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B.S. Trading with Kenneth Lee

  • #5,341
  • Apr 12, 2013 4:25pm Apr 12, 2013 4:25pm
Quoting Amcee
I like your post , and appreciate all "very kind and patient explanations". I became a loyal reader of this thread and I am very happy to learn from all You guys here- Thank You. I believe will improve my trading a lot here. I would like to ask about your volume indic, is it some special one or standard Mt4 ? could you share it please? I had a luck to take last move up and now trying S will see .. any advise/ critics I will love to here as they will help me to improve. have a good trading {image}
I would like to ask about your volume indic, is it some special one or standard Mt4 ? could you share it please?

Basic MT4 Volume indi.. 5 SMA is added/overlayed. Basically I look at the 5SMA and ask myself.. Am I above or below..If I am above I have better than avarage volume.. If I am below I have less than average volume... I look at it within the context over several periods..ExtremeVolume...HighVolume... LowVolume.. What is price doing in relation to volume... WideSpread candles with Wide Spread of the open and close and H-L... Low Spread H-L would be examples...

May I suggest... If you are just starting out or are reasonably new to the S/D method... Please learn the basics as KL teaches.. This will take you along way to being consistant ..Once you achieve this then, maybe, volume may enhance your ability to better manage your trades.

One step at a time....I will always be happy to answer yours or anyone elses questions...Just having that solid understanding of KL's S/D method before adding other options will give you a real edge!!!


hopes this helps

TSD

TSD
  • #5,342
  • Apr 12, 2013 4:28pm Apr 12, 2013 4:28pm
Quoting Aussie-FX
Hey everyone, just want to introduce myself. I am keen as mustard to take part in this awesome thread (thanks Ken!!). Ive been learning forex for about 1.5 years, and I stumbled upon Sam Seiden's work about 3 weeks ago. I haven't looked back. To me Supply/Demand is the missing piece to the forex puzzle, something that finally makes sense (still learning though!) So when I found this thread i was pretty damn excited. So thanks everyone! Aussie
Welcome !.. You have come to the right place.

TSD
  • #5,343
  • Apr 12, 2013 8:01pm Apr 12, 2013 8:01pm
Quoting TraderinSD
I would like to ask about your volume indic, is it some special one or standard Mt4 ? could you share it please? Basic MT4 Volume indi.. 5 SMA is added/overlayed. Basically I look at the 5SMA and ask myself.. Am I above or below..If I am above I have better than avarage volume.. If I am below I have less than average volume... I look at it within the context over several periods..ExtremeVolume...HighVolume... LowVolume.. What is price doing in relation to volume... WideSpread candles with Wide Spread of the open and close and H-L... Low Spread H-L...
'

Just a thought... Since the forex market is not centralized, where is the 'volume' total coming from? From your broker's feed ? Does your broker have access to all of the other brokers, dealers, funds, banks ?
  • #5,344
  • Apr 12, 2013 10:43pm Apr 12, 2013 10:43pm
Quoting Lou
' Just a thought... Since the forex market is not centralized, where is the 'volume' total coming from? From your broker's feed ? Does your broker have access to all of the other brokers, dealers, funds, banks ?

Where is the 'volume' total coming from? From your broker's feed ?

Yes

Does your broker have access to all of the other brokers, dealers, funds, banks ?

No...But what they supply I have been successful with... Especially in the smaller TF's

Below is the best explanation I have found regarding Forex Volume. It is why I think and use volume the way I do. I look at volume from a singular and context point of view. I use VSA principals as the foundation..... But more importantly, it is the context ( what volume is doing over a given period of time that makes a difference for me )

There are those who will subscribe to this ... there are those who don't. Several of my previous posts on this thread show my thought process regarding volume...What I am looking at and why.

Here is an except from that article:

Why is volume important to understand?

Volume is required to move a market, but it’s a particular type of volume that really matters: institutional money, or “Smart Money”, which is large amounts of money being traded in a similar way, thus affecting the market greatly. Only volume shows when price is being affected by this type of activity. Knowing how institutional money operates, we are able to track those traders and trade along with them, so that we’re swimming along with the proverbial sharks rather than being their next meal.

Is Forex volume reliable?

There is a common misconception that volume cannot be used reliably in Forex trading for two reasons: firstly, there is no central exchange and therefore no official volume data. Secondly, when you’re looking at volume data on your Forex platform, you’re actually seeing “tick volume”, and not actual volume traded, such as the volume with a stock chart.

“Tick volume” measures the number of times the price ticks up and down. This is an excellent indicator of the strength of activity in any given bar. But also, the correlation between tick volume and actual volume traded is incredibly high. In 2011, Caspar Marney, head of Marney Capital and ex-UBS and HSBC trader, conducted an analysis of actual volume and tick volume in Forex. He used data from eSignal, EBS and Hotspot. For the pairs he studied, he calculated the correlation between tick volume and actual volume is over 90%.

Hopes this helps

TSD
  • #5,345
  • Apr 13, 2013 2:15am Apr 13, 2013 2:15am
Quoting TraderinSD
We are short 2 lots for CT scalp trade. {image} {image} {image} {image}
Hello TraderinSD:

On your AUDUSD trade on the 5 min can you tell me what triggered your short entry ? Looking at your chart it seems like you went short on the 23:25 bar right after the 23:20 high bar and before the 23:30 bar. I would be looking for a bearish pin bar at the high but there is none, so I am a little confused as to what PA triggered your short entry. I do see how price stalled around the 1.05586 level.

Please explain.

Btw my MT4 is set for EST.

Thanks

Borg
Attached Image (click to enlarge)
Click to Enlarge Name: audusd_20130411_05min_2320_hi.gif Size: 44 KB
May the Forex be with you.
  • #5,346
  • Apr 13, 2013 7:29am Apr 13, 2013 7:29am
TradingSD - what post i should read to understand volume? I suppose that you explained that in some posts. Thank you!
  • #5,347
  • Apr 13, 2013 10:24am Apr 13, 2013 10:24am
Quoting TraderinSD
Where is the 'volume' total coming from? From your broker's feed ? Yes Does your broker have access to all of the other brokers, dealers, funds, banks ? No...But what they supply I have been successful with... Especially in the smaller TF's Below is the best explanation I have found regarding Forex Volume. It is why I think and use volume the way I do. I look at volume from a singular and context point of view. I use VSA principals as the foundation..... But more importantly, it is the context ( what volume is doing over a given period of time that...
Thanks TSD , I had not heard about that correlation. Very encouraging. I appreciate your research on the topic and that you have shared it with us.
  • #5,348
  • Apr 13, 2013 1:18pm Apr 13, 2013 1:18pm
I dont understand exactly how S/D Work but i read Kenneth”s book a few times. I have for example an m30 level which respect all condition to take it but it doesnt work. I also dont understand when a level is a good level or is just a reaction from another level. When a reaction from a level become a valid level?
  • #5,349
  • Apr 13, 2013 1:25pm Apr 13, 2013 1:25pm
Another question to you: does trend matter? If i want to entry at m30 level what tf i should use to define the trend. What is the correct way to determine a trend? :HH HL LH LL method or breaking levels determine the trend( if a demand level is broken we have an down trend and viceversa) Thank you very much!
  • #5,350
  • Apr 13, 2013 4:10pm Apr 13, 2013 4:10pm
Quoting Borg
Hello TraderinSD: On your AUDUSD trade on the 5 min can you tell me what triggered your short entry ? Looking at your chart it seems like you went short on the 23:25 bar right after the 23:20 high bar and before the 23:30 bar. I would be looking for a bearish pin bar at the high but there is none, so I am a little confused as to what PA triggered your short entry. I do see how price stalled around the 1.05586 level. Please explain. Btw my MT4 is set for EST. Thanks Borg {image}

Price came into our level very aggressively. Look at the context of the strong up move into our level. The preceding candles did not have near the spread ( H-L ) that the two candles had going into our level..The covered a lot of ground in just 2 periods !! Look at the preceding Drop move in the Drop-Base-Rise pattern. See how price DID NOT move as aggressively down as it did going back up. S/D ODDS ENHANCER tell use we need to have a strong move back into our chosen level. Looking at the context of the ENTIRE pattern this is what we see.

We came into a FIB level 78.6 as I drew my levels.. Yes I use FIBs too. Again it is a confluence tool. You will notice quite often ( NOT ALWAYS ) that that S/D levels will set up around FIB levels. Is it an exact science NO.. IT"s an AREA....It helps me define.. I must be just lazy.. who knows I do like to see the FIBs set up inside or top and/or bottom of my area...

Notice the first touch and the second touch. KL talks about this second touch PA.. PA should be a little deeper into the chosen level on the second touch.. It was.

We spent a good amount of time away from our level ( ODDS ENHANCER )

After the aggressive move into our level, PA moving slightly deeper into our Supply level, we had the FIB level overhead..Price then stalled..

The next candle had a very low spread..( H-L ) Significantly Lower Volume...

Add all this together ... We got short second red candle...
Looking at your chart it seems like you went short on the 23:25 bar right after the 23:20 high bar
Yes 23:23

I would be looking for a bearish pin bar at the high but there is none
As for looking for a PIN bar.. That is only one way. The question you need to asked is?? What else is happening that indicates price MAY move short at this level.

Use the ODDS ENHANCERS.. they will help you determine potential trades.


Now look at the 60M..See the 0522 and 0481...This was essentially a ( What I call a Magnet Trade )

See the strong up move prior to price turning back down on the 60M.. 2 HL's followed.. PA began a slow drift downward..At some point we should see some sort of retrace back up?...Price did retrace back into our Supply level..The idea here is: IF PA does retrace, where is the most likely target for price to go?? So we hunt the different TF's to see what we can find.

As we can see price eventually moved down to the two levels previously stated ( hence the Magnet ) .. Simply, I got shaken out.. Lack of patience..

Hopes this helps

TSD
  • #5,351
  • Apr 13, 2013 4:12pm Apr 13, 2013 4:12pm
Quoting Lou
Thanks TSD , I had not heard about that correlation. Very encouraging. I appreciate your research on the topic and that you have shared it with us.
Your welcome. It is what I subscribe to.. I realize it is not for everyone.



TSD
  • #5,352
  • Apr 13, 2013 6:39pm Apr 13, 2013 6:39pm
Attached Image (click to enlarge)
Click to Enlarge Name: EUR 1A 4.13.JPG Size: 167 KB


Here is how I go about looking for trades. ( several screen shots to follow )

I begin by looking for confluence between wide spread candles, high volume, FIB's, .. I also look at various S/R levels as indicated..Remember they are not the same.. It's nice when the are ( confluence ) but they tend to be more a trade management tool ( price stall areas, profit points, etc )

Notice that some of the FIB's are not exact..and some are..It's the area I look for .. and it's better when there is confluence. The reason I show this chart... if you look at it naked you will see a lot of areas that could be Supply Levels.. This is how I define the majors.

If you look at the 38.2 FIB level.. Look a little left from were I start the FIB SUPPLY LEVEL..There was another supply that is not marked.. That level was taken out on 3/08 with a PIN..So the new level is drawn on the 4HR.. See how price has moved into this new level.

See the 3/24, 3/25 highs..This created the S/R level as drawn. See how price is moving around this resistance turned support. This level may hold...it may not..If it does not hold, I would be looking for price to move to our Demand and 50% FIB as marked.. Lets look at this pattern.. see the RISE-BASE-RISE ( Demand and 50% FIB ).. This also tells me this area has high potential..

As we move down in to smaller TF's we will look for ODDS ENHANCERS to determine IF price has high POTENTIAL of holding and reversing.

There are no absolutes.. just probabilities.

TSD
  • #5,353
  • Apr 13, 2013 8:44pm Apr 13, 2013 8:44pm
Attached Image (click to enlarge)
Click to Enlarge Name: EUR 1B 4.13.JPG Size: 134 KB


Here is the view on the 60M

Attached Image (click to enlarge)
Click to Enlarge Name: EUR 1C 4.13.JPG Size: 135 KB


Now we see a lot more activity that is of interest on the 30M..We have LH's inside the 4HR Supply.. PA inside a level.. KL speaks to this within the thread.

Area #1...We had a strong move on good volume that, for me, defines a Demand level.. Yes, yes... I Know..the Demand level is really wide.. It how I see the Demand level.. Even if you go to a 15M it's not that much different.

Area #2...We had very high volume prior to PA moving into our level.. Actually volume was much less than the previous ( context ) when price arrived.. See how price really did not fly back up as we see, so many times, when price reaches a strong level...ALL THE ACTION happened prior to move done into the Demand level..To me the level is questionable to trade at that point.. Looking at the Candle ALONE would indicate that we may get a good bounce from Demand. Then price retraced back down again..DEEPER..but on relatively low volume. This now tells me the there is no incentive to take it short or potential for a SWAP Trade.

So.. Low spreads ( H-L) and low volume.. But..?? you say ??.. Volume is better than average...Yes?? but look at it in context.. Just a little while earlier volume was very high, screaming..This was a test to see if there was any more Supply left.. Supply keeps it going.. Demand turns it around.

#3.. Here we see price move short with strength.. Wide spreads / high volume..We know this may be a second test of Demand ( so we should see a deeper move ( KL speaks to this ) Volume dries up inside our Demand level..

Now lets look a little closer.. PA looks almost like #2.. Will admit this might be a tough one to call.. So when in doubt .. stay out...

#4 All of sudden we get extreme high volume and a major PIN into our level.. Time to get long...But???? We are so far away from our level??? Here is another controversial trading method.. I subscribe to the 50% FIB retrace of PINs when the are at S/D's or S/R's..Especially when they are this strong with this much volume.. So I would put my stop just below the 61.8 FIB..Just less than 20 pips so the risk would be reasonable... Didn't even get close.. Again.. probabilities not absolutes.. Clear rejection of our Demand level... Most definitely !!.. Not all trades using this method will happen inside our chosen level. I have posted a few trades that are definitely outside the level.


Attached Image (click to enlarge)
Click to Enlarge Name: EUR 1D 4.13.JPG Size: 126 KB


He is the last view of where we are at now..We have a PIN at a small Supply create at #3. Price traded into this level from our PIN below off Demand. I am a subscriber that price moves Between S/D level and S/R levels.. IN THAT ORDER...Does it always work out this way.. NO...But enough for me to make a profit.

I added this last LH on the PIN as I anticipate we should see this become a LH..We have reasonable volume above average.. Will see??

The question might be..Should we trade short...Well if you look at the larger pattern the Daily and Weekly you will see that price is trading within their bases.. So I see trades to favor the long side by a small %%.. We have seen the strength of the up move of late as well. HL's on the 4HR..

BUT ...The Daily ?? we broke a 2 swing low . The Weekly we broke 1..but price is still well off the major lows .CT are absolutely possible we just need to be aware the larger direction...The immediate trend is down with the break of the swing lows.. the larger is long...When it gets like this, it can be tricky. Proper management of the trade essential.

Some of this will be controversial... But as KL has stated.. We all trade a bit differently.. What is important is the strength of the basic S/D Method. It presents opportunity to grow.


Just a point of view

TSD
  • #5,354
  • Apr 13, 2013 11:47pm Apr 13, 2013 11:47pm
Quoting TraderinSD
Price came into our level very aggressively. Look at the context of the strong up move into our level. The preceding candles did not have near the spread ( H-L ) that the two candles had going into our level..The covered a lot of ground in just 2 periods !! Look at the preceding Drop move in the Drop-Base-Rise pattern. See how price DID NOT move as aggressively down as it did going back up. S/D ODDS ENHANCER tell use we need to have a strong move back into our chosen level. Looking at the context of the ENTIRE pattern this is what we see. We came...
Thanks TraderinSD, yes it helps alot.

But to be sure I understand, when you mentioned first touch did you mean the Apr. 11 13:15 Hi and the second touch was the Apr. 11, 23:20 Hi.

And were you looking for a reaction off the Apr. 11 4:00 Hi level when price was approaching that level at 13:15 ?

See chart.

Borg
Attached Image (click to enlarge)
Click to Enlarge Name: TraderinSD_AUD 4.11 Short #2._20130411.gif Size: 123 KB
May the Forex be with you.
  • #5,355
  • Apr 14, 2013 12:31am Apr 14, 2013 12:31am
Quoting Borg
Thanks TraderinSD, yes it helps alot. But to be sure I understand, when you mentioned first touch did you mean the Apr. 11 13:15 Hi and the second touch was the Apr. 11, 23:20 Hi. And were you looking for a reaction off the Apr. 11 4:00 Hi level when price was approaching that level at 13:15 ? See chart. Borg {image}

Yes .... The second touch was a bit deeper.. KL speaks to this in the thread.

And were you looking for a reaction off the Apr. 11 4:00 Hi level

No

Simply looking at price and the level drawn:

1) The approch
2) Entry into level
3) What price does when it get there

TSD
  • #5,356
  • Apr 14, 2013 12:32am Apr 14, 2013 12:32am
Quoting Kenneth Lee
charts {image} {image}
Hello Ken:

Congrats on your winning trade and thanks for starting this great thread.

Can you tell me what you mean by flip entry ?

Thanks

Borg
May the Forex be with you.
  • #5,357
  • Apr 14, 2013 8:50pm Apr 14, 2013 8:50pm
Quoting TraderinSD
We are short 2 lots for CT scalp trade. {image} {image} {image} {image}
Hello TraderinSD:

For this April 11, 2013 AUDUSD setup I drew the supply levels that would mark the area that I would expect price to turn around in as price made its high at 23:20.

The bottom of the area would be the 13:15 Hi and the top of the area the 11:10 Hi. Both places where price dropped away from rapidly.

Is this correct ?

Would you draw the supply area smaller or larger ?

Thanks

Borg
Attached Image (click to enlarge)
Click to Enlarge Name: audusd_20130411_05min_2320_supplyarea.gif Size: 49 KB
May the Forex be with you.
  • #5,358
  • Apr 14, 2013 9:30pm Apr 14, 2013 9:30pm
Attached Image (click to enlarge)
Click to Enlarge Name: JPY 4.14 Short Example.JPG Size: 92 KB


I thought I would share this example to show the power of this method. Any TF, any pair, any session..Yes some pairs and sessions may produce better results due the activity level.. "volume".. But the basic method is what is so powerful. I trade the Asian session most of the time.

This is not to say that other methods are not profitable either but, the ability to trade both range markets and trend markets, in any TF definitely puts this method in a select few.

Trading KL's 30m is a solid TF as there is a lot less noise. This example is put up to show, and hopefully give confidence to, those just beginning their journey with S/D.

For the record I missed this short.. I was waiting but had stepped away for a few and flat missed it...Should have put in a pending order.... YA THINK !!

Attached Image (click to enlarge)
Click to Enlarge Name: JPY 4.14 Short Example 2.JPG Size: 112 KB


Here is a higher TF view. I am of the "point of view" that markets tend to fill gaps.. A through back to my index trading.

Attached Image (click to enlarge)
Click to Enlarge Name: JPY 4.14 Short Example 3.JPG Size: 105 KB


Here is the conclusion of this trade as indicated in the first screen shot.


As of this writing we are moving strongly in the direction to fill the gap...Will see ???

TSD
  • #5,359
  • Apr 14, 2013 9:42pm Apr 14, 2013 9:42pm
Gonna try my hand at a long here, its either gonna bounce or smash straight through?
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  • #5,360
  • Apr 14, 2013 9:46pm Apr 14, 2013 9:46pm
Here's what i was looking at on 30min. Thoughts?
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