B.S. Trading with Kenneth Lee

For those looking for a solid set of rules. This is a great example..!!

Well done Alfonso

TSD

Hey Alfonso,

If I may suggest, what might be helpful to many: As you had stated TREND in always tricky....

WK is my supply/demand curve (extremes controlling price)

Maybe you could expand on what you are visually looking at ( maybe a chart or 2 ) when you talk about: supply/demand curve (extremes controlling price)

just a thought

TSD

can somebody pls tell me if this is a good demand zone on the E/U daily chart

This level is not fresh, it was almost absorbed on the previous hit !!!

Hello Mr_Black:

Congrats on these great trades.

Can you tell me what triggered your buy on the second chart at that particular time as opposed to earlier or later ?

Thanks

Borg

I was scalping the Profit Zone @ this time Long @ Demand Exit @ Supply ,Short @ Supply exit @ Demand .... in hindsight looks like my 2'nd trade was the best entry for that day and the worst exit only 16 pips...in my view the last short was the best because the trend was my friend....here is the 5min with Supply/Demand Zones taken from 30min time frame...the market was playing ping pong between this 2 zones ...

Hello Mr_Black:

Great job working those supply and demand zones.

Thanks for all of your charts showing your trades.

Do you find that Oanda widens their spreads excessively during news events like some people say ? If so can you give some examples of how much ?

Borg

Thank you,....and yes the spread widens up during news events ...sometimes 7-15 pips on EURUSD.

Hello TraderinSD

I've read the slide presentation and the roar of the pits pdf you mentioned earlier. They are just great. I like Sam's storey about his floor trader friend's trading strategy. And now I have a clear explanation of bases. http://assets.forexfactory.net/images/editor/smilie.gif

From Sam's explanation of a speed bump it sounds like bases and speed bumps are the same thing in the case of a RBR or DBD. Is that correct ?

Thanks

Borg

TraderinSD asked me to explain the concepts of Supply and Demand in control after he read about the way I trade. I accepted his suggestion and I'm posting this reply to expand on those concepts, hopefully they will help you understand these concetps, which I believe are key to understanding supply and demand.

Let me expand on my idea of supply and demand in control.

But first of all, the most important thing is: How do we define trend on any given timeframe?
You can use trendlines (these can help to assess it), macd crosses, and any other lagging indicators. I am not using any indicator to assesse trend, I'm doing something much much simpler than that. What are we doing? We're trading the supply and demand imbalances, we want to sell high in the curve and buy low in the curve for higher odds. So if we're trading SD imbalances, shouldn't we use the higher timeframe's SD areas to assess our trend? Remember, buy low in and sell high.

What defines a downtrend or an uptrend?
In a downtrend: supply areas are consistently being respected and demand areas are being violated
In an uptrend: supply areas violated are violated, while demand areas are being respected

THAT SIMPLE. Just look at your D1 or your WK chart and see what is going on with the SD areas and decide which direction to trade. Once you know what direction you want to go, locate lower timeframe SD areas with a strong departure, little time at the level, fresh zones, and a minimum of 3:1 profit margin (3 times or more the risk in pips of the zone)

What tells you if a downtrend or an uptrend has started to change?
Since we're doing SD trading, once you supply or demand in control is violated, it will be showing weakness in that currency pair's timeframe.

I will consider a downtrend changed IF the timeframe I use as direction has broken at least 2 D1 supply zones, that simple. If 2 supply zones have been violated, then I will consider the downtrend has ended and will start looking for longs. Opposite for an uptrend. That's the very simple rule I am following.
* If only 1 supply zone is broken I will not consider the trend as changed, but I will look further up to lean on the previous unbroken supply on my direction timeframe. If my trade fails at that level again, then I will not trade again in that direction (down), and will considered the trend changed and now it's up.

ON TO THE SUPPLY AND DEMAND IN CONTROL

1. On every timeframe there is an area of supply and demand in control, that is, once price reaches that area, sellers/buyers will be likely in control and price will probably react. If the zone is fresh and good, price will drop quite fast. If the zone has been touched once or more times, then it will probably will not bounce that fast. That territory is where sellers will probably fill their orders again. So, supply is control when price is high on the charts
2. What is a supply or demand in control? It's the previous fresh or unfresh SD area which has not yet been broken/violated. If a supply zone has been hit 10 times and the distal line of that zone has not been broken, that zone is still valid, that zone is still the supply in control. You can't, you shouldn't assume that you can buy that high in the curve and it will be broken. Once it's solidly broken, you will be looking to go long at a good demand area, but don't buy into a supply zone in control until it's been solidly broken, it's higher odds. A zone can resist 1, 2, 3, or 10 pullbacks. Only trade when it's solidly broken
3. Buy high in the curve. Sell low in the curve
4. Don't diddle in the middle. If the levels are in the middle of the curve, then price can probably go both ways
5. The higher the timeframe, the higher its reliability. That is, if we have a WK supply zone, even if that zone it's not fresh, it will probably hold a few times, much more than a M15 or a H1 zone which can be easily broken. Why? Because the smart money, the insitutions, the big fishes, will be looking to position themselves on higher timeframes and work from there. They will probably not be looking at M5 and M15 to fill 100 million euros on the EURUSD. Maybe some might, but they just don't care much about lower timeframes, most of them are not scalpers but swing and position traders, so why should they care about filing orders in the middle of nowhere? For higher odds, they don't diddle in the middle. They are market makers and they know what you are doing, remember.
7. Trade with the trend for higher probability. The trend is not a straight line, SD levels will work in both directions, with and against the trend, but the higher odds is to go with the trend until it ends. But where will it end? Near or at a higher timeframe supply/demand area. Avoid unnecessary losses trading against the trend in the middle of the curve, you will raise your % success quite a lot if you do that. You will miss many trades for sure, but you will filter out many losses as well. You decide, well, your emotions will decide, and that's not good So behave like a robot

THE CURVE
Let me show you a couple of examples of supply and demand in control in higher timeframes, what it's called the curve.
Remember, for higher odds we want to buy low in the curve and sell high in the curve.

So these are the steps you need to take:
1. Decide whiich kind of trader you are: are you a scalper, intra-swing, intraday, or swing or position trader?
2. Once you know what kind of trader you are (not that easy because your mind will want to trade on all timeframes, you will see SD levels on all charts, with the trend and counter-trend, you will chase trades), decide which is the timeframe for your curve.
3. Use the WK chart as the curve for your swing trading
4. Use the D1 chart as the curve for your intraday trading
5. Going lower than that will be placing more odds against you, you can use H4 or H1 for scalping, but I will never do that. But each trader will decide, but whatever you decide, forward test it hundreds of trades. Don't backtest, you will see what you want to see.

In the following NZDUSD chart, yesterday's Friday close, the trend is down, why? Not because you can clearly see that price has been dropping for the lasts days, that's visually crystal clear. Not because you can see a clear downslope trendline pointing down (not painted on my chart), but trend is down because in a down trend, supply areas are respected and demand areas are violated (broken), that simple.

The first 77 pips red supply is the D1 supply in control. Why? Because it has not been violated yet, so sellers are in control near or at that area. Why the lower 49 D1 demand in control is in control, for the same reason, zone has not been violated yet, so buyers are in control. That simple. You don't need to add any indicators to assess what is going on on your charts, institutions leaves traces in the charts in the shape of strong imbalances.



Since we have already asssed we're in a downtrend, we want to sell, not to buy. We'll only buy if we're close to a higher timeframe D1/WK demand area, the fresher the better, the bigger the imbalance the better. The lower D1 demand area with 33 pips is got a really nice imbalance, strong unpaused departure, very different to the one where price is located now.

Look at the WK chart. We can clearly see what the WK SD zones in control are. We need to respect them, because the higher the timeframe the higher its reliability. Once 0.8050 is broken down solidly (not a fakeout), we will be looking to go short on the previous supply areas formed, since we're in a downtrend. There has been no correction yet, this WK demand zone could be the one that causes that correction. On my charts you can see a few trendlines. They are painted automatically with the custom made rectangle indicator I've built. So when I am on the D1 or the WK, or any timeframe, I will know where my D1 and WK S/D in control are located. By looking at the WK chrt you can see the filled trendlines, yellow and green, those are D1 SD levels. The - - - lines are the WK SD areas in control. So now on the WK chart we are within a fresh D1 demand inside a WK demand.



If you want to try a long, this is the place to try. How. There are a couple of ways I use ONLY
1. I will tighten my long entry in the a lower timeframe demand area (H4, H1 or even lower), if there are any. It has to be fresh and with a nice departure and profit margin, or I will pass on it.
2. Else, wait for a brand new demand area that solidly and clearly absorbs some supply on lower timeframes to confirm that there is willing demand in the area. You need to see strength.

That's all for now folks. I hope this will help you understand what the curve is and what the higher timeframe supply and demand in control terms are visually. This is what I am always doing, these are my rules more or less, there are nuances but that comes with practice. This is no different to what Ken and the others are doing, these are just my rules, all based on SD imbalances

NZDUSD has some fresh demand waiting to be hit a bit further down @ 0.8017-0.8000 (and a major psychological level of 0.8), to be more accurate -- the open price of that 4hour 'demand candle' is 8011 on my chart and often price will touch that particular number before bouncing away, so come monday I'll have an order waiting a few pips above that.

Price closed approx 30 pips away yesterday.

I've created my own supply and demand thread, where I will be posting some of my trades and the way I look at the markets on a swing trading basis, sometimes intraday. I've also uploaded in that thread the Rectangle Reader indicator I've created. This indicator will help you a lot on your supply and demand trading, I'm sure about it, you will see.

It will help you to have cleaner charts as well as to being aware of where the D1 and WK supply and demand zones in control are when zooming in lower timeframes, you don't want to buy into a D1/WK supply zone, or buy into a D1 demand zone. That's very very dangerous and lower odds. With this indicator you will always know about it, if your zones are correctly drawn. It will all depend on how good you are locating the supply and demand imbalances.

This is the thread, feel free to visit it or subscribe to it:
http://www.forexfactory.com/showthread.php?t=428204

Thanks a lot! I will be posting things over here as well of course

Hello everyone, I am a novice trader that is learning my craft and find myself needing some help with supply and demand. I've been reading the PDFs and posts and like any good student...have been doing my home work practicing drawing the levels and zones on my charts. The issue I have is how do I know if I understood the
"subject" correctly and my home work is done right if there is no one or a teacher to check it for me and verify that I am correct? I'm sure you guys know where this is headed. Yes...I am shamelessly posting a picture of what I've done and asking if its correct. I apologize for the newbie question, I know the information is out there but please understand where I am coming from. I mean I may think I've got it but that is only what I think and who knows how far from the truth that might be? Once again apologies for the newbie questions but a little guidance will go a really long way in learning. Many, many, thanks!




This picture is taken off a Eur/Usd 5min chart because I felt there was more candles and "moves" I could practice drawing with.

Q1 Did i draw the levels correctly? Should have set the boundaries at wicks instead of the body that kind of thing.

Q2 Are my labels correct?


Thank you very, very much!

Hello there!
In my opinion the upper supply area you drew is not a fresh area, see how it's a reaction to the one the left side.

A tip: if you see candles with long shadows (wicks and tails), try not to rely on them. Like the ones you're pointing at as demand. Long shadows normally means reaction to previous levels. We need a tight based with small basing candles and almost no shadows for higher odds. That's just a heads up, it's what I always do.

Hope that helps

Alfonso

Thank you! That helps a lot!

His is the view of the 4HR Demand Level. I'm showing it on the Daily so as to get it all on one chart.



A closer look at the 4HR level



30M view showing how price is moving within the 4HR Demand Level. You'll notice I have set a PO for a long at the 5M level just inside the 4HR. This is what I call Magnet Trade as the overhead Supply is the Magnet for price to move in that direction. Basically I am looking for a Demand Level on th smaller TF to get long for the move back up into the Supply Level.



Drilled down to the 5M showing the PO for the long.




Price retraced into our 5M level. We were looking for price to retrace back to the top area of the 4HR level. We had an opportunity to get long on the 5M Demand Level just inside the 4HR. Price hit our PO and we got long a 2 lot.



Price eventually hit out TP for just over a 100 pip profit for the 2 lots

Note that price did hit the Supply Level and turned back short, right back down to the top of our original 4HR level. I did not take the short. Was not at the screen.

TSD

Nice trade T. I'm in the short move you mentioned, still holding it for a larger move down.

http://www.forexfactory.com/showthre...81#post6692681

Edit: Unfortunately stopped out.

Many pips to ya

TSD

Just did this one on 6E ....4HR SZ...Entry from 5min SZ....Target 5min DZ Risk/Reward 1:3....

chart