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Trading Supply & Demand Zones

  • #301
  • Nov 28, 2010 10:25am Nov 28, 2010 10:25am
Quoting CollectPIPS
I’m a late come, hopefully not too late, as the thread started less than 3 months ago.

I’ve gone thru the posts in the thread.

I cld understand the concept & principles of Seiden’s method. What I need do is practice. For starters, I think I wld go for higher timeframes, where there is less noise.

Thinking thru, I have 2 difficulties to get over with.

1....
Hey brother,

In response to:

Quote
[IMG]file:///C:/Users/Winston/AppData/Local/Temp/moz-screenshot-7.png[/IMG][IMG]file:///C:/Users/Winston/AppData/Local/Temp/moz-screenshot-8.png[/IMG][IMG]file:///C:/Users/Winston/AppData/Local/Temp/moz-screenshot-9.png[/IMG]1. I hv no problem with one of the 2 lines that define the s/d zone. This is the one at the swing high or low point. But I am not too sure where to put the 2nd line. Pl see attached screenshots for details. Seiden did not show details in his videos & articles.
By 2 lines, do you mean the top and bottom of the SD zones? To me your boxes look fine. If by 2 lines you mean the top and bottom of box/zone, they look fine to me.

I would add in the other supply zones, as price may turn there before it gets to the more extreme zones that you've highlighted.

I like to focus on weekly SD levels. After we turn at a demand zone, start looking for fresh demand levels and trade towards the next weekly supply zone, see attachment.

For the fresh zones, I look at a variety of time frames, mainly 30m, 1h, 3h, 4h. It varies.

Quote
2. when price gets near the s/d zone, unless the probability enhancer score is 9 or 10, we cannot be sure if it is to reverse and if so, when & where. As Porkpie said, price can still go anywhere. The best is to observe price action, which I think we wld do at a lower time frame.
If you have the time to be around the levels when price approaches, that is a huge advantage.

Sam (in his free vids) advocates the use of bollinger bands. He doesn't wait for candlestick patterns, but waits for price to pierce the bands into the SD zone for entry.

When I'm around when price enters the SD zone, I really like to use VSA entries (no demand or up thrust following buying climax in a short scenario)

I would guess that on a smaller time frame (say 15m PA looking at a 4h supply level) pretty much any short signal that can be spat at you could reasonably work. The important thing when you desire a "signal" to be spat at you is the r:r. It's a trade off because when you wait for confirmation you are going to have a way larger stop, and therefore a worse r:r.

I'm attaching a weekly dollar chart.
Attached Image (click to enlarge)
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  • #302
  • Nov 28, 2010 6:31pm Nov 28, 2010 6:31pm
Quoting frankkn
Hey brother,

In response to:

By 2 lines, do you mean the top and bottom of the SD zones? To me your boxes look fine. If by 2 lines you mean the top and bottom of box/zone, they look fine to me.
Thx Frank. Sorry for late response, becos of time difference.

Yes, you are right. I was referring to the top & bottom of the S/D zone. I have no problem with the top one in the examples I showed. It is at the tip of the swing high. This is easy. For the bottom one:

1. taken in 4 diff timeframes there are 4 diff possibilities. Which shd I take, i.e. which timeframe?

2. Next, within the same timeframe, do I take: (i) the tip of the lower wick of the same swing high candle; or (ii) the low of the candle body of the same candle; or (iii) the low of the candle body of the preceding candle; or (iv) the low of the candle body of the subsequent candle; or (v)......?

Placed wrongly, we cld either miss the trade or take the trade too early.

Quote
I would add in the other supply zones, as price may turn there before it gets to the more extreme zones that you've highlighted.

Understood. I showed only one S/D zone in my examples as illustration.

Quote
I like to focus on weekly SD levels....

What is VSA? Thx for sharing.
  • #303
  • Nov 28, 2010 7:28pm Nov 28, 2010 7:28pm
Quoting CollectPIPS
Thx Frank. Sorry for late response, becos of time difference.

Yes, you are right. I was referring to the top & bottom of the S/D zone. I have no problem with the top one in the examples I showed. It is at the tip of the swing high. This is easy. For the bottom one:

1. taken in 4 diff timeframes there are 4 diff possibilities. Which shd I take, i.e. which timeframe?

2. Next, within the same timeframe, do I take: (i) the tip of the lower wick of the same swing high candle; or (ii) the low of the candle body of the same candle; or (iii) the low...
Try here for a killer VSA thread. VSA stands for Volume Spread Analysis. The guys who move the market trade in such size that they need to buy into selling and vice versa. VSA shows this, then it shows you where to get in and where to get out. There are traders like hiddengap, intel, and malc who have an impression of what nearly every single bar is saying in terms of "smart money's" interest in the process of "accumulation" and "distriubution". I'm using quotes just to highlight terms that are used primarily by VSAers.

From my experience, the hourly time frame offers the best view for placing my limit orders and stop orders. This is just my experience, and it fits my preferences and limitations.

The tips of the wicks are going to be the same because they show the extreme price of the particular level. I may not understand you correctly.
  • #304
  • Nov 28, 2010 8:25pm Nov 28, 2010 8:25pm
Sorry if I didn't make myself clearer. The attached screenshot shows more clearly 6 possibilities where the bottom line may be drawn. Which is the correct one to take? If none, where shd it be placed? Need to get it right lest trade is missed or taken prematurely.

Thx.

Quoting frankkn
Try here for a killer VSA thread. VSA stands for Volume Spread Analysis....
Attached Image (click to enlarge)
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  • #305
  • Nov 28, 2010 8:59pm Nov 28, 2010 8:59pm
Quoting CollectPIPS
Sorry if I didn't make myself clearer. The attached screenshot shows more clearly 6 possibilities where the bottom line may be drawn. Which is the correct one to take? If none, where shd it be placed? Need to get it right lest trade is missed or taken prematurely.

Thx.
Check this out

That's how I place my orders. There are multiple supply levels almost every time, and nobody knows which will work. An advantage of this kind of entry is a small enough stop that you can get awesome r:r, and therefore you can enter on each supply level.

If you're in tune with the weekly trend then you will be profitable over all. Not a flashy way to trade, but a sustainable and profitable way.
  • #306
  • Nov 28, 2010 9:07pm Nov 28, 2010 9:07pm
In addition, I'm attaching the chart you posted. I inserted yellow boxes.

I would consider those two boxes to be two possible levels. Price left the second box in a more impressive way so price could turn there, but then again it may want to tag the upper box.

That's why you should be careful with your stops and use multiple entries while going with the weekly trend.

Or if you would like to be hands-on use VSA.
Attached Image (click to enlarge)
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  • #307
  • Nov 28, 2010 9:18pm Nov 28, 2010 9:18pm
Thx again. Got the book "Master the Mkts". Will start reading it. Wld take a while though - 188 pages !

Quoting frankkn
In addition, I'm attaching the chart you posted. I inserted yellow boxes.

I would consider those two boxes to be two possible levels. Price left the second box in a more impressive way so price could turn there, but then again it may want to tag the upper box.

That's why you should be careful with your stops and use multiple entries while going with the weekly trend.

Or if you would like to be hands-on use VSA.
  • #308
  • Nov 28, 2010 9:24pm Nov 28, 2010 9:24pm
Understand better now: it's not exact science, i.e. not hard & fast. All a matter of probability. Many thks.

Quoting frankkn
Check this out

That's how I place my orders. There are multiple supply levels almost every time, and nobody knows which will work. An advantage of this kind of entry is a small enough stop that you can get awesome r:r, and therefore you can enter on each supply level.

If you're in tune with the weekly trend then you will be profitable over all. Not a flashy way to trade, but a sustainable and profitable way.
  • #309
  • Nov 29, 2010 7:14am Nov 29, 2010 7:14am
Quoting frankkn
In addition, I'm attaching the chart you posted. I inserted yellow boxes.

I would consider those two boxes to be two possible levels. Price left the second box in a more impressive way so price could turn there, but then again it may want to tag the upper box.

That's why you should be careful with your stops and use multiple entries while going with the weekly trend.

Or if you would like to be hands-on use VSA.
agree. Not every level should be defined as a supply/demand level. The odds enhancers help you pick the higher probability levels. Use them for every trade and you will eventually identify them automatically without the list. But the list is very important to begin with, to get you seeing the right set-ups.
  • #310
  • Nov 29, 2010 10:28am Nov 29, 2010 10:28am
Quoting CollectPIPS
Understand better now: it's not exact science, i.e. not hard & fast. All a matter of probability. Many thks.
True, but if you ensure you have a solid set of rules of when to enter it makes pulling the trigger a whole lot easier, then you really are playing the probabilities. If you don't have solid rules then you are less likely to be consistent and the odds may not be in your favour (probabilities will go against you) over the long term. Consistency is the key.
  • #311
  • Edited 11:42am Nov 29, 2010 11:19am | Edited 11:42am
I came back from the weddiversary in Dorset and still feeling a little worse for wear, I was apprehensive on taking any trades on Sunday opening. Hopefully you will see my reasoning for taking these 2 trades. I also took EURUSD which hit TP1, came back and hit my SL this morning before dropping like a stone. Risk off today and DIX is now heading for 81.64-82.00.

I will try to post before I take the trades, but it is difficult to find the time when I am working full-time, so hopefully some of you will learn as to why I took these trades by my commentary on them.

Both of these trades gapped up into or near supply and they were both in a downtrend already. I have been wanting to re-engage the downtrend on AUDUSD, but price never hit my supply levels higher up, so I got it on the throwback trade. I think the H&S pattern is in full swing now with 500+ pips of profit from the neckline! I have already bagged a 110 as it closed in on the demand level.

Both of these trades are now free trades. I am still in the GBPCAD and GBPCHF trades that I posted two weeks back in this thread where I also have detailed analysis on why I entered the trades. http://www.forexfactory.com/showthre...58#post4186058

My final targets are -

GBPCAD: 1.4963
GBPCHF: 1.5242

I am using a trailing stop now on both of these, but only above the supply levels which I consider a good supply that I see on the chart!

I hope you begin to see a pattern!

AUDUSD:
Attached Image (click to enlarge)
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EURGBP:
Attached Image (click to enlarge)
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As these trades are free with some profit, I can now continue to scour the market for further opportunities. I will leave the SL as they are, because they are nice supply levels and I will let the market tell me whether they are good ones or not.

I wish you success with your trading!
  • #312
  • Nov 29, 2010 11:41am Nov 29, 2010 11:41am
Don't go in at market price, let the market come to YOUR price!

If it does not hit your price do not rue on the missed opportunity. Let go! Forget about it and wait for the next opportunity! Price, more often than not, will come back.

A great example of this was my AUDUSD trade which I set on Sunday night at MY price and it missed it by 3 pips! I left the order on the system and it got filled on the Monday morning.

If you jump in, it will also mess with your R/R ratios and you're not planning your trades!

That's all folks!
  • #313
  • Nov 29, 2010 11:59am Nov 29, 2010 11:59am
Here is a nice opportunity on NZDUSD -

Attached Image (click to enlarge)
Click to Enlarge Name: 101129_nu_d1.png Size: 47 KB


It is with the long-term trend, but against the short-term trend. Be aggressive with your profit taking. My FINAL target is the opposing supply zone!
  • #314
  • Nov 29, 2010 1:35pm Nov 29, 2010 1:35pm
Quoting killthebee
Hey egkid,
1) Mainly I use H1 to scan trade opportunity. Confirm the chances by H4 and take my entry using M15.

2) For a beginner like me, I try to be outside the market most of the time, until I find a 'perfect' set to enter.
Sorry to late reply
Always check bigger TF is good thing.
Wish u all the best
  • #315
  • Nov 29, 2010 9:05pm Nov 29, 2010 9:05pm
Thx PP. Glad to see you around. Look forward to learning from you & all here

Quoting Porkpie
True, but if you ensure you have a solid set of rules of when to enter it makes pulling the trigger a whole lot easier, then you really are playing the probabilities. If you don't have solid rules then you are less likely to be consistent and the odds may not be in your favour (probabilities will go against you) over the long term. Consistency is the key.
  • #316
  • Nov 29, 2010 9:24pm Nov 29, 2010 9:24pm
Collected some pips from AUDUSD yesterday from 0.9680 to 0.9590
Attached Image (click to enlarge)
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  • #317
  • Nov 29, 2010 9:31pm Nov 29, 2010 9:31pm
Collected some pips, too, from NZDUSD. This one I had time to watch price action & entered at 0.7528 when it retraced. Wld like to hear comments.
Attached Image (click to enlarge)
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  • #318
  • Nov 29, 2010 9:53pm Nov 29, 2010 9:53pm
EURUSD is approaching some important demand zones. There seem to be several possible demand levels, in green in attached chart. Can levels 4 & 5 be taken as demand levels as well?

But to buy at any of these demand levels is to go against the bigger DOWN trend. Not advisable to do?

Thx.
Attached Image (click to enlarge)
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  • #319
  • Nov 29, 2010 11:50pm Nov 29, 2010 11:50pm
Missed trade is not a problem, as you said. Trades that get stopped out are ok, too. But trades that get stopped out & then go in our favor, hmmm......

Quoting bbakker
Don't go in at market price, let the market come to YOUR price!

If it does not hit your price do not rue on the missed opportunity. Let go! Forget about it and wait for the next opportunity! Price, more often than not, will come back.

A great example of this was my AUDUSD trade which I set on Sunday night at MY price and it missed it by 3 pips! I left the order on the system and it got filled on the Monday morning.

If you jump in, it will also mess with your R/R ratios and you're not planning your trades!

That's all folks!
  • #320
  • Nov 30, 2010 12:46am Nov 30, 2010 12:46am
Quoting CollectPIPS
EURUSD is approaching some important demand zones. There seem to be several possible demand levels, in green in attached chart. Can levels 4 & 5 be taken as demand levels as well?

.
In order to use your levels 4 and 5, you'd have to "cut through candles" with your line to the left.

Sam sez don't cut through candles when searching for an entry.

However..... cutting through candles might be useful in exiting or identifying a place where momentum might weaken. At least that's what I've been learning from the other guys here who've studied this method longer than I have. I'm new at this concept too.
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