B.S. Trading with Kenneth Lee

levels.

Plus I normally will enter a bit early , AS I think we either one have commercial guys needing all the orders available so they start getting them as soon as possible , or two we have loads of retail traders jumping on soon .

Either way it is normally the Fresh (first touch) that turns ahead of our levels.
Then each test after will go deeper and deeper into the level until it breaks. This is why i will wait later on the second or third touch . Those will have less risk the closer to my stop I enter.

Plus I believe some commercial traders will have some decent orders left deep within a level as it is a better price.

Of course this is my two cents worth only. and probably worth about that much.

Though in Ponzi's book he mentions that what forms double tops and bottoms is the fact that commercial traders will break their entries in pieces as not to push price to far away and let retail traders trade it back to the level then add on at the price they want.

Some things just make sense.

i've recently thought about putting a small size on before it gets to the "main" level of exactness then if it takes off at least im in, but if it rallies up to the better deeper level put on the rest of the size. Obviously this would = more of a loss if it never did go in your direction but i guess the game is all about being happy to lose if it doesnt go ur way.

yes , scaling in and out of positions is a way to adjust your risk and lock in gains. Just as long as it is in your trade plan.

Just talking out a trade I just set up:


I see this 1h supply:





- but I want to see if there's a lower tf supply so I can get an earlier trade.
yes: here's the 30 min:









so: let's plan on a bounce off that. let me see fibs again.
okay: I see 3 fib confluences:





and I sense but haven't drawn yet another supply level, 30m. let me draw that, and work to answer: "Which supply level to bounce from?"
here:







again, the lime rectangles are 3-fold fib confluences.

obviously, that lowest supply zone is not fresh. so: which of the upper two should I seek a short from? I'm hearing a voice say "let price action decide". another is saying "Go for that middle supply zone." Any thoughts?

New PDF added to first page .. Cheers Ken

Very thoughtful pdf. Thank you for your contribution!

"Insanity: doing the same thing over and over again and expecting different results." Albert Einstein

A very smart man indeed.

This PDF was a great read.

Thanks Ken, Your supply and demand has made things so much clearer to me about the forex market. Before price was like birds sitting on a wire and otherwise quite meaningless. I know we see Geometry and Symetry in PA but I have found S and D a deeper meaning. I don't quite love my stops yet but am slowly accepting them into the family......

But don't you need to see actual volume in order to accurately assess whether there is real demand that has pushed prices? Have switched over to futures as I can see volume data and it makes a huge difference, because price can move in a way which makes you think there is big volume behind a move. But without volume to show you, then you'll never actually know. Don't know what spotfx markets did today, but it kept me out of a eurusd short today, but got me in a audusd short as I could ascertain which moves were based on solid supply and demand and which ones weren't. And if you only use price as a guide, then you're only seeing half the picture.
Sorry, don't mean to throw a spanner in the works, this is a great thread (thanks Kenneth!) that has revolutionised my trading.

1st chart is eurusd. Second is audusd. Third is usdcad. Look at the volume on audusd and usdcad-that's a good set up.
Look at the volume on eurusd in comparison, it's pretty decent, but when volume is compared to preceeding moves, it's not too different. And the biggest volume spike occurs where at the middle arrow, yet price doesn't drop. So to me, shorting the euro would not be a good idea.
Also, looking at the eurusd, there's the possibility of being faked out twice. That quick upwards spurt looks like it happened with good volume. But the volume actually shows that it occurred at very low levels, when a lot of market participants aren't around. So you could be tricked twice, as you might enter long at the start of that spurt in the expectation that there is a strong order book down there, where the reality is a bit different.

Anyway, these are my thoughts, let me know what you think. ken, apologies if I've hijacked this in any way-I won't post if it does. You've done wonderful things showing both myself and others how the markets really work.

I should add that these are 5 minute charts and not 30 minute charts so it is a bit different from Ken's 30 min tf, but the same principles apply.

The increase in volume for eurusd at the bottom of the move, but without dropping the price further, may imply strong buying in this area and lead to a further takeoff if those areas are approached.

One thing that being in the futures market does show is this-the major trading volumes occur in the US sessions. There is triple (roughly) the amount of contracts traded in this session, which I have taken to mean that levels set in the london session are less safer. Any thoughts-anyone done any analysis backtesting to see how often london levels are respected by the US session?

I just found this thread. Interesting and good stuff.

The futures market day market is in fact operating mostly in the US session (13.20 London time is the time that currency pit opens) might have a lot to do with your observation. It doesn't make London trading any less valid. Often (but not always) after London closes, there is little movement in currencies.

In foreign exchange, about or perhaps more than 2/3 of the volume is in London. There is no 'real' volume gauge in forex simply because it's not centralised in any exchange and noway to truly measure it. A lot of toys in the last few years about volume in forex is about tick change, it is not the real volume.

I learned this supply and demand stuff from Sam Seiden's videos. I think (I could be wrong) he was using price action to define S/D areas, not using volume like trading stocks or indices. Like in your euro chart, euro did bounce nearly 40 pips from that higher low dip into 'demand' area into daily pivot. If one catches it, that's still a 30/40 pips good trade.

Yup know all that already thanks Oshawa.
Futures and spotfx are different that's for sure, hence the difference in volume for london spot and london futures.
But the simple fact remains that they move in almost exactly the same way, so if you can't see the volume that is driving a move, then you can never be too certain of the validity of the move.
I trade London session but don't zoom out too much as the US volume dominates/distorts too much. Anyway got to go-US session heating up

if VSA or any other indicator helps a person to see clearly I find nothing wrong with it. I just personally go on the common sense approach that volume increases during the prime sessions and drops off late in the day and in between.

Plus i can just watch as price moves on my charts has to how much action is taking place just the amount of blips on my direction indicator ( green or Red) tells u a lot about volume.

My entire search has been to trade with less, so this is what i do. But if anything can help a person why would they not use it.

It is like I mentioned fibs and candlestick patterns in that PDF. But i never pull a fib just with time I know what a good retrace looks like. Plus a pattern is clear as well. It all comes with time.

Cheers Ken

Although it's on the list of things to do, I've yet to do a study on futures volume and it's relation to correlating bases. I wanted to do this for the very reason you've brought up. It's hard to see if there is still any interest in that area.

I think if we're going to do this in the forex market we should be looking to become experts at 2 things. Spotting a great zone and understanding prices actions (not PA pins and engulfings) as it returns to the zone and while in the zone.

If you take a look at the charts you've posted..........







Each chart offers a 2nd touch after the initial rejection except the 1st trade on the 3rd chart. In the futures market i'd take the trade on the 2nd touch. In the spot i will wait (most times) for another rejection and enter on a 50% retrace. The 1st trade on the 3rd chart shows a trade i wouldn't take.

The first touch rejection shows that there is still interest in that area. It's also very important to understand that if price shoots towards the zone there will always be a better chance of that zone pushing price away than if price approached it slowly (has to do with market structure and psychology).

In short, i don't think the lack of volume figures in the forex hinders our ability to see good S&D levels. I believe we'd do better to find ways to discover areas that are of interest without it. One less thing to be concerned with. This is just my opinion of course.

I would like to thank You Kenneth for your valuable information you share with others.

i see that you pay attention for swing highs and lows. My first question; Is there anything else than HH, HL, LL, LH you look when analysing the price action ?

My second question; I am also confused if you are looking at price action over the time before the level has been created or during the time the level is alive.

Thank you in advance

sure , I look for more than just that. but I find they are a good reference to what is fixing to happen . a higher high , i then will be interested in a higher Low for a long. So i then will look for a retrace or if it is looking like a flag then a test of the low. that would be the best place to try a long. but most times we will see a demand level for the entry.

and you look at all times . it is learning to understand what price action is doing all the time that makes it easier to take trades. if you know it is forming a level or that it is heading towards a level will make your trade planning different.

@ Kenneth/Good lookin,

Thanks for the replies. Having volume data works well for me because I can analyse price and subsequently figure out the true strength of a move and a price zone, and sunsequemtly why things have happened they way that they have.

E.g. first chart (6e 09-12), volume spike near bottom of move, price doesn't move lower, implies accumulation at this level. Sure enough, price recovers and spurts higher.

Second chart (ummm can't view it here 6a 09-12) took this one yesterday. Actually something similar to chart 1 happened, whilst was volume spike, the next candle had higher volume, but was the same as the chart above so implied accumulation at these levels and not a strong set up.

Third chart (6c 09-12) was the best set up, was in on this one too. Great volume spike lower with corresponding price spike, and price kept going down after this volume spike. 2 min chart confirmed what levels the volume kicked in, and price subsequently turned on the button, so also allowed me tighter SL leading to higher RR.

No matter, all of this works for me, am happy to see others kicking butt in spot fx thanks to Kenneth.

Seeing prices reverse and shoot higher/lower doesn't work for me as I want to see the mechanics, and that is all about Supply and Demand, which leads to having volume displayed.
The VSA that Kenneth mentions is not the same. That is an actual indicator that is an interpretation of volume spreads (I think?). That is not the same as straight volume-I don't even see it as an indicator, price and volume are kind of the same thing for me.

SpotFX is not traded via a central exchange where all volume is logged and can be viewed, as per futures markets. No idea what the VSA would be telling you if this is the case.
As a result, no spot fx broker can accurately chart the footsteps of the big boys, and it's their footsteps we're trying to follow. Think that was my first ever fx breakthrough, realising that I wasn't the one dictating the market and looking for 'hidden signals' was complete and utter bullsh*t.

Happy trading al!

Hey there,
If you are using volume to look at price moves and you are only trading with a standard retail broker, wouldnt it be silly to be looking at volumes since the volume data would only consist of retail traders and not anyone of any real price moving power? This is something I have wondered about with volume data whenever i have a look at it.. Just curious at how you look at it?
josh

Nollej
I'm trading forex on the futures market. Futures are traded via an exchange, so volume is available for all to see so it's different from spot fx which doesn't have volume for the reasons that you stated