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B.S. Trading with Kenneth Lee

  • #3,461
  • Apr 19, 2012 2:29am Apr 19, 2012 2:29am
Quoting caj1986
Decent trade just picked up on EU, really tight stop of 9 pips so was able to hit +27 for a 3:1 reward.
Well done!

Better than bailing out with a few cause of the big red candle reentering the level, and then watching it making an easy 5:1 reward.

But learning to bail with dignity is also important.

Peter
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  • #3,462
  • Apr 19, 2012 5:52am Apr 19, 2012 5:52am
hello I would like to improve my supply and demand analysis and trading skills, could you possibly link me to some articles which describe about it for beginners. also I looked at sam seiden but I couldn't see webinars for complete beginners in supply and demand in fxstreet.
Thanks.

BTW thanks very much for the pdf. It is a really good guide.
  • #3,463
  • Apr 19, 2012 5:55am Apr 19, 2012 5:55am
Just been updating my trading plan with the supply and demand method and went through the odds enhancers in detail to remind myself of the logic behind them. I thought it might be helpful to post it here.

Odds enhancers:
Strength of the move - How did price leave the level? The faster the market moves away from a level, the more that its signifying a high degree of supply and demand imbalance. This is considered an absolutely key criteria and I won't consider levels that don't fulfil this rule.

Risk/reward - What profit target is the level offering in relation to the size of the stop loss? I generally want my trades to be offering at least 3:1 (measured from entry level to next clear s/r or s/d level). The other key factor is if the trade is offering 3:1 I should take 2:1, if I want 3:1, it should be offering 4:1 and so on. I shouldn't be pushing trades to the limit in order to hit my target.

Big picture - What is the overall market condition and trend suggesting? I should scan multiple time-frames when selecting my levels and pay attention to larger s/d levels to make sure I'm not trading the wrong way into them on a lower time-frame. I should also pay attention to the swing highs and lows on the lower time-frames to help me determine the bias of the market.

Fresh levels - Are we entering on the first test of the level? In the vast majority of cases I will only consider fresh levels. One thing to watch out for is when markets retrace very close to the level but don't touch it, then move away again. In those scenarios, caution is required because the retracement can still use some of the supply or demand up. Trades can still be taken in this scenario if the level is strong in other aspects. The other thing to consider is when I'm trading swap levels, what appears to be a fresh level can actually be the 2nd retracement. Whenever drawing a level in it's worth checking how the market has reacted around that level previously.

Time at level - How long did the market pause at the level before breaking away? The less time it spent at the level, the more it shows a high imbalance of supply and demand. The market should generally spend at least 2 candles at a base to qualify it (although in some scenarios I'm happy to consider a single candle as a base), but if it spends too long there it starts to show a little weakness in the level, particularly if the market drifts along at a specific level for a significant period of time.

Arrival - How did the market arrive back at the level? If the market is arriving very fast with solid red or green candles it can seem counter-intuitive, but these are actually the best set-ups. If a market is choppy and gradually making it's way to a level, it often creates s/r or s/d levels on its way that ruin the risk/reward of the trade by giving it areas closer to the level where it has the potential to turn.

Levels on levels - Often at a market turning point or in a trend you will get more than 1 supply or demand level close together. These can increase the strength of the trade, and also give you multiple points at which you can enter. Sometimes for example the market will blast through a level causing a loss, but will turn at the next level and give you a chance to get your loss back as well as make a profit. If the levels are very close together you can consider scaling into the position or using a bigger stop loss to incorporate more than 1 level if it still sits within your risk/reward parameters.
  • #3,464
  • Apr 19, 2012 6:55am Apr 19, 2012 6:55am
wasn't this a great demand level? the candle movement was very strong according to the probability enhancer. could you tell me if this was a part of the natural losses that occurs in trading or is there a mistake in my part.
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  • #3,465
  • Apr 19, 2012 7:08am Apr 19, 2012 7:08am
Kenneth can give you a much better answer than me, but heres my 2 pennies worth.

While those kind of levels do work out quite often and therefore aren't the worst in the world to take, the off-putting thing for me would be how long the market has spend at the same level before it exploded away.

The theory is that if there was really a huge supply and demand imbalance at the level, the price wouldnt have stayed there for so long previously.
  • #3,466
  • Apr 19, 2012 7:29am Apr 19, 2012 7:29am
Quoting needtolearn
wasn't this a great demand level? the candle movement was very strong according to the probability enhancer. could you tell me if this was a part of the natural losses that occurs in trading or is there a mistake in my part.
I think the point with your failed GBPUSD level is that price hit a massive weekly level today. Look at the weekly chart below...

You should never try to fight bounces from these kinds of levels. This is a perfect example for how important it is to always always always keep the bigger picture in mind.

Peter
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  • #3,467
  • Apr 19, 2012 12:33pm Apr 19, 2012 12:33pm
Quoting asos101
Hello Ken. I was reading up some of darkstar's posts from the (now deleted) "ohh sweet liquidity" thread, its not about SD but stop hunting.
The part that i think is relative to us is the "test of the levels" what we see here as price almost touching a zone but missing it for a few pips.

He described it at "testing of the waters" to see if anything is seriously defending that area, and there were a few scenarios about what happens next.

Also again as for the price turning early, very rarely it will stop in the middle of nowhere. If you...

Never looked at that thread ,, sorry . But the turning to soon we are talking bout is associated with our levels just a few pips earlier.

I know a lot of traders use war as a metaphor. I prefer not to, enough power is given to that everywhere, less thought about it maybe less of it around..

But what we see mainly is a base formed and price moved away aggressively. So a level was formed. We and many others can clearly see them also support resistance traders. Son we have a lot of competition to enter a trade at the AA+ levels.

So I have no doubt some are willing to enter early to guarantee they get a position. Also larger players need the volume to get in. WE need to think of the big guys all the time. We hit a button we are in a trade . They may hit a button and 1/2 their order doesn't get filled because of lack of opposing side.

A few writers ahve written of this .. Why we get double tops and bottoms on some cases. That can be the bigger traders allowing price to move away and then return to fill more of their orders. Don't think for a moment they can't make that happen . Plus why would they keep moving price away from where they want to enter when they can wait and get what they want.

So I quess the point I am making is , we have to decide if we are willing to risk a early entry or just wait for that retest.

Oz had a great bit of printing on this 1.0390 ish closed on this 3 times and each time turned it after it went a bit deeper each time .
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Good Trading To All ; Ken Lee
  • #3,468
  • Apr 19, 2012 12:34pm Apr 19, 2012 12:34pm
Quoting doraforex
Hi, there, could you tell me at which point I could buying or selling foreign currency, if there is a trial, what could I do next? Many thanks.

I don't understand ..
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Good Trading To All ; Ken Lee
  • #3,469
  • Apr 19, 2012 12:38pm Apr 19, 2012 12:38pm
I'm just starting to apply the S/D levels and would like some input on the ones I've drawn here and the swap line (H2 chart). I drew the levels at the time of the candle at the arrow so obviously it would have been a good couple of trades, playing the ranges. But I would like some feedback on if people agree with these levels or how they see them.
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  • #3,470
  • Apr 19, 2012 12:39pm Apr 19, 2012 12:39pm
Quoting needtolearn
hello I would like to improve my supply and demand analysis and trading skills, could you possibly link me to some articles which describe about it for beginners. also I looked at sam seiden but I couldn't see webinars for complete beginners in supply and demand in fxstreet.
Thanks.

BTW thanks very much for the pdf. It is a really good guide.
To be honest most of sam's webinars are for beginners. They are trying to get you to join the advanced classes. just not laid out so smoothly. but he goes over almost on each one the very basics.

Just watch them over and over .. THEN TAKE NOTES. as you write things down it will become clearer to you what the main points are . Then start marking levels on your own charts even if you don't trade them and see where you may need to tweak your understanding a little.

Then you will start to see what the few things you are not understanding and then search for that small bit.

Sam Seiden Link to his videos

Cheers Ken
Good Trading To All ; Ken Lee
  • #3,471
  • Apr 19, 2012 12:46pm Apr 19, 2012 12:46pm
Quoting needtolearn
wasn't this a great demand level? the candle movement was very strong according to the probability enhancer. could you tell me if this was a part of the natural losses that occurs in trading or is there a mistake in my part.
The guys answered very well.

I have mentioned a lot. That I have no problem trading into a major charts levels . when I know they are there . But I have just as many have taken trades and held them to long as well. I was in a short on the gbp all afternoon and most the night on the gbp. I finally closed it with 3 as it just would not drop. I didn't want to be in it at the open as there wasn't enough to suggest more volume would help. It was in a range on most my charts and not the risk .

So see we all deal with that. but the key is to know where price is in relationship to all the charts. The longer the time on a chart the more positive it will reject . May not be a total reversal but it will almost always turn for a bit. That is the reason I will almost always take a trade off a 4 hr level. I know I can at the very least get a scalp from it. The hard part is knowing when to take the few offered and bail. Have to really see and understand price action and even then we get it wrong from time to time .

Cheers Ken
Good Trading To All ; Ken Lee
  • #3,472
  • Apr 19, 2012 1:35pm Apr 19, 2012 1:35pm
Quoting Kenneth Lee
The guys answered very well.

I have mentioned a lot. That I have no problem trading into a major charts levels . when I know they are there . But I have just as many have taken trades and held them to long as well. I was in a short on the gbp all afternoon and most the night on the gbp. I finally closed it with 3 as it just would not drop. I didn't want to be in it at the open as there wasn't enough to suggest more volume would help. It was in a range on most my charts and not the risk .

So see we all deal with that. but the key is to know where...
thanks.
the trade gave a good profit, I holded the trade with usd unemployment news being a positive sign for the trade.
I am learning this with high concentration. I am having trouble with the exit strategy. could you give a brief application of your trade management strategy? thanks
  • #3,473
  • Apr 19, 2012 9:17pm Apr 19, 2012 9:17pm
Quoting Knud45
I'm just starting to apply the S/D levels and would like some input on the ones I've drawn here and the swap line (H2 chart). I drew the levels at the time of the candle at the arrow so obviously it would have been a good couple of trades, playing the ranges. But I would like some feedback on if people agree with these levels or how they see them.

The upper level was a B level as this was the second touch . But the first touch had decent rejection so would have taken it for the first tp level. Which was your lower level. The touch of that level is also a higher low so would try to get that one moved to BE or tp'd at the last touch of your supply level. Or exit wait for the break and then try to go long on the other side.

This is how I see it anyway. Cheers ken
Good Trading To All ; Ken Lee
  • #3,474
  • Apr 20, 2012 1:22am Apr 20, 2012 1:22am
chart
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Good Trading To All ; Ken Lee
  • #3,475
  • Apr 20, 2012 3:22am Apr 20, 2012 3:22am
Quote
thanks.
the trade gave a good profit, I holded the trade with usd unemployment news being a positive sign for the trade.
I am learning this with high concentration. I am having trouble with the exit strategy. could you give a brief application of your trade management strategy? thanks
I think people can overthink things a bit much with exits. I'm sure you can improve in this area over time but at the start its best to keep it simple.

All I do is check that the next clear supply or demand level or clear support/resistance line is at least 3:1 away from my entry, and then just go for 2:1 as a fixed target. Over time I might develop this but 2:1 gives you a decent return while still maintaining a high strikerate. So far with this method I've been trading for about a month and my strikerate going for 2:1 is about 55% so that gives a pretty solid return. The cool thing is that includes quite a few poor trades so I think that figure can be comfortably improved upon, the ultimate goal would be about a 70% strikerate but anything over 50% is pretty good considering the risk reward is strong.
  • #3,476
  • Apr 20, 2012 9:03am Apr 20, 2012 9:03am
Quoting Kenneth Lee
chart

hi kenny
is this a fresh level?
  • #3,477
  • Apr 20, 2012 9:27am Apr 20, 2012 9:27am
Quoting mauroby
hi kenny
is this a fresh level?

No but first time price had entered the level.
Good Trading To All ; Ken Lee
  • #3,478
  • Apr 20, 2012 10:01am Apr 20, 2012 10:01am
is this a good supply level?
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  • #3,479
  • Apr 20, 2012 12:14pm Apr 20, 2012 12:14pm
Quoting needtolearn
is this a good supply level?
From my own personal experience, be careful entering such levels after a rounded bottoming out process. The rounded bottoming out pattern forming the base of the U shows a long winded struggle between bulls and bears where bulls have been able to accumilate large positions in the process. The result is a reluctance for these bulls to let go of profits into supply so soon after building such positions, no matter how strong the supply level looks. Its all about the overall structure and context.
  • #3,480
  • Apr 20, 2012 2:11pm Apr 20, 2012 2:11pm
Quoting Kenneth Lee
The upper level was a B level as this was the second touch . But the first touch had decent rejection so would have taken it for the first tp level. Which was your lower level. The touch of that level is also a higher low so would try to get that one moved to BE or tp'd at the last touch of your supply level. Or exit wait for the break and then try to go long on the other side.

This is how I see it anyway. Cheers ken
Thanks a lot Kenneth. I was also looking for the break of the swap line. How would determine whether the supply level has been broken or not? I tried going to the M15 chart and looked for a demand level. It was possible to get in at 1.3193 after drawing the level. How do you see this and where would you place you t/p level?
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