Supply and demand in a nutshell by Alfonso Moreno | Page 3 | Forex Factory

Options

Go to
Permalinks
Print Thread

Similar Threads

Supply and Demand Zones 57 replies

Price movement as a function of Supply and Demand 43 replies

Supply and demand zones and EW principles 1 reply

How Markets Work, in a Nutshell! 32 replies

Demand and Supply 1 reply

Attachments: Supply and demand in a nutshell by Alfonso Moreno
Exit Attachments

Supply and demand in a nutshell by Alfonso Moreno

  • #41
  • May 22, 2013 8:34am May 22, 2013 8:34am
Planned this long trade on EURGBP after 0.8500 was solidly broken. The supply on the left was easily absorbed because it was compressed, too much time in the area, so no good for me to lean on for shorts, moreover after a first hit the 14th May.

There is a good H4 supply area I've painted in purple at 0.8583, but it's counter trend and not at or very close to D1 supply which you can see with the yellow trendlines. I use the Rectangle Extender indicator I shared with you to draw those higher timeframe areas automatically.

There is new basing being formed right underneath the H4 supply area, not good. Not taking those shorts against the main trend, but it could work. I prefer to lean on the longs and go with the trend.
Attached Image (click to enlarge)
Click to Enlarge Name: Screenshot1.png Size: 136 KB
Set and Forget supply and demand trading community
  • #42
  • May 22, 2013 8:34am May 22, 2013 8:34am
very very educational Alfonso keep it up ... . since about a year I teach in demand and supply trade, I'm still not consistently profitable.
post if you have time, more video, and you will save time and the information transmitted by the video is more
my English is not very good ...
  • #43
  • May 22, 2013 8:57am May 22, 2013 8:57am
Hello Alfonso,
i just joined forexfactory. Im interested in supply demand trading as only one logical method to read the charts and beat the market makers.
Im really delighted by your friendly & pro attitude and things You shared with us all. I saw many sam seidens webinars and texts, also i read PIE, RTP, Kenneth Lee and few more threads here on FF nowadays, but Your thread seems to be a real bomb for people like me. After several weeks of lurking I still consider myself as a beginner of course, but i think i know basic rules of this kind of trading. I know also that im not a scalper by nature. I prefer longer periods and this is it what i can find here with Your very educational explanation. I've just downloaded your templates and ill join You with charts, hopefully on this weekend.
  • #44
  • May 22, 2013 9:25am May 22, 2013 9:25am
Got triggered long on GBPNZD right now on a H4 demand area right at the distal area of the D1 Demand area... Let's see what happens, my SL is at breakeven now.
Attached Image (click to enlarge)
Click to Enlarge Name: Screenshot3.png Size: 131 KB
Set and Forget supply and demand trading community
  • #45
  • May 22, 2013 9:29am May 22, 2013 9:29am
Oops the movement was so fast that by the time I had posted the message my TP had been reached. I was conservative, 76 pips in a couple of minutes! Crazy!

Quoting panoramia
Got triggered long on GBPNZD right now on a H4 demand area right at the distal area of the D1 Demand area... Let's see what happens, my SL is at breakeven now. {image}
Set and Forget supply and demand trading community
  • #46
  • May 22, 2013 10:38am May 22, 2013 10:38am
Got triggered long counter trend on NZDUSD. A H1 demand level with a gap up that was not filled, right within a H4 demand area which it at the same time within a D1 and WK demand area, an extreme. I will try counter trend in those areas. Let's see what the market brings.

H1 chart:
Attached Image (click to enlarge)
Click to Enlarge Name: Screenshot2.png Size: 136 KB


WK chart:
Attached Image (click to enlarge)
Click to Enlarge Name: Screenshot3.png Size: 122 KB
Set and Forget supply and demand trading community
  • #47
  • May 22, 2013 6:03pm May 22, 2013 6:03pm
Thanks for your kind words. I love sharing with others and helping others if they have the right attitude to things and life.

Supply and Demand trading is the way to go to trade with the smart institutional money, you don't need to look for anything else as you already know. We just need to focus on one single strategy and master it, that's all.

I will be creating some more videos soon, it also helps me to have a clearer mind and direction with my trading plan. It settles my knowledge and helps me as well. Whatever question you have, don't hesitate to ask me, I'll be grateful to answer you.

Nite nite!
Alfonso

Quoting mr.zomg
Hello Alfonso, i just joined forexfactory. Im interested in supply demand trading as only one logical method to read the charts and beat the market makers. Im really delighted by your friendly & pro attitude and things You shared with us all. I saw many sam seidens webinars and texts, also i read PIE, RTP, Kenneth Lee and few more threads here on FF nowadays, but Your thread seems to be a real bomb for people like me. After several weeks of lurking I still consider myself as a beginner of course, but i think i know basic rules of this kind of trading....
Set and Forget supply and demand trading community
  • #48
  • May 22, 2013 10:12pm May 22, 2013 10:12pm
Sorry for asking too much on your journal,
What is compressed supply mean, how to recognize the compression? How it can affect the price movement?

Thanks

Quoting panoramia
Planned this long trade on EURGBP after 0.8500 was solidly broken. The supply on the left was easily absorbed because it was compressed, too much time in the area, so no good for me to lean on for shorts, moreover after a first hit the 14th May. There is a good H4 supply area I've painted in purple at 0.8583, but it's counter trend and not at or very close to D1 supply which you can see with the yellow trendlines.
Going where the money Flow
  • #49
  • May 23, 2013 3:30am May 23, 2013 3:30am
Look at my screenshot on EURGBP above. I call it compressed when there is lots of trading in the zone.

Too many candles in a zone is not a good sign because it means there is not a big supply/demand imbalance. If there was, price would have rallied/dropped much quicker. So, if price finally drops from such a zone (too many candles and wicky without a clear formation) like in the EURGBP example above, when price comes back into the area, it can be easily absorbed because by definition, a zone with too much trading in the area (compressed area), does not have a big imbalance. It's big imbalances that make the market move, so we want to lean on them and trust them.

Most important enhancers for a SD area area:

  1. Strenght of departure. How fast and quickly price took off, big long ERC candles
  2. Number of pullbacks to the area. None is the highest odds
  3. Profit margin. Area must have created a minimum of 3:1 profit margin (60 pips or more for a 20 pips + wiggle room) before it retraces,
  4. Big picture. Trading with the trend
  5. Time at level

Arrival to the level is not important if all those odds are on your favour! Even time at level. If the first 4 odds enhancers are with you, set & forget your trades and whatever happens happens.

Hope that helps!
Alfonso

Quoting deadlyhands
Sorry for asking too much on your journal, What is compressed supply mean, how to recognize the compression? How it can affect the price movement? Thanks {quote}
Set and Forget supply and demand trading community
  • #50
  • May 23, 2013 5:00am May 23, 2013 5:00am
Quoting panoramia
Look at my screenshot on EURGBP above. I call it compressed when there is lots of trading in the zone. Too many candles in a zone is not a good sign because it means there is not a big supply/demand imbalance. If there was, price would have rallied/dropped much quicker. So, if price finally drops from such a zone (too many candles and wicky without a clear formation) like in the EURGBP example above, when price comes back into the area, it can be easily absorbed because by definition, a zone with too much trading in the area (compressed area), does...

Hi Panoramia,
Could you explain with charts or a video these points:

  1. Strenght of departure. How fast and quickly price took off, big long ERC candles
  2. Number of pullbacks to the area. None is the highest odds
  3. Profit margin. Area must have created a minimum of 3:1 profit margin (60 pips or more for a 20 pips + wiggle room) before it retraces,
  4. Big picture. Trading with the trend
  5. Time at level

Thank you

  • #51
  • May 23, 2013 8:11am May 23, 2013 8:11am
Hi Alfonso !

new in this thread,
just installed your rectangle indi, it works like a charm !
thank you mate for your excellent work

Peace
dom

Quoting panoramia
Look at my screenshot on EURGBP above. I call it compressed when there is lots of trading in the zone. Too many candles in a zone is not a good sign because it means there is not a big supply/demand imbalance. If there was, price would have rallied/dropped much quicker. So, if price finally drops from such a zone (too many candles and wicky without a clear formation) like in the EURGBP example above, when price comes back into the area, it can be easily absorbed because by definition, a zone with too much trading in the area (compressed area), does...
  • #52
  • May 23, 2013 10:35am May 23, 2013 10:35am
Just want to say thank you. Reading the charts in terms of supply and demand has made me a better trader. That is not say I am making money now, I am still lousy trader with bad trading psychology and discipline but a better one today than yesterday because of S & D.
I want more brain power!
  • #53
  • May 23, 2013 1:52pm May 23, 2013 1:52pm

Hi, first attempt with this method so any input would be appreciated. I’m posting few charts showing the top down analysis from the monthly to the 4 hour to see if I am doing the analysis properly. This way I can compare my work and see if I am doing the proper analysis. I’m picking a pair (EURCAD) that hasn’t been highlighted yet in the FF thread yet so as not to influence any of my decision making.

On the monthly I have highlighted the S/D areas. Blue demand area is fresh, Dark green area is not fresh because of the 2 bars that are inside the yellow ellipse.

Attached Image (click to enlarge)
Click to Enlarge Name: eurcadmonthly 5-13.png Size: 60 KB



On the weekly I have highlighted the S/D areas. Blue demand area is fresh. Demand is being respected. Brown area is not fresh, penetrated twice but not yet completely violated so I will watch this area because it is on a higher timeframe. Upper brown area is fresh.

Attached Image (click to enlarge)
Click to Enlarge Name: eurcadweekly 5 23 13.png Size: 60 KB


On the daily I have highlighted the S/D areas. Blue demand area is fresh. Demand is being respected. Brown area is not fresh but lines up around weekly proximal line so will watch.

Attached Image (click to enlarge)
Click to Enlarge Name: eurcaddaily 5 23 13.png Size: 58 KB


On the 4H I have only highlighted 3 demand areas.... there are no visible supply areas on the chart.

Trade ideas …. The longer trend is up so I would be looking to get long at the 3 demand areas on the 4 hour chart. We are currently at a supply area that has been violated several times on the higher timeframes so I would not consider a short at this time.


Attached Image (click to enlarge)
Click to Enlarge Name: eurcadh4 5 23 13.png Size: 59 KB



  • #54
  • May 23, 2013 2:11pm May 23, 2013 2:11pm
I'll try to explain it on a video soon, those are the basic concepts for supply and demand trading, which will allow you to filter out levels that do not match those rules. It's not difficult but your mind will want to chase for trades and choose levels that are not that good.

I'll cover that in a video soon hopefully. Sorry for not being able to explain further but with screenshots it would take a long time to explain, and there would be many things not covered by them, a video is much better I believe.


Alfonso

Quoting mosah
{quote} Hi Panoramia,Could you explain with charts or a video these points: Strenght of departure. How fast and quickly price took off, big long ERC candles Number of pullbacks to the area. None is the highest odds Profit margin. Area must have created a minimum of 3:1 profit margin (60 pips or more for a 20 pips + wiggle room) before it retraces, Big picture. Trading with the trend Time at levelThank you
Set and Forget supply and demand trading community
  • #55
  • May 23, 2013 2:15pm May 23, 2013 2:15pm
You are welcome Boris. Thanks for your message. Hope that you use it and helps you on your trading, it does help me A LOT to know where I'm on the higher timeframes SD areas that I've painted!

Enchanté
Greetings from Spain

Quoting BorisViven
Hi Alfonso ! new in this thread,just installed your rectangle indi, it works like a charm ! thank you mate for your excellent work Peacedom {quote}
Set and Forget supply and demand trading community
  • #56
  • May 23, 2013 2:17pm May 23, 2013 2:17pm
Thanks for your message. S & D moves the market, so whatever you do or add in order to help you read the market imbalances, the better! Hopefully you will make good use of the indicators. I'm not a professional trader trader, lot of psychology work left to do, but on my way to it with a trading plan that I need to follow!

Regards,
Alfonso

Quoting cfdtaleong
Just want to say thank you. Reading the charts in terms of supply and demand has made me a better trader. That is not say I am making money now, I am still lousy trader with bad trading psychology and discipline but a better one today than yesterday because of S & D.
Set and Forget supply and demand trading community
  • #57
  • May 23, 2013 3:05pm May 23, 2013 3:05pm
Joe, (fortunejason). Thanks for sharing your EURCAD analysis with me and the others viewing this thread. I like it

I agree with you on the Monthly Chart

I differ with you on the Weekly SD areas, the area you drew on the weekly is a reaction to a WK speedbump (Drop-Base-Drop) supply on the left. It's a wicky area, I don't take those into account, the top area is a reaction to theat speedbump I show. See also my WK demand area to see the difference

Attached Image (click to enlarge)
Click to Enlarge Name: Screenshot2.png Size: 143 KB


I differ on the Daily supply area as well, see the attachment. There is a non-fresh D1 speedbump supply area where price is right now. The areas above on the left are crap supply, no reaction, compressed and too wicky. This one where price is right now is the only one it looked good to me, it's also close to the downslope trendline.

Attached Image (click to enlarge)
Click to Enlarge Name: Screenshot3.png Size: 120 KB


On the H4 chart there was a fresh supply area that I had painted some days ago, but 50+ pips wide, so I had gone to the H1 to drill it down for entry, in fact I had added a horizontal line in order to add the entry. I was talking my my dear friend Leo about it just now. I had the line 4H level painted, a nice H1 are within that H4 supply which is also within a D1 supply area. What else do I want? I had not set the order, my emotions played with me on this one, still working with them closely

Attached Image (click to enlarge)
Click to Enlarge Name: Screenshot4.png Size: 117 KB


See the H1 chart with the drilled down area.

Attached Image (click to enlarge)
Click to Enlarge Name: Screenshot5.png Size: 142 KB


My levels differe a bit from yours, it does not mean that they are better. It all depends on what you consider to be a fresh area, the origin of a move, if you take into account the speedbumps (rally-base-rally and drop-base-drop) as SD level. Speedbumps are the best ones trading with the trend (momentum trades), not good when opposite higher TF SD areas are in control, like the one painted in purple on H4.

I saw some levels as good, like the H1 supply area when the H4 was drilled down, look at the big red extended range candle on H1, nice profit margin there. The level is working so far, but I am not in because I had not set my order there for reasons I'm still working on!

Hope my explanations help a bit. Drawing levels is an art, it does not mean that I'm an artist and you are not It means that with lots of screentime and experience your mind will be absorbing what you have seen for months and even years, and you will see things that before you couldn't see because you were not aware that they existed. Once your mind is alerted that they do exist, you will start seeing things with a different light.

Hope that helped a bit Joe! Just trying to help with my views, nothing else.
Alfonso

P.S. One thing, next time also attach your .tpl template so that I can view it better and others can load it on their metatrader and play with it better. That would be a great thing for everybody to do

Quoting fortunateson
I’m picking a pair (EURCAD) that hasn’t been highlighted yet in the FF thread yet so as not to influence any of my decision making.On the monthly I have highlighted the S/D areas. Blue demand area is fresh, Dark green area is not fresh because of the 2 bars that are inside the yellow ellipse.
Set and Forget supply and demand trading community
  • #58
  • May 23, 2013 4:30pm May 23, 2013 4:30pm
Quoting deadlyhands
Sorry for asking too much on your journal, What is compressed supply mean, how to recognize the compression? How it can affect the price movement? Thanks {quote}
I hope i do not pollute thread, but compression can mean something like this also:
http://www.forexfactory.com/showthre...30#post4484730
this is post from redsword who is SOMEBODY (as i noticed) for many S/D traders here on forexfactory. Actually this meaning of compression makes sense for me and whats more important "almost always" means easy pips
  • #59
  • May 23, 2013 8:02pm May 23, 2013 8:02pm

Alfonso, Thanks for your kind works and timely response. I really appreciate you taking the time to analyze and explain your take on this pair in detail. I’m going to take some time and compare and contrast the differences between your charts and mine. That’s the best way to learn!! My eyes are relatively new to this approach. I will add my template soon (which is new to me so I have to learn how to get it to the FF thread). My template is mainly all of your indicators from the 1st post where I have added 2 more …. one shows the pip spread and the other shows the contract and a countdown timer which I will add as soon as I figure it out.

Thanks again,

Joe

  • #60
  • May 24, 2013 3:15am May 24, 2013 3:15am
I was waiting to go short on CADJPY at a nice fresh H4 speedbump supply (drop-base-drop) on H4 near a retest of that broken upslope trendline, missed it by few pips for now. Holding my limit sell order since level was not touched touched, price hit last week low (red beads) and dropped fast from there. I have a long trade down below at a fresh H4 demand level at the D1 proximal line.

Depending on what basing candles you use to determine the base of that 4H rally at D1 demand, the level will be considered hit or not on the aproach to the right. If that is so, the long might not work, but rules force me to try a long there

Let's see what the market brings
Attached Image (click to enlarge)
Click to Enlarge Name: Screenshot2.png Size: 188 KB
Set and Forget supply and demand trading community
3 traders viewing now