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Trading Supply & Demand Zones

  • #321
  • Nov 30, 2010 2:30am Nov 30, 2010 2:30am
On this point of being in tune with weekly trend, I thought when price comes back to retest s/d zone, the trade direction we wld take is often against the weekly trend. A case in point is post #318 above. Thoughts?

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.
  • #322
  • Nov 30, 2010 2:37am Nov 30, 2010 2:37am
Quoting CollectPIPS
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......
That happened to me on EU yesterday. OK, it reached my 1st target, came back, hit my SL and then dropped like a stone again, but there have been other times when price will fake out of the supply or demand zone, hit my SL and then move in the direction that I had favoured. The solution is to give the Stop Loss more wriggle room, to give your position a chance, especially on currency pairs that have a tendency to do this.

You just need to accept that these events occur and that they are part of Forex trading. You need to take the emotion out of trading... be a robot. Easier said than done!
  • #323
  • Edited 3:19am Nov 30, 2010 2:42am | Edited 3:19am
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?

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

Thx.
No. Always use fresh levels. If going against the bigger trend, be aggressive with your trades. Take the extremes with a tight SL, so that it is easier to obtain the 3:1 and set realistic profit targets. Don't shoot for the stars!

Also in a fast moving market, rather than "fading trends", try to join the trend using throwback trades as I did with the AUDUSD at the beginning of this week! Saying that, a trend is only a trend until it ends and each timeframe will have its own trend! Bigger picture is the Goliath trend!
  • #324
  • Nov 30, 2010 3:08am Nov 30, 2010 3:08am
Quoting bbakker
That happened to me on EU yesterday. OK, it reached my 1st target, came back, hit my SL and then dropped like a stone again, but there have been other times when price will fake out of the supply or demand zone, hit my SL and then move in the direction that I had favoured. The solution is to give the Stop Loss more wriggle room, to give your position a chance, especially on currency pairs that have a tendency to do this.

You just need to accept that these events occur and that they are part of Forex trading. You need to take the emotion out of...
Yes, more wriggle room or when price breaks back through the lower band just re-enter.

These miniscule levels with poor RR being reached during Frankie's hour (european open fakeout) then tank at the London open are proving to be solid trades, but terrible RR. Possible indication of the strength in trend. Maybe time to be a bit more aggressive with entry for the next couple of weeks before volume drops.
  • #325
  • Nov 30, 2010 3:43am Nov 30, 2010 3:43am
Quoting bbakker
Here is a nice opportunity on NZDUSD -

Attachment

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!
I have taken this trade!

Entry: 0.7415
SL: 0.7399
TP1: 0.7450 (Just over 2:1)

The trade is out of my hands now... Let the market determine the outcome!
  • #326
  • Nov 30, 2010 4:52am Nov 30, 2010 4:52am
Quoting bbakker
I have taken this trade!

Entry: 0.7415
SL: 0.7399
TP1: 0.7450 (Just over 2:1)

The trade is out of my hands now... Let the market determine the outcome!
TP1: 0.7450 hit
TP2: 0.7490
TP3 (Final): 0.7580
Moving SL to BE.

I will be looking to short around the 0.7584-0.7644 supply zone.
  • #327
  • Nov 30, 2010 5:14am Nov 30, 2010 5:14am
Quoting bbakker
TP1: 0.7450 hit
TP2: 0.7490
TP3 (Final): 0.7580
Moving SL to BE.

I will be looking to short around the 0.7584-0.7644 supply zone.
Here is a picture for you for those who can't visualise numbers and words

Attached Image


I am working from home today because of the snow. I must really get on with some work now!
  • #328
  • Nov 30, 2010 7:05am Nov 30, 2010 7:05am
<...to give the Stop Loss more wriggle room...> I call it more breathing space. Same thing

The million dollar question is how much more is enough? Maybe abt 20% of the sideway range? Of course, must bear in mind the r:r .

<...currency pairs that have a tendency to do this...> I found GBPUSD & GBPCHF fall into this category, esp after London open. Any others?

Quoting bbakker
That happened to me on EU yesterday. OK, it reached my 1st target, came back, hit my SL and then dropped like a stone again, but there have been other times when price will fake out of the supply or demand zone, hit my SL and then move in the direction that I had favoured. The solution is to give the Stop Loss more wriggle room, to give your position a chance, especially on currency pairs that have a tendency to do this.

You just need to accept that these events occur and that they are part of Forex trading. You need to take the emotion out...
  • #329
  • Nov 30, 2010 7:07am Nov 30, 2010 7:07am
Quoting bbakker
Here is a picture for you for those who can't visualise numbers and words

Attachment

I am working from home today because of the snow. I must really get on with some work now!
Stopped out but I still made my money on it. Tempted to take it again with an even tighter SL as price has hit 0.7404, but I will sit out!
  • #330
  • Nov 30, 2010 7:08am Nov 30, 2010 7:08am
Quoting CollectPIPS
<...to give the Stop Loss more wriggle room...> I call it more breathing space. Same thing

The million dollar question is how much more is enough? Maybe abt 20% of the sideway range? Of course, must bear in mind the r:r .

<...currency pairs that have a tendency to do this...> I found GBPUSD & GBPCHF fall into this category, esp after London open. Any others?
Swissy and Yen pairs, although recently the EURCHF seems to be behaving!
  • #331
  • Nov 30, 2010 7:11am Nov 30, 2010 7:11am
Hi BB

Cld you shed more light on what you mean by throwback trades?

Thx.

Quoting bbakker
No. Always use fresh levels. If going against the bigger trend, be aggressive with your trades. Take the extremes with a tight SL, so that it is easier to obtain the 3:1 and set realistic profit targets. Don't shoot for the stars!

Also in a fast moving market, rather than "fading trends", try to join the trend using throwback trades as I did with the AUDUSD at the beginning of this week! Saying that, a trend is only a trend until it ends and each timeframe will have its own trend! Bigger picture is the Goliath trend!
  • #332
  • Nov 30, 2010 7:23am Nov 30, 2010 7:23am
Quoting Porkpie
Yes, more wriggle room or when price breaks back through the lower band just re-enter.

These miniscule levels with poor RR being reached during Frankie's hour (european open fakeout) then tank at the London open are proving to be solid trades, but terrible RR. Possible indication of the strength in trend. Maybe time to be a bit more aggressive with entry for the next couple of weeks before volume drops.
They call it hikkake pattern?
  • #333
  • Nov 30, 2010 7:47am Nov 30, 2010 7:47am
Quoting bbakker
Swissy and Yen pairs, although recently the EURCHF seems to be behaving!
Talking of which, I have a swing buy limit order on euro/swissy at 1.2788, sl 2758 (weekly/monthly/yearly lows) tp 1st 3235, 2nd 3300

hikkake pattern? Not familiar with that.
  • #334
  • Nov 30, 2010 7:54am Nov 30, 2010 7:54am
Quoting Porkpie
Talking of which, I have a swing buy limit order on euro/swissy at 1.2788, sl 2758 (weekly/monthly/yearly lows) tp 1st 3235, 2nd 3300

hikkake pattern? Not familiar with that.
jfyi-a hikkake pattern is an outside bar with an inside bar with the third bar being a pin(hammer) that breaks the range and fails. It's a reversal signal. It's more accurate on higher tf's of course.
  • #335
  • Nov 30, 2010 8:22am Nov 30, 2010 8:22am
cheers Calderone
  • #336
  • Nov 30, 2010 11:34am Nov 30, 2010 11:34am
Quoting CollectPIPS
Hi BB

Cld you shed more light on what you mean by throwback trades?

Thx.
Throwback trades are when a demand or supply zone breaks, but you wait for price to retrace back before going in the direction of the break. I do not trade breakouts as I do not like them one bit, because more often than not, price will come back or it is a fakey. The only time it does not come back is in a fast moving market!

So in the case of a breakdown of a demand zone as per my AUDUSD trade, it in then turns into a supply zone. (i.e. Support turns into resistance) http://www.forexfactory.com/showthre...62#post4206862

Hope this helps!
  • #337
  • Dec 1, 2010 4:37am Dec 1, 2010 4:37am
An interesting point on Frank's thread here about strong and weak levels in strong and weak trends.
  • #338
  • Dec 1, 2010 10:22pm Dec 1, 2010 10:22pm
Thk you. Learnt something

Quoting bbakker
Throwback trades are when a demand or supply zone breaks, but you wait for price to retrace back before going in the direction of the break. I do not trade breakouts as I do not like them one bit, because more often than not, price will come back or it is a fakey. The only time it does not come back is in a fast moving market!

So in the case of a breakdown of a demand zone as per my AUDUSD trade, it in then turns into a supply zone. (i.e. Support turns into resistance) http://www.forexfactory.com/showthre...62#post4206862...
  • #339
  • Dec 1, 2010 10:30pm Dec 1, 2010 10:30pm
Thx for pointing out.

There are sooo many posts around that we often miss good ones unless pointed out.

Quoting Porkpie
An interesting point on Frank's thread here about strong and weak levels in strong and weak trends.
  • #340
  • Dec 2, 2010 7:16am Dec 2, 2010 7:16am
Quoting CollectPIPS
Thx for pointing out.

There are sooo many posts around that we often miss good ones unless pointed out.
With all that being said, picking the highest quality levels and patience is the name of this game, expecting and forcing one's self to trade everyday on sub par levels is not healthy imo.
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