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Supply and Demand zones NOT in retrospect

  • #21
  • Nov 13, 2011 9:34am Nov 13, 2011 9:34am
Quoting HiddenGap
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...
Hello HG,

your answer sounds very logical and describes what I'm looking for when price reaches supply and demand levels.

But: In strong trends especially when they are fundamental driven price goes easily through the most zones. I noticed that there is often a fake PA at these zones such as Pins, engulfings.... Thus I come to the conclusion that the smart money knows that people are monitoring such zones and create the fake PA to suck people in a bad trade or keep them out of a good trade. What I want to say is that supply/demand zones in combination with PA is no guarentee for profitability.
  • #22
  • Nov 13, 2011 9:39am Nov 13, 2011 9:39am
Quoting MCFly
Hello HG,

your answer sounds very logical and describes what I'm looking for when price reaches supply and demand levels.

But: In strong trends especially when they are fundamental driven price goes easily through the most zones. I noticed that there is often a fake PA at these zones such as Pins, engulfings.... Thus I come to the conclusion that the smart money knows that people are monitoring such zones and create the fake PA to suck people in a bad trade or keep them out of a good trade. What I want to say is that supply/demand zones in combination...
Use momentum to ur capabilities.
here is a picture i drew up how a smart trader would think and a novice. Why counter trend a trend if you know the momentum just wouldnt be enough?

and i trade those fake pinbars into my advantage. we all know pinbars and doji sticks almost have no meaning in the center of a trend, therefor e that is entry into a trned and not a reversal.
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Have I got something on my face, SOLDIER?
  • #23
  • Nov 13, 2011 10:14am Nov 13, 2011 10:14am
Quoting HiddenGap
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.


Well let's take a Demand Zone.


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...
This approach will give u less losing trades but as any indicator or other confirmation (candlesticks, patterns, MA etc.) its lagging so u just filter bad trades but get into good trades too late so potential profit will be smaller. Im not saying its bad just wouldnt consider that waiting for any kind of lagging confirmation would give me an edge.
  • #24
  • Edited 11:33am Nov 13, 2011 10:54am | Edited 11:33am
The pic below is the current near-term 1hr screenshot for gbpusd cash as of Friday's close. The pic shows the previous price pivots - ie the previous near-term obvious fractal swing hi and lo zones where there existed a previous imbalance of supply over demand -and- demand over supply - creating those near-term previous obvious fractal swings as price fell/rose from those areas of demand and supply imbalance.

Some of the zones are co-existant as such on the 4hr t/f and some may not be as strong in respect of their ability to see further such imbalances if tested again from either side in the near-term ie as potential support or resistance or as potential sbr/rbs. (support becomes resistance / resistance becomes support.)

There are also relevant trend lines and unbreeched fibs of the swings up from 5867 and 5895 to Friday's 6092 hi - ie other potential support/resistance factors, on the chart.

None of us know what will happen if previous price pivots or indeed other potential supp/res factors, or confluences thereof are tested again by price. All we can do is pre-identify the potential support/resistance, and see how price reacts to it if tested, but bear in mind the overall context if/when it does, - ie the opa (overall price action conditions) on both the t/f they appear on and on the higher t/f (s) ie is price trending or ranging ?

What it is as well to work out also is what confluences of these potential supp/res factors (and indeed others you may use) are historically proven to see a price reaction at them (ie a bounce or break) and then, - what tools you will use to determine/indicate what the greater probability is should price test them again.

G/L
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ex member
  • #25
  • Nov 13, 2011 11:11am Nov 13, 2011 11:11am
The key for trading Seiden SD levels is to always look at higher time frame SD to then enter on lower time frame SD. PIE style is completely different and the two styles should not be mixed up which is what many people discovering this method make the mistake of doing thus causing confusion.

You need to think in terms of market inefficiencies. Higher time traders will often only trade against lower time frame traders because the higher time frame signals have that much more directional bias in terms of clarity. Lower time frame traders will often be trading against higher time and lower time frame traders. So when the fight between lower time frame traders drifts into higher time frame supply/demand territory we have a huge imbalance or market inefficiency effect causing a much more probable directional outcome in favour of the higher time frame traders. We can then look at the smaller time frame supply/demand levels to reduce risk. Rinse and repeat.

There is no guarantee of the level working out that's why you trade with probabilities and losses are business costs.

Higher time frame levels are a lot more obvious and easier to trade which makes the smaller time frame levels around these levels higher probability which can be used for day or swing/position trades. Just make sure you are high r low on the higher time frame curve.

When day trading the levels I use 3 time frames, two for the levels and one smaller one for identifying price action within those levels as the trend changes at higher time frame SD. Stops are always the otherside of the confirmation candle as if that candle fails then its telling me it was not the right time to get in (not that the zone is invalid), then wait for the next pa to show or not at the level.

The statement about lack of buyers into a supply zone is not quite right. Large traders need liquidity so they will create bullish candles into supply to encourage buyers so that the large sellers have buyers to take their large orders. Amateaurs will always get in late and thus lose.
  • #26
  • Nov 13, 2011 11:40am Nov 13, 2011 11:40am
Quoting Gabe2004
I see zones EVERYWHERE. In hindsight.......
How Institutional /Hedge fund Algos create Strong Supply & Demand Levels

 

  1. @11.58 A Marked Demand Level
  2. Not Mentioned on the video , but watch how Price returns to the Demand level (Marked spot) , and then bounces off the level ...

Inserted Video
  • #27
  • Edited 12:22pm Nov 13, 2011 11:48am | Edited 12:22pm
Hi:

Many persons believe that all Swing Highs/Lows are high quality Supply/Demand levels. Sam says this is incorrect.

He uses a set of criteria called Odds Enhancers (Google it) to find high quality levels.

Even with that knowledge, screening levels can still be tricky!

Can anyone give a detailed explanation as to why some levels are "Not Demand" on the image from Sam below?

Regards,
JS
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  • #28
  • Nov 13, 2011 12:08pm Nov 13, 2011 12:08pm
Quoting euro_dude
Hi:

Many persons believe that all Swing Highs/Lows are high quality Supply/Demand levels. Sam says this is incorrect.

He uses a set of criteria called Odds Enhancers (Google it!) to find high quality levels.

Can anyone give a detailed explanation as to why some levels are "Not Demand" on the image below?

Regards,
JS

I was wondering about the same thing a while back when I got the e-mailing from OTA and Sam Seiden had this chart.
I asked him the same question and got no answer.

Gabe
Every rule has an exception. Except for this one.
  • #29
  • Nov 13, 2011 12:20pm Nov 13, 2011 12:20pm
the chart you posted is a little fuzzy and has gone fuzzier as I have increased it's size so a little hard to see...the areas you mention are not potential support zones because subsequent price action has breeched the areas first to the downside then to the upside. The only potential supp/rbs areas on that chart are highlighed as below although I have not graded these as to potential strength, nor do I know if these previous near-term onbvious fractal swings are co-existant as such on a higher t/f (s)

G/L
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ex member
  • #30
  • Nov 13, 2011 12:28pm Nov 13, 2011 12:28pm
When trying to pick levels. you must look for a mountains and valleys. the bigger the mountains and valleys , the better the levels are. if you look at sam's levels in the chart . look the left(not shown clearly in pic) there was a good drop into the level and then a nice rally. anything in between , you are just wasting your time.

You can see many examples of this i have posted in ken's thread.

Good luck!!!

Edit: attached pic.

Edit: also Sam doesn't show this in his charts. This is probably something he teaches in his exclusive classes. This is where most followers of S/D are lost.
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  • #31
  • Nov 13, 2011 12:40pm Nov 13, 2011 12:40pm
Quoting zamfir
When trying to pick levels. you must look for a mountains and valleys. the bigger the mountains and valleys , the better the levels are. if you look at sam's levels in the chart . look the left(not shown clearly in pic) there was a good drop into the level and then a nice rally. anything in between , you are just wasting your time.

You can see many examples of this i have posted in ken's thread.

Good luck!!!

Edit: attached pic.

Edit: also Sam doesn't show this in his charts. This is probably something he teaches in his exclusive classes....
Actualy Zamfir, drop 2 is larger than drop 1, so I really don't see why 1 is more significant than 2 and on top of that there was a bounce off of #2. Not a big bounce but at the time it was impossible to tell the extent of the bounce.

Gabe
Attached Image
Every rule has an exception. Except for this one.
  • #32
  • Nov 13, 2011 12:43pm Nov 13, 2011 12:43pm
Quoting Gabe2004
Actualy Zamfir, drop 2 is larger than drop 1, so I really don't see why 1 is more significant than 2.

Gabe
we don't know that for sure, as the drop 1 is not clearly shown the picture.

I'd be happy to post plenty of live, working samples of good levels. better to study from real markets than the ones photo shoped.
  • #33
  • Nov 13, 2011 12:49pm Nov 13, 2011 12:49pm
An example...

Also note, that Rallies and drops must be "clean". clean meaning that there is not much selling in rallies and not much buying in drops. This is critical for a good level. Clean R-B-R and D-B-R.
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  • #34
  • Nov 13, 2011 12:56pm Nov 13, 2011 12:56pm
Quoting zamfir
An example...

Also note, that Rallies and drops must be "clean". clean meaning that there is not much selling in rallies and not much buying in drops. This is critical for a good level. Clean R-B-R and D-B-R.
Thank you for the example.
Unfortunately it seems that these occurances are very subjective and there lays my problem. I see too many of them.

Gabe
Every rule has an exception. Except for this one.
  • #35
  • Nov 13, 2011 1:21pm Nov 13, 2011 1:21pm
I found the Ninja chart of the ES chart from above.
It is from 8AM to 4PM but you can see that there was nothing special in that area.
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Every rule has an exception. Except for this one.
  • #36
  • Nov 13, 2011 1:40pm Nov 13, 2011 1:40pm
I see it..
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  • #37
  • Nov 13, 2011 1:51pm Nov 13, 2011 1:51pm
A lot of charts and a lot of words when all it comes down to is either a supply/demand zone is there or it is not. If not that is what a stop is for.
  • #38
  • Nov 13, 2011 3:32pm Nov 13, 2011 3:32pm
Quoting zamfir
When trying to pick levels. you must look for a mountains and valleys. the bigger the mountains and valleys , the better the levels are. if you look at sam's levels in the chart . look the left(not shown clearly in pic) there was a good drop into the level and then a nice rally. anything in between , you are just wasting your time.

You can see many examples of this i have posted in ken's thread.

Good luck!!!

Edit: attached pic.

Edit: also Sam doesn't show this in his charts. This is probably something he teaches in his exclusive classes....

Don't be fooled. The OTA futures course for example, doesn't reveal that much more information from what is shown at FXstreet. The full odds enhancers have been posted on other threads on FF. As already mentioned, the main distinction between good levels is the profitability factor eg high or low on the higher time frame curve; how do prices leave the level; how do prices arrive at the level. Don't make this more complicated for yourselves. Its basic stuff. Money management is more important. Yet again people focusing too hard on the wrong stuff and getting their balls in a twist. Oh and by the way, do it your own way and make it your own, use your loaf and practice and you will figure it out.
  • #39
  • Nov 13, 2011 3:45pm Nov 13, 2011 3:45pm
Quoting zamfir
I see it..
I don't want to beat a dead horse but I have problems to distinguish between the "no trade" demand zone marked with number 2 in gabes post (post 31) and your drop base rally zone.
  • #40
  • Nov 13, 2011 3:48pm Nov 13, 2011 3:48pm
Quoting Porkpie
[b]You need to think in terms of market inefficiencies. Higher time traders will often only trade against lower time frame traders because the higher time frame signals have that much more directional bias in terms of clarity. Lower time frame traders will often be trading against higher time and lower time frame traders. So when the fight between lower time frame traders drifts into higher time frame supply/demand territory we have a huge imbalance or market inefficiency effect causing a much more probable directional outcome in favour of the higher...
Good Post Porkpie

Markets and Market Logics .. perhaps ?


cheers
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