Supply and demand in a nutshell by Alfonso Moreno | Page 30 | Forex Factory

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Supply and demand in a nutshell by Alfonso Moreno

  • #581
  • Jul 22, 2013 9:34am Jul 22, 2013 9:34am
Quoting panoramia
Looking to go long on GOLD (XAUUSD) H4 demand area. A few days ago a member was talking about going short on gold, in fact he went short and I guess he got a breakeven at least, he was Ochinkumar I believe, post is here: http://www.forexfactory.com/showthre...90#post6812290 We talked about it, it was not an original level of supply and I had taken a short before, so I was not going to lean on a short when that level was not original (counter trend on H4)... Now gold has broken D1 supply like Silver did. Dollar index has broken...
Hi panoramia , by seeing your analysis about my chart , i did not trade gold that time. (english is not my native language)
  • #582
  • Jul 22, 2013 11:14am Jul 22, 2013 11:14am
Alfonso

A question regarding your long on XAU/USD... Given that price fell through a series of red extended range candles down to form that D1 supply speedbump that has just been broken to the upside, would you not be tempted to place an order at the H4 speedbump demand right now as there are no apparent levels of supply or resistance to prevent price retracing a good portion of that move down (i.e. is there not already sufficient risk:reward potential)? Or is your thinking that this speedbump demand must first prove it's credentials by showing a more emphatic departure before you'll take a retrace to the demand area? In other words, at this point in time it is not yet speedbump demand but potentially speedbump demand should price travel higher with momentum?

Huk
  • #583
  • Edited 12:11pm Jul 22, 2013 11:54am | Edited 12:11pm
Exactly Huk! At the time I posted my analysis, the H4 speedbump itself didn't provide enough profit potential, that's why the long trade is set at the lower demand area that DOES provide profit potential and goes with the new trend. We need to wait for that profit potential (profit margin or risk reward) before we place the order at the potential H4 speedbump demand!

That's if we're doing swing trades taking H4 levels, if you want to do Intraday, you'd use the H1 level, and there you have a nice H1 demand to lean on.

Hope it makes sense!
Alfonso

Quoting Hukkleberry
Alfonso A question regarding your long on XAU/USD... Given that price fell through a series of red extended range candles down to form that D1 supply speedbump that has just been broken to the upside, would you not be tempted to place an order at the H4 speedbump demand right now as there are no apparent levels of supply or resistance to prevent price retracing a good portion of that move down (i.e. is there not already sufficient risk:reward potential)? Or is your thinking that this speedbump demand must first prove it's credentials by showing...
Set and Forget supply and demand trading community
  • #584
  • Jul 22, 2013 3:27pm Jul 22, 2013 3:27pm
Today's 2 hours Webinar has already been uploaded to YouTube.

We've done a top down analysis on AUDUSD, reviewed past trades and analyzed current market conditions on H4 and H1 areas to learn how lower timeframes, H1 and H1 supply on demand levels have behaved in current Monthly demand area, which ones to take, which ones to skip.

We've also introduced how to use trendlines to assess current trend and when to skip them.

We didn't have much time to cover other pairs, but I believe I answered all questions asked by attendees.
Hopefully all is a bit clearer now
Alfonso

Inserted Video
Set and Forget supply and demand trading community
  • #585
  • Jul 22, 2013 8:55pm Jul 22, 2013 8:55pm
Honestly, what have your results been? Negative months don't bother me but I want the straight dope on how well you've done only by touch trading fresh zones. I pulled something like 4% in March, 5% in April, 10% in June but July has been a loser due to trying to trade the FOMC minutes, down about 5%...
  • #586
  • Jul 22, 2013 11:03pm Jul 22, 2013 11:03pm
Quoting panoramia
Today's 2 hours Webinar has already been uploaded to YouTube. We've done a top down analysis on AUDUSD, reviewed past trades and analyzed current market conditions on H4 and H1 areas to learn how lower timeframes, H1 and H1 supply on demand levels have behaved in current Monthly demand area, which ones to take, which ones to skip. We've also introduced how to use trendlines to assess current trend and when to skip them. We didn't have much time to cover other pairs, but I believe I answered all questions asked by attendees. Hopefully all is a bit...
I wasn't able to watch webinar live as it wasn't a real good time for me however I just watched video and very good info.

Thanks for recording and uploading video.
If you act surprised, then you probably missed something
  • #587
  • Jul 23, 2013 12:26am Jul 23, 2013 12:26am
Alfonso, i dont understand some things about your explanations from yesterday webinar. In other webinars you said RBR is a continuation pattern and i we have an RBR and another RBR lower, that RBR which is lower doesnt matter because is a continuation pattern. now you use trendlines to determine trend. What is the correct answer? And... another queswtion its about monthly with h4. You said: i use weekly for big picture, daily for trend and h4 for entry(on swing trade) but yesterday in the webinar you take levels with h4 trend and monthly big picture Thank you very much.
  • #588
  • Jul 23, 2013 12:30am Jul 23, 2013 12:30am
Hi Alfonso,

I have question in regards to USDCAD for a long trade off demand.

On Weekly chart price could come down to a fresh demand area where we could go long. On Daily I see and original and fresh demand zone at 1.0166 which is 30 pts wide so we could just set and forget on this level or drill down to H4.

When I then go down to H4 it gets a little confusing as I can draw the H4 levels two ways. Either as two demand zones one fresh blue area which is within the weekly zone but just above the daily zone and one not fresh dark grey zone which is within the daily zone.

Alternatively and probably a more conversative way is to only draw one rectangle (shown in thick red unfilled retangle) which would be an unfresh level within the daily zone.

I know its personal preference but how would you analyse this pair for a long?

Weekly Chart
Attached Image (click to enlarge)
Click to Enlarge Name: 20130723 usdcad wk.png Size: 82 KB


Daily Chart
Attached Image (click to enlarge)
Click to Enlarge Name: 20130723 usdcad dly.png Size: 71 KB


H4 Chart
Attached Image (click to enlarge)
Click to Enlarge Name: 20130723 usdcad h4.png Size: 74 KB
If you act surprised, then you probably missed something
  • #589
  • Jul 23, 2013 1:04am Jul 23, 2013 1:04am
Hello Boby!
Let me answer to your doubts, because I'm not doing anything differently. I'm using an object, a trendline to filter out areas of supply and demand.

Quoting bobyv87
Alfonso, i dont understand some things about your explanations from yesterday webinar. In other webinars you said RBR is a continuation pattern and i we have an RBR and another RBR lower, that RBR which is lower doesnt matter because is a continuation pattern. now you use trendlines to determine trend. What is the correct answer?
A speedbump is a continuation pattern, but if the trend is broken to the opposite side, speedbumps are not higher odds, so I won't take them. I'm using the trendline to filter out continuations patterns (RBR, DBD) that goes against the current timeframe's trend

Quote
And... another queswtion its about monthly with h4. You said: i use weekly for big picture, daily for trend and h4 for entry(on swing trade) but yesterday in the webinar you take levels with h4 trend and monthly big picture Thank you very much.
That has an explanation. Basic rules are as you said, but looking for perfect entries will have you staying out of many other trades.

  1. If I find levels in other areas that match other higher timeframe areas, I will go for them as well
  2. If I'm close or at Monthly demand, I'm not going to sell. If I find a good level of demand I will think of buying
  3. I'm not going to trade only at the WK extremes on H4 entries, on the way up or down there will be other opportunities, what you have to avoid is selling too close to WK demand or buying to close to WK supply
  4. Direction timeframe is optional, you can use it or you can't. Having a timeframe for the curve and another one for the entries (always the same one), is key
  5. If I am at a D1, WK or Monthly demand, I don't want to buy
  6. If I am at a D1, WK or Monthly supply, I don't want to sell

I'm always aware of D1, WK and MN curves and will stay away from opposite trades at those areas and actively look for trades that match the higher timeframe area. I believe this is logic and common sense, just watch those higher timeframes in all pairs and you will see that this is true most of the times.

Hope that solves your doubts!
Alfonso

Set and Forget supply and demand trading community
  • #590
  • Jul 23, 2013 2:18am Jul 23, 2013 2:18am
Hello Kanzler!
Thanks for your message. As far as results on the way I trade. There are 2 kind of results I'm having. Why 2 different ones?

1. An account I take the trades and I have my emotions involved
2. A second account where I set and forget and set a fix 3 or 4:1 TP or opposing H4 SD area, no breakeven. I started this not long ago with a friend of mine, and he's taking the trades that I tell him

The results talk by themselves. On the first account, my emotions are involved and I cancel many trades, don't let the trades run that much and so on. On the second account, I don't touch anything, whatever happens happens.

On the first one the average is around 4-7%. On the second account, it's been an average of 15-20% since it started, last 2 months . Why this difference? On the second account I do not observe, the observer is not involved, fixed TP, win or lose situation. Trading is like Quantum Mechanics, the observer influences in the result of the experiment (double slit experiment).

Losing months? Yes, I've had a couple in the last 9 months. For 3 times in a row, I had 6 losses in a row by leaving the limit orders I had on NFP and FOMC news. Conclusion? I've added a new rule, I'll disable trading on the pairs involved on big news events like NFP, interest rates or FOMC. I'm just trying to avoid unnecessary losses.

Since the 2nd account works better (no emotions involved with a lose or win scenario, no breakeven), I started to develop my own SD EA, which is almost finnished, it will do all that I think but I will not touch anything. It will have no limit orders, only virual orders based on a few conditions, like the ones I talk on the webinars.

This is my goal right now, stay away from the computer. This is the only job I know that the least you work, the better your results will be. But yes, I've had losing months as well. Remember I've been into trading for 2 years and a half, and that's nothing, still fine tuning my entries and decision making processes.

All the best!
Alfonso


Quoting Kanzler
Honestly, what have your results been? Negative months don't bother me but I want the straight dope on how well you've done only by touch trading fresh zones. I pulled something like 4% in March, 5% in April, 10% in June but July has been a loser due to trying to trade the FOMC minutes, down about 5%...
Set and Forget supply and demand trading community
  • #591
  • Jul 23, 2013 2:33am Jul 23, 2013 2:33am
Hello Peter,

I have very similar levels on D1 and WK, my WK supply is much higher because there is a real big mess in that area, it's all a reaction to a reaction, it's compress supply on the WK, so I don't have it there, but much higher. But it's not relevant to your question right now.

I do have a trade on H4 demand area, the first level, because it has strong imbalance, nice R/R, fresh, at higher timeframe demand (bigger picture with that level), little time at the level. The score is good for set & forget, so there is my entry. If it fails and goes lower and create a new fresh demand area I will try it again, but so far that's what I would do. The score is good on that first level, departure is just great.

I do have a short as well at 1.0380, which will be valid as long as the H4 trendline is respected. If it takes too many candles to reach that area, the TL will be broken with decision, so I will cancel it.

Hope that helps, I agree with your analysis.
Alfonso

Quoting outapips
Hi Alfonso, I have question in regards to USDCAD for a long trade off demand. On Weekly chart price could come down to a fresh demand area where we could go long. On Daily I see and original and fresh demand zone at 1.0166 which is 30 pts wide so we could just set and forget on this level or drill down to H4. When I then go down to H4 it gets a little confusing as I can draw the H4 levels two ways. Either as two demand zones one fresh blue area which is within the weekly zone but just above the daily zone and one not fresh dark grey zone which is...
Attached Image (click to enlarge)
Click to Enlarge Name: usdcad.png Size: 156 KB
Set and Forget supply and demand trading community
  • #592
  • Jul 23, 2013 3:03am Jul 23, 2013 3:03am
Hi Panoramia,
Good stuff you are doing in here, thank you for sharing like you do! It's very kind of you!

Do you have a indicator or something that alert you when a supply or demand is coming? I tried to apply an alert indicator but it doesn't work properly with RectangleReader.

Thanks again for your help! Panoramia.
Mfinab
  • #593
  • Jul 23, 2013 3:07am Jul 23, 2013 3:07am
You are welcome mfinab!

I have no indicator to alert me when a SD level is coming or it's broken. I don't want to know that either. Why? Because then I will watch it and my emotions will try to take control. I just set & forget and try not to touch my entries (sometimes my emotions win the battle). If I had all those alerts then I would set & regret instead, which would not be good.

Alfonso

Quoting mfinab
Hi Panoramia, Good stuff you are doing in here, thank you for sharing like you do! It's very kind of you! Do you have a indicator or something that alert you when a supply or demand is coming? I tried to apply an alert indicator but it doesn't work properly with RectangleReader. Thanks again for your help! Panoramia. Mfinab
Set and Forget supply and demand trading community
  • #594
  • Jul 23, 2013 4:29am Jul 23, 2013 4:29am
Gracias Alfonso, your explanation is logical but for me trendlines are subjective. Sam Seiden also not use trendlines.
  • #595
  • Edited 12:58pm Jul 23, 2013 4:43am | Edited 12:58pm
De nada Boby! Sam Seiden does not use trendlines, at least as far as I know, not on the videos I've seen, but we don't know the way he really trades. He's just showing a tiny fraction of what he does, I am sure. Each one of us needs to find its own ways to filter out potential bad trades. As long as you follow the same rules always over and over and you are consistent doing it, it's a valid approach to me.

Drawing trendlines are also subjective to me But subjectivity is removed if you always draw them the same way, it's just a mechanical way, a method to filter out trades, that's all. Drawing supply and demand levels even more, the automatic indicator draws them, but which ones will you choose? If you choose most of them, you will lose, because we need to add multiple timeframe analysis and the curve, so it's all subjective. Drawing the curve timeframe's SD level is also subjective as well, an uptrend or a downtrend can also be subjective, a D1 close as well (it depends on the brokers server's offset), so on and so forth. If you look at it that way, all you do in life is prone to be subjective, trading is not an exception.

You just have to find your way, I found mine. Sam Seiden is the man! But we don't know what he really does after all. I've seen some contradictory Sam Seiden videos where he says he will only trade fresh levels, others where he will say he'll trade the same level over and over and over, if it has not been penetrated more than 25%. He never uses indicators, but in some videos he teaches how to use CCI. Some OTA instructors use EMAs, others CCI, another one uses Bollinger Bands, others use no trend at all, they just do location trading.

What I am trying to say is that each of us need to find his own style. The rule here is that if you add an indicator, a trendline, an EMA or anything, you have to backtest it and forward test it in a decent number of samples. You have to have rules for each variation you add to your trading strategy, and always follow the same ones over and over until it becomes a habit and you are consistent.

This is why I am using the trendlines to assess temporary trends as well as longer term trends. I will not use them to trigger my trades, but only as a guidance to what I should or shouldn't do. Will I miss many valid trades? Of course I will. But it will prevent me from losing many more.

Alfonso

Quoting bobyv87
Gracias Alfonso, your explanation is logical but for me trendlines are subjective. Sam Seiden also not use trendlines.
Set and Forget supply and demand trading community
  • #596
  • Jul 23, 2013 5:32am Jul 23, 2013 5:32am
Quoting panoramia
Hello Peter, I have very similar levels on D1 and WK, my WK supply is much higher because there is a real big mess in that area, it's all a reaction to a reaction, it's compress supply on the WK, so I don't have it there, but much higher. But it's not relevant to your question right now. I do have a trade on H4 demand area, the first level, because it has strong imbalance, nice R/R, fresh, at higher timeframe demand (bigger picture with that level), little time at the level. The score is good for set & forget, so there is my entry. If it fails and...
Great thx .. looks like I missed the most obvious point as you correctly point out the strong imbalance of that level.

I didn't see that short but do see that level now .. I don't seem to be able to pick out those types of levels very easy at the moment .. It will come in time.
If you act surprised, then you probably missed something
  • #597
  • Jul 23, 2013 8:21am Jul 23, 2013 8:21am
I saw that you draw trendlines to filter trades.Do you draw tem manually?Can you recomend me an some good trendline indicator?Thanx!
  • #598
  • Jul 23, 2013 8:25am Jul 23, 2013 8:25am
All trendlines are painted manually, I don't trust any of the trendline indicators I have found. I draw my higher timeframes manually as well as the trendlines!

Alfonso
Quoting astronaud
I saw that you draw trendlines to filter trades.Do you draw tem manually?Can you recomend me an some good trendline indicator?Thanx!
Set and Forget supply and demand trading community
  • #599
  • Jul 23, 2013 8:33am Jul 23, 2013 8:33am
And Panoramia,thanx for sharing your knowledge with us!Ia m learning alot from you.Ia m just at the begining ,but i will not quit until i find it
  • #600
  • Jul 23, 2013 10:34am Jul 23, 2013 10:34am
Quoting panoramia
Hello Kanzler! Thanks for your message. As far as results on the way I trade. There are 2 kind of results I'm having. Why 2 different ones? 1. An account I take the trades and I have my emotions involved 2. A second account where I set and forget and set a fix 3 or 4:1 TP or opposing H4 SD area, no breakeven. I started this not long ago with a friend of mine, and he's taking the trades that I tell him The results talk by themselves. On the first account, my emotions are involved and I cancel many trades, don't let the trades run that much and so...
Hey Alfonso,

Are you risking 1% or more than that? In any case, I've found the same thing where levels are almost always violated on less than a daily chart during FOMC and NFP. Of the losses this month 3% was solely based on that event trying to hold shorts which worked fine for a few hours and then just got wiped out as the rally continued. As a result that's a part of my trading plan as well, avoid those events at all costs. Anyway was just curious as to how your results are, based on personal experience they seem totally realistic. Best wishes for future trades, you seem legit. Vouch for you.
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