf77216d2f
Seiden might be good. I've tried watching his videos and about 5 minutes of him is all I can handle.
He ends every sentence with "okay?". It starts to sound like fingernails on a chalk board.
  • #7
  • Jan 12, 2010 2:22pm Jan 12, 2010 2:22pm
Quoting Dopey
I second Sam Seiden's work. It's as good as anything out there for identifying and trading Supply and Demand.

http://www.fxstreet.com/search/contr...1-e9bf77216d2f

The link was a page with a lot of advertising and asking for lots of personal info. No help.
  • #8
  • Jan 12, 2010 2:26pm Jan 12, 2010 2:26pm
Quoting billbss
Seiden might be good. I've tried watching his videos and about 5 minutes of him is all I can handle.
He ends every sentence with "okay?". It starts to sound like fingernails on a chalk board.
I agree. Every one his videos, could be edited to about 5-10 minutes and retain all its value. That's the problem with doing things like this for groups...it has to be highly repetitive and boring.

But they're still worth watching.
  • #9
  • Jan 12, 2010 2:43pm Jan 12, 2010 2:43pm
Quoting CodeMeister
The link was a page with a lot of advertising and asking for lots of personal info. No help.
I think you have to register to see his stuff.
  • #10
  • Jan 12, 2010 6:18pm Jan 12, 2010 6:18pm
i might get laughed at for saying this but I dont believe S&r to be Supply & demand zones....

I think they are 2 totally different things
  • #11
  • Jan 12, 2010 6:27pm Jan 12, 2010 6:27pm
Quoting domino
i might get laughed at for saying this but I dont believe S&r to be Supply & demand zones....

I think they are 2 totally different things
OK, nothing wrong with having a view on this.

Explain your thinking as I'm all for hearing about different concepts.
  • #12
  • Jan 12, 2010 7:07pm Jan 12, 2010 7:07pm
Quoting PeterFM
OK, nothing wrong with having a view on this.

Explain your thinking as I'm all for hearing about different concepts.

Well generally I simply feel support and resistance can be lines or zone but they are very narrow and take form in highs or lows created by changes in directions and trendlines.. tops bottoms of waves...

not ness.. where one view will overwhelm another view bullish or bearish but enough sentament is created to cause a bounce or some stall..

A supply and demand zone I simply feel is an Area where buying or selling will become overwhelming that causes a shift in the thinking in buyers or sellers like for example the chart i posted in the aud.cad the green X would be a Demand Area and the dashed lines would be some support or resistance lines the trendlines as well... the Area doesnt have a specified price that something should shift just a psychological zone that will in effect... change the minds of sentament.

Edit: sorry attached the picture... i hope i made my explaination easily understandable.
Attached Image (click to enlarge)
Click to Enlarge Name: example.PNG Size: 34 KB
  • #13
  • Edited 8:01pm Jan 12, 2010 7:27pm | Edited 8:01pm
Sounds a lot like this:

[EDIT] The picture is a link.

http://cdn.forexfactory.com/attachme...6&d=1234501446
  • #14
  • Jan 12, 2010 7:30pm Jan 12, 2010 7:30pm
i dunno what that is what is that... RR
  • #15
  • Jan 12, 2010 8:05pm Jan 12, 2010 8:05pm
Quoting domino
A supply and demand zone I simply feel is an Area where buying or selling will become overwhelming that causes a shift in the thinking in buyers or sellers
Exactly! When Demand is strong enough a Support Zone is created. This may be at a previous historical price point/area where the market agreed that price represented fair value and current traders see the prior moves and decide to start buying at that point once more.

To be fair, the market is a little more complex than that as different traders will be covering their shorts at that point or getting back in having missed the previous buying opportunity or any one of a dozen different scenarios. The point is that an excess of Demand creates Support and an excess of Supply creates Resistance.

Whichever way you dice it they are one and the same thing; all you need to do then is see what the herd is doing and run with it until it runs out of steam. The key thing to remember is that every time you want to Buy something, someone has to Sell it to you. At some point in the future they will want their money back, if not from you they'll take it from someone else.

The problem is being on the right side of Supply and Demand when the big money moves.
  • #16
  • Jan 12, 2010 9:21pm Jan 12, 2010 9:21pm
Quoting domino
Well generally I simply feel support and resistance can be lines or zone but they are very narrow and take form in highs or lows created by changes in directions and trendlines.. tops bottoms of waves...

not ness.. where one view will overwhelm another view bullish or bearish but enough sentament is created to cause a bounce or some stall..

A supply and demand zone I simply feel is an Area where buying or selling will become overwhelming that causes a shift in the thinking in buyers or sellers like for example the chart i posted in the aud.cad...
From you pic, the demand zone is the retracment of the main trend, bcos the retracment is where "buying or selling will become overwhelming". So another question is, can you use every retracment as a Demand or supply zone?
Life is a school for the soul
  • #17
  • Jan 12, 2010 11:48pm Jan 12, 2010 11:48pm
Quoting esuffw
From you pic, the demand zone is the retracment of the main trend, bcos the retracment is where "buying or selling will become overwhelming". So another question is, can you use every retracment as a Demand or supply zone?

no simply because it retraces is not a good reason to enter... ill post a couple of examples in picture form.. and explain my logic..

its fundamentals first ... then psychological ... then technicals

so you need clear fundamental reason to enter a trade and in this case we have a widening interest rate divergence/the steepest yeild curve in history... and bunch of other reasons. then to the inside of this the psychological action that is occuring inside the wave. youll notice the verticle yellow double sided arrow... this is a measure from the low break as it "falls off a cliff" panic selling as people think we are overvalued or whatever... but psychology in here is that of a panic cycle... which fuels the drop.. as it enters the demand zone and its now support will come into the market and belief their trade will come back dollar costed averaging happens.. and fuels the comeback... and this will generally occur if fundamentals are in tact... on the technical side yes we are at a retracement and i see the support line at the beginning of the demand zone.. and my psychological buys must be at my technical areas... i think try to control risk as i fade the psychology in that zone....

if there is no fundamental reason to enter there is no demand and no demand zone also without psychological reason to enter there will be slow controlled change not rapid like id like

same with supply
Attached Image (click to enlarge)
Click to Enlarge Name: example.PNG Size: 43 KB
  • #18
  • Jan 13, 2010 12:22am Jan 13, 2010 12:22am
hope that helps
- there is a good chance i just might be wildly crazy tho so dunno...
  • #19
  • Jan 13, 2010 1:03am Jan 13, 2010 1:03am
Quoting domino
hope that helps
- there is a good chance i just might be wildly crazy tho so dunno...
Thx domino, it really helped. I am still trying to find a way to determine the possibility of reverse in those demand and supply areas. I know the confluence with pivot points and round numbers can help, but do you guys have any more suggestions? Also, other important information that i should be aware of regarding trading around these areas?
Life is a school for the soul
  • #20
  • Jan 13, 2010 3:42am Jan 13, 2010 3:42am
Have you heard about the COT report ?

Since there is no real accurate volume information in spot forex, maybe the big players, the Net large Commercial Traders ( Banks & large Institutions) who hedge currencies on the Futures Markets can give some clues as to where demand /supply imbalances are. At least you get the sentiment of the big players vs the retail market.

There are lots of articles you can read, including free cot charts & of course up to date paid COT charts.

http://www.investopedia.com/articles.../COTreport.asp
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