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Supply and Demand Zones

  • #21
  • Jan 13, 2010 12:53pm Jan 13, 2010 12:53pm
Quoting esuffw
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?
Well im not sure that there is a way to measure that but I have done a study on the psychological reversal effect in a demand zone area... and it is quite a beautiful thing apparently. and also that length into a support or demand line in a zone is amazing as well .. as i studied V type corrections and this is was generally happen... no comment tho on those stats or how thats done...
  • #22
  • Jan 13, 2010 12:57pm Jan 13, 2010 12:57pm
Quoting Shabs19
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...
yes I have heard about the COT and I used it when I was a beginner trader... and generally since then i stopped using it... its a lagging report.. I like to use rather economic forcast and wrap many economic forcasts into an index that I can read rather quickly after typing the numbers into the spread sheet... what I would be looking for is a trend on how the majority of a countries economic reports are coming out... I also look at the treasury yeild curve.. and a couple of other leading indicators including where the international fisher effect may be forcing large bank and traders to trade and be focused directionally.

But the COT ive personally found it doesnt have an effect on my trading.
  • #23
  • Jan 13, 2010 4:42pm Jan 13, 2010 4:42pm
Quoting CodeMeister
The link was a page with a lot of advertising and asking for lots of personal info. No help.
It's not a bad link. When you click on the link, the ad page you see is just a pop-up. Click on the little x in the upper right corner (close window icon) and Seiden's page is behind it. You don't need to register or give up personal info.
  • #24
  • Jan 14, 2010 9:49am Jan 14, 2010 9:49am
In a perfect capital market, supply and demand are equally matched and prices are efficient. A perfect capital market is one in which all information is known. Additionally, in the perfect capital market, there are no imperfections such as taxes or transaction costs (commissions). In this perfect world, prices move in a straight line – sideways. When new information is known about a security, price immediately adjusts and moves sideways at another price.


The world, however, is imperfect. This said, there are many individuals with many opinions and millions of dollars to back these opinions. Each of these individuals or corporations who are engaged in trading or investing believes that they know the correct price or correct value of a security. With this knowledge, they are able to say that a security is undervalued or overvalued and they purchase or short in order to profit from these discrepancies. Additionally, since the markets are not efficient and there are many opinions in the market, prices tend to trend rather than immediately adjust to news and fundamental information, allowing the trader to profit.


Supply zones can be found where many dollars that were otherwise sitting on the sidelines enter the market with the belief that the market is undervaluing a security. Demand zones can be found where many dollars that were otherwise sitting on the sidelines enter the market with the belief that the market is overvaluing a security.

Technical traders label these zones support and resistance and use rather simple strategies to trade them. The average trader will not use the terms “overvalued” or “undervalued”, but this is in effect his belief when he purchases or shorts a security.
  • #25
  • Jan 14, 2010 6:40pm Jan 14, 2010 6:40pm
Quoting Moody
Supply zones can be found where many dollars that were otherwise sitting on the sidelines enter the market with the belief that the market is undervaluing a security.

Demand zones can be found where many dollars that were otherwise sitting on the sidelines enter the market with the belief that the market is overvaluing a security.
I think your comment is a bit off here...
  • #26
  • Jan 14, 2010 7:28pm Jan 14, 2010 7:28pm
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.
Do you find his material to be profitable?
  • #27
  • Jan 28, 2010 12:54am Jan 28, 2010 12:54am
Sorry, been off this thread for a while. Thx for all your ideas and insights. i would like to ask one more question thou. Options barriers are also very tough Supply and Demand Zones since some will protect their options with all cost... Am I right??
Life is a school for the soul
  • #28
  • Feb 20, 2010 9:13pm Feb 20, 2010 9:13pm
Quoting esuffw
Sorry, been off this thread for a while. Thx for all your ideas and insights. i would like to ask one more question thou. Options barriers are also very tough Supply and Demand Zones since some will protect their options with all cost... Am I right??
How would they protect their options?
  • #29
  • Feb 21, 2010 10:38am Feb 21, 2010 10:38am
Quoting tjfxtrader
How would they protect their options?
I guess they have to set a huge limit orders (Iceberg? I doubt they will set one huge block of limits... Also, the limits can be take profit points from their earlier positions...) just above or below the barriers, or use market orders until the market ran out of the opposing force.

Please correct me if I am wrong.
Life is a school for the soul
  • #30
  • Feb 21, 2010 12:04pm Feb 21, 2010 12:04pm
Quoting esuffw
Sorry, been off this thread for a while. Thx for all your ideas and insights. i would like to ask one more question thou. Options barriers are also very tough Supply and Demand Zones since some will protect their options with all cost... Am I right??
yeah not the only ones tho reverse barrier options and double barrier options as well.
  • #31
  • Feb 21, 2010 10:30pm Feb 21, 2010 10:30pm
Quoting domino
yeah not the only ones tho reverse barrier options and double barrier options as well.
Double barrier options. That would create some sort of "Ranged market" given that the hands behind the market is strong enough?
Life is a school for the soul
  • #32
  • Feb 22, 2010 10:57am Feb 22, 2010 10:57am
Quoting esuffw
Double barrier options. That would create some sort of "Ranged market" given that the hands behind the market is strong enough?
It could create range or breakout.. given the strength and how it (the option) can or can not be excersized if the limit price is crossed by the underlying..
In essence here you are talking about reading the orderflow trying to find turning points based more on clustering i believe than ness. a single player...
  • #33
  • Feb 23, 2010 12:27am Feb 23, 2010 12:27am
Quoting domino
It could create range or breakout.. given the strength and how it (the option) can or can not be excersized if the limit price is crossed by the underlying..
In essence here you are talking about reading the orderflow trying to find turning points based more on clustering i believe than ness. a single player...
But these kinds of supply and demand zones are hidden away. Just a plain chart would not help. So I guess searching for options details would help to identify these important zones, besides the normal Fibs, Trendlines, past tops/bottoms and Pivots.
Life is a school for the soul
  • #34
  • Feb 23, 2010 12:48pm Feb 23, 2010 12:48pm
it is possible.. options isnt my thing and i wouldnt know about how to go about that... but hey its worth takin a look at.
  • #35
  • Apr 2, 2010 11:24pm Apr 2, 2010 11:24pm
This is all good, but what about indicator,
which will plot these Supply & Demand zones.
Without any thinking and subjectivity involved.
  • #36
  • Mar 8, 2011 3:34pm Mar 8, 2011 3:34pm
Quoting noone22
This is all good, but what about indicator,
which will plot these Supply & Demand zones.
Without any thinking and subjectivity involved.

Sure, no problem. Ive been using an indicator that plots global supply demand in actual orders onto a MT4 chart. and it updates regardless of MT4 updating.. so its intertick.. it shows you true supply/demand all the time regardless of what your MT4 feed shows.
  • #37
  • Mar 8, 2011 3:36pm Mar 8, 2011 3:36pm
Quoting esuffw
But these kinds of supply and demand zones are hidden away. Just a plain chart would not help. So I guess searching for options details would help to identify these important zones, besides the normal Fibs, Trendlines, past tops/bottoms and Pivots.

No, its not impossible to plot supply/demand on an MT4 chart. Its actually quite useful.
  • #38
  • Mar 8, 2011 8:57pm Mar 8, 2011 8:57pm
Quoting Rockshore
Sure, no problem. Ive been using an indicator that plots global supply demand in actual orders onto a MT4 chart. and it updates regardless of MT4 updating.. so its intertick.. it shows you true supply/demand all the time regardless of what your MT4 feed shows.
hello Rockshore,

can you share your indicator?

thanks.

-guandi
  • #39
  • Mar 9, 2011 1:00am Mar 9, 2011 1:00am
This is an old thread but Peter and JHIG hit the nail on the head I feel.

Supply and demand is just another way of saying support and resistance.

I have studied all the stuff I can find about s and d and whilst it was well worth the effort I got nothing from it except a better understanding of s and r.

IMHO orderflow, supply and demand and to an extent even vsa just overcomplicated pure sr.

Multi timeframe analysis is the key, not ALL sr levels are equal, that is why retracements are difficult to trade BUT not impossible.
  • #40
  • Mar 9, 2011 7:34am Mar 9, 2011 7:34am
Here are a couple of more links -

http://www.daytradingcoach.com/daytr...ick-course.htm

This post also has charts that explains how to quantify good supply and demand zones

http://www.informedtrades.com/blogs/...fying-s-d.html
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