Supply and Demand zones NOT in retrospect | Forex Factory

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Supply and Demand zones NOT in retrospect

  • #1
  • First Post: Nov 12, 2011 7:03pm Nov 12, 2011 7:03pm
I am starting this thread out of frustration with my inability to implement what I was reading about S/D zones.
It is my understanding that when price returns to a S/D zone it would, in most likelyhood retrace.
To confirm a trade in the direction of the retrace, one would use candle formations or indicators (to a lesser degree)
When I watch some of the charts posted, these levels seem to be very obvious and a trade should be easy to implement.
Problem is that in real life (live) trading, the moves are not so obvious.
Another issue that I have is with the explanations given.
They all explain an event that occured, thus, any explanation would be valid.(i.e. "price turned down at SUPPLY because there were no more buyers". Isn't it obvious that price turned down because there were no more buyers?
I will post some charts with zones and indicate my expectation of the
impeding move.

Please comment whether the zones are valid or not and please reply to the question(s) in the charts.

Thank you

Gabe
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  • #2
  • Nov 12, 2011 7:43pm Nov 12, 2011 7:43pm
Hey Gabe


well its not that easy to tell if S/D zones hold or break..

but some conclusions can be made if u analyse the background and the most recent action (the cause).. aswell as how price moves torwards that areas.. and at least the PA @ those areas.. (the effect)

however i use Volume aswell to judge the market.. but i will nevertheless try to answer to your question .. using your chart..


MY Answer :

its more likely that the supply level/resistance gets broken thru
however i wouldnt buy a breakout.. but rather buy at support as this chart looks like its strenghten.. if it breakouts i would buy a retest of resistance wich will turn support... but depends on retarce and PA.. thou

NOTE:
however u cant say that it breaksout now .. or a lil latter .. but i would rather buy support then sell resistance if i i have such a chart infront of me.. due the fact that i see signs of strenght within that chart..


cheers
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  • #3
  • Nov 12, 2011 8:18pm Nov 12, 2011 8:18pm
another thing!



as your question stated : UP or DOWN ?

u simply dont know ! , no one does!

and its not about knowing what price does next.. but to be positioned in the most proper spot... and participate

it doesent mather if u blindly sell that supply zone or use PA to pull the trigger

or if u dont sell that supply zone and rather buy the demand zone..

it doesnt mather u allready positioned yourself in the most favorable areas.. and what happens next! is not in our controll.. but managing the open position is!..

and if your tradingplan clearly shows that you are on the right track.. then keep pulling the trigger .. and dont try to second guess the market.. but position yourself on the right spots.. ie trade the edges!
  • #4
  • Nov 12, 2011 8:24pm Nov 12, 2011 8:24pm
Thank you PrymeTyme.
Here is the bigger picture.
BTW what kind of confirmation signal would you use to go long?
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  • #5
  • Edited 11:10pm Nov 12, 2011 8:44pm | Edited 11:10pm
Quoting Gabe2004
Are we going up or down?
A better question is "where do I want to be, long, short or flat?"

You probably chould already have gone short as price tested the higher level, and closed out when it finished testing lower.

Then, if you are able to quickly change direction (something I am working on), you could be long now as it retests the high.

I would also draw a diagonal trend line connecting the lows (or maybe better yet, the previous highs) to see the possible extent of a retest of the lows, which would give a likely re-entry if bullish.

If bearish, I would wait for a retest of the high. If bullish I would wait for a retest of the diagnoal. But that's just me.
  • #6
  • Nov 12, 2011 9:01pm Nov 12, 2011 9:01pm
Quoting Gabe2004
Thank you PrymeTyme.
Here is the bigger picture.
BTW what kind of confirmation signal would you use to go long?


HI Gabe

again i would also use Volume to confirm and analyze.. but for your chart and question.. here is my answer


as for what signal i would use to go long.. well its PA and HOW price retests or comes back to retest.. the area of interrest.. Could be a PinBar or shortening downbars.. indicating a lack of selling pressure.. etc..

as iam pretty picky .. i wouldnt have gone long on your chart.. due the reasons i statet on your chart...

however ther is one setup ie. the springboard on the chart .. and this would be the only tradeable setup on that whole chart (retest) at least for me..
but i dont trade springboards that often they are tricky .. but i watch them nevertheless ... also i dont know what TF your chart is.. and if i could zoom into the springboard area to find a good opportubnity within that spring
so to be Honest i wouldnt have taken a trade on that chart alone !

remember the market will be there forever .. so better miss a good opportunity then beeing in a bad one!

cheers
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  • #7
  • Nov 12, 2011 9:05pm Nov 12, 2011 9:05pm
Quoting Gabe2004
...It is my understanding that when price returns to a S/D zone it would, in most likelyhood retrace.
To confirm a trade in the direction of the retrace, one would use candle formations or indicators (to a lesser degree)..

Quoting PrymeTyme
...well its not that easy to tell if S/D zones hold or break..
Whilst I technically do not use Supply/Demand Zones a la Sam S, I do consider myself a part of the PIE and Romancing the Price community. I have a different take for you. Feel free to accept or reject it.

The first thing to understand is that Support/Resistance (Demand/Supply) is not a trade signal. Yes, Sam does simply place limit order within the Supply/Demand Zones. However, for most traders this is a mistake.

I believe a better approach is to look for what you want to see, where you want to see it. The where you want to see it is in the Supply/Demand Zone. So the next question is what do you want to see?

Well let's take a Demand Zone.

First off we know that two of the major mistakes a losing trader will make is : (1) selling after a fall in price and (2) selling where there is more demand order flow. So how can we eliminate the need for prediction and keep those things in mind? As price enters the Demand Zone we simply look for our predetermined LONG entry signal(s).

We can look for bullish hammer patterns.
We can look for bullish engulfing patterns.
We can look for the first interval that closes higher than the interval three periods prior.
We can look for our mixoplex osc to be "over sold".
There are any number of entry signals we could look for. Suppose we choose to look for bullish hammer patterns.

Now think about the beauty and simplicity of how we can trade. We look for Demand Zones. As price moves back into a Demand Zone we look for bullish hammer patterns. No prediction. No concern with whether or not the Zone will hold. Either we see a bullish hammer pattern and get long or we do not see one and do nothing.
Without VSA, you're playing checkers while the Smart Money plays chess.
  • #8
  • Nov 12, 2011 9:07pm Nov 12, 2011 9:07pm
Thanks WT4x.
Here is another one b4 I go 2 sleep.
The question here is the same as b4 + would you include the wicks in defining a zone? (on the extreme left of the zone i marked).

G
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  • #9
  • Nov 12, 2011 9:12pm Nov 12, 2011 9:12pm
Quoting HiddenGap
The first thing to understand is that Support/Resistance (Demand/Supply) is not a trade signal. Yes, Sam does simply place limit order within the Supply/Demand Zones. However, for most traders this is a mistake.

I believe a better approach is to look for what you want to see, where you want to see it. The where you want to see it is in the Supply/Demand Zone. So the next question is what do you want to see?

True S/D zones are merly an area of interrest or where I want to do buisness at and if i pull the trigger is based on PA + background

+1 to all u wrote HG!

also i have to correct my statement .. as its not that EASY is the wrong word .. its IMPOSSIBLE to know if price bounces or breaks

cheers
  • #10
  • Nov 12, 2011 9:22pm Nov 12, 2011 9:22pm
Quoting PrymeTyme
+1 to all u wrote HG!

also i have to correct my statement .. as its not that EASY is the wrong word .. its IMPOSSIBLE to know if price bounces or breaks

cheers
If it is impossible then wouldn't a trade NOT in a S or D zone, have more probabiliy of identifying the direction of the move?

Gabe

PS thanks to all who participate and contribute here.
Every rule has an exception. Except for this one.
  • #11
  • Nov 12, 2011 9:33pm Nov 12, 2011 9:33pm
Quoting Gabe2004
If it is impossible then wouldn't a trade NOT in a S or D zone, have more probabiliy of identifying the direction of the move?

Gabe

PS thanks to all who participate and contribute here.
thats even worser .. only trade the edges! ..

remember what i wrote .. your goal as a trader shouldnt be to predict where price will go .. as this is impossible .. but to position yourself in the most favourable place in the market !

to predict the direction of a move is the work of crystall balls and scammers
but to do buisness u have to participate and position yourself at low risk levels.. etc..

you should concentrate on areas where u want to do buisness in... not trying to predict the direction of the next move..

a guide (easy illustrative example)

1. watch areas of interrest ie. where i want to do business in (S/D zones)
2. wait till Price moves torwards those predetermined areas and finally reaches those areas
3. watch for setups and take action or not (could be anything )
  • #12
  • Nov 12, 2011 9:47pm Nov 12, 2011 9:47pm
Quoting Gabe2004
If it is impossible then wouldn't a trade NOT in a S or D zone, have more probabiliy of identifying the direction of the move?.....
By definition, a Supply/Demand Zone would be the highest probability area to look for a trade.
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Without VSA, you're playing checkers while the Smart Money plays chess.
  • #13
  • Nov 12, 2011 11:14pm Nov 12, 2011 11:14pm
Quoting Gabe2004
Thanks WT4x.
Here is another one b4 I go 2 sleep.
The question here is the same as b4 + would you include the wicks in defining a zone? (on the extreme left of the zone i marked).

G
This looks like it will continue long. That said I could see fading this test of the upside.

If the price action is just a dip rather than the start of a retest of lows, I would then either go long if bullish or go flat wait for a test of next level up before being bearish.

But if it's range trading, there is still room to go bearish.

Only Mr. Market knows the actual direction for sure.
  • #14
  • Nov 12, 2011 11:24pm Nov 12, 2011 11:24pm
very good idea,and I like the people who have courage to ask questions,subscribing this thread.
Trade responsiblypatience is the key/Swing trader
  • #15
  • Nov 13, 2011 4:39am Nov 13, 2011 4:39am
Quoting Gabe2004
I am starting this thread out of frustration with my inability to implement what I was reading about S/D zones.
It is my understanding that when price returns to a S/D zone it would, in most likelyhood retrace.
To confirm a trade in the direction of the retrace, one would use candle formations or indicators (to a lesser degree)
When I watch some of the charts posted, these levels seem to be very obvious and a trade should be easy to implement.
Problem is that in real life (live) trading, the moves are not so obvious.
Another issue that I have is...
supply and demand is just a tool to identify levels in which we would find high probabiliyt low risk setups in my opinion, they are not enough to trade. like indicators, jsut because its there doesnt mean itll hold or do waht you want it to do. Price action and order flow rules above all and with time you will find out if a level will hold or not. even i am still in process of doing so,

i wish you best of luck,

Buma
Have I got something on my face, SOLDIER?
  • #16
  • Nov 13, 2011 4:51am Nov 13, 2011 4:51am
The way I see it, you dont know whether the S/D zone will hold therefore you use a tightstop and a target to another zone to get a high risk:reward ratio.

I prefer to trade the higher TF S/D zones, like the 1hr, and use divergence on CCI to help give me confidence in the trade.
  • #17
  • Nov 13, 2011 5:41am Nov 13, 2011 5:41am
Quoting Gabe2004
Thank you PrymeTyme.
Here is the bigger picture.
BTW what kind of confirmation signal would you use to go long?
This is one of the easiest and elementary S/R trades i have come across.
Orderliness of Randomness
  • #18
  • Nov 13, 2011 5:47am Nov 13, 2011 5:47am
Quoting Gabe2004
I am starting this thread out of frustration with my inability to implement what I was reading about S/D zones.
It is my understanding that when price returns to a S/D zone it would, in most likelyhood retrace.
To confirm a trade in the direction of the retrace, one would use candle formations or indicators (to a lesser degree)
When I watch some of the charts posted, these levels seem to be very obvious and a trade should be easy to implement.
Problem is that in real life (live) trading, the moves are not so obvious.
Another issue that I have is...

Levels marked are wrong. please come over to Ken's B.S Trading thread.

We can help you there.
  • #19
  • Nov 13, 2011 5:59am Nov 13, 2011 5:59am
Quoting eloaking
This is one of the easiest and elementary S/R trades i have come across.
No offence eloaking, but how about a more informative post?

Thanks

Gabe
Every rule has an exception. Except for this one.
  • #20
  • Nov 13, 2011 7:15am Nov 13, 2011 7:15am
I see zones EVERYWHERE. In hindsight.......
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