Supply and demand in a nutshell by Alfonso Moreno | Page 33 | Forex Factory

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Supply and demand in a nutshell by Alfonso Moreno

  • #641
  • Jul 25, 2013 12:05pm Jul 25, 2013 12:05pm
Quoting Sdprice
{quote} Thanks for the help on that chart. I had a few questions? 1. I am looking at your D1 supply level for AUD/JPY and mine is a little different. could you please show me a snapshot where you painted your daily supply level for the AUD/JPY 2) The chart below is the AUD/USD and i have a speedbump supply level on the 1H chart. The trend was down and and the 1H trend is UP. When looking at the 1H chart and the trend is reversing: making higher highs and lower lows, can i rely on that 1H speedbump supply that i have painted? 3) could you please...
SDPrice and Alfonso

Just a quick question, on the A/U chart you posted is that supply zone you highlight in the green box correctly named as a "speedbump"? Is it not in fact a (fresh and original) rally-base-drop instead? Furthermore, it was formed after the red extended range candle crashed through the previous demand zone (sometimes referred to as a "swap" zone on some other threads). In your experience, can you expect this kind of zone to be strong? In forming the R-B-D supply zone, can it be argued that price has already had the opportunity to remove excess supply created by trapped traders who were positioned long at the previous demand zone, and perhaps may be weaker as a result? Your thoughts and experience would be appreciated.

Huk
  • #642
  • Jul 25, 2013 5:44pm Jul 25, 2013 5:44pm
Hello Huk,

Yes, everything is automated on my side, entry, moving SL to Breakeven, targets and alerts. I've built an advanced external application that manages my trades from my local MT and also from VPS when I turn off my computer, so I am covered when I am away, computer is down or electricity is lost, because the VPS will take care of everything.

I entered GBPCAD right on the first touch, after the engulfed candle, I mean, the big red candle absorbed previous demand, then the next candle engulfed the red, same size, I had already an order when that red candle had taken out previous demand. There was a second opportunity later I believe (I don't have MT running now so I am not 100% sure), but my entry was on the first touch.

Once my trade is 2:1, that is, if my risk is 25 pips including spread and wiggle room, my SL will be moved automatically to breakeven + a few pips below entry, I can configure my trade assistant to me SL at any given Risk/Reward ratio, 2:1, 3:1, 3.5/1, etc. That gives me a lot of frexibility. My trade assistant is for personal use only, but I am thinking if I can share it with all of you in the near future, it's taken me 1 year and a half to build it, it has features that no application has in the market... but let's not talk about it and let me answer your questions (I talk too much)

I am also doing some trades (a friend of mine in fact is doing the live trades in this kind of setting) not to move SL to BE and setting fix 3:1 exits, or opposing SD area on entry timeframe. That gives even better results as I explained in one of my previous messages. The thing is not knowing that there are better results like that, after all once you place a trade, you must accept that it will be a loss, but your ego will not think the same and you know the rest, this is why I am in the process of automating 95% of my decisions so that my emotions stay away.

But yes, my entry was right at the first touch of H4 speedbump supply, and my SL was moved to Breakeven after 2:1, double the risk in pips of my entry!

Hope that helps!
Alfonso

Quoting Hukkleberry
{quote} Alfonso, another question regarding your short on G/CAD. As you say, the departure was excellent and absorbed the underlying demand area but price bounced straight back up to the departure point on the next candle. Is this where you entered the trade or was it on the next visit (at the red candle with the long upper wick that almost breached the speedbump supply zone)? If you entered at this second point, shouldn't the supply zone have been considered non-fresh, and by your rules not tradable? Also, when you say you will move your SL to...
Set and Forget supply and demand trading community
  • #643
  • Jul 26, 2013 12:59am Jul 26, 2013 12:59am
Quoting panoramia
Yes, but speedbumps at the beginning of a new trend works like charm most of the times, so I am willing to risk in those scenarios. Speedbumps are my favourite entries, if taken at the right area (at the beginning of a breakout or with the trend right when it's being formed) it can be tremendously effective. When they happen in those scenarios what I look at is: Previous demand has been absorbed Previous trendline has been solidly broken Room to previous opposing SD levelIf those parameters are met, then I will take the chance! Remember that the...
Thanks for the help on that chart. I had a few questions Alfonso?
1. I am looking at your D1 supply level for AUD/JPY and mine is a little different. could you please show me a snapshot where you painted your daily supply level for the AUD/JPY

2) The chart # 1 below is the AUD/USD and i have a speedbump supply level on the 1H chart. The trend was down and and the 1H trend is UP. When looking at the 1H chart and the trend is reversing: making higher highs and lower lows, can i rely on that 1H speedbump supply that i have painted? by the way that trade did not work as you can see on chart # 2? Why do you think this happened and was not a good LEVEL?

3) could you please take the latest snapshot of your D1 and Wk supply and demand spreedsheet and post it. I like you use it to see if my levels are the same as yours.

Really appreciate the help, Thankyou
Attached Image(s) (click to enlarge)
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  • #644
  • Jul 26, 2013 1:26am Jul 26, 2013 1:26am
Quoting panoramia
Hello Huk, Yes, everything is automated on my side, entry, moving SL to Breakeven, targets and alerts. I've built an advanced external application that manages my trades from my local MT and also from VPS when I turn off my computer, so I am covered when I am away, computer is down or electricity is lost, because the VPS will take care of everything. I entered GBPCAD right on the first touch, after the engulfed candle, I mean, the big red candle absorbed previous demand, then the next candle engulfed the red, same size, I had already an order when...
Thanks Alfonso

I completely agree that a trader must accept risk on each trade and in my limited experience tinkering with the trade, managing the trade - call it what you will - is usually very self-defeating. I think it usually best to set the SL in stone and let the trade play out one way or another. One of the reasons I have been drawn to the SD style of trading is the logical target areas for taking profit. Having a clear and reasonable target allows a proper assessment of risk:reward and provided the entries are well picked, a positive expectancy over time. What more could we ask for?

Keep up the good work.

Huk
  • #645
  • Jul 26, 2013 3:37am Jul 26, 2013 3:37am
The NZDUSD short didn't work well yesterday, it was a loss. But as we already discussed on the thread, it's part of the game. The rules said I had to sell then I sold at that level. It didn't work, well, it does not matter, we'll look for the next opportunity. Why didn't it work? Well, the markets is like that.

I had another loss on GBPCAD long as I explained yesterday as well...

But then comes the good trades... I am trading different accounts with different R/R and risks as I also explained on one of my posts, because emotions is a big part of the success equation, it directly affects your trading decisions and trade management, key to be profitable.

I had 2 losses, but now I am in 4 winning trades. I am also short on AUDJPY, which I posted yesterday over here. On another account I am up on another 3 trades, gbpusd, usdcad and usdchf, all based on the methodology which I am trying to explain over here, simply SD tading. Both accounts are live, I trade demo only on metals and commodities, too much leverage for me at this stage, but it's good to see that SD works on all instruments.

Some losses will happen, well in fact, MANY losses, more than one's mind can possibly accept. We just have to cope with them and try to be in the zone. I stil am working on that, most of us over here are trying to reach the zone. I can see "the zone" but I still am not there.. on my way... I just wanted to share my thoughts and trades with you.

Have a nice Friday morning!
Alfonso
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Set and Forget supply and demand trading community
  • #646
  • Jul 26, 2013 3:54am Jul 26, 2013 3:54am
Guys, in my modest opinion, the only "problem" with that kiwi short from yesterday, is that it was really not in line with US DOLLAR index which is in clear downtrend. And of course, not all can be winners. But it was nice looking zone.
Every accomplisment starts with decision to try.
  • #647
  • Jul 26, 2013 3:58am Jul 26, 2013 3:58am
Yes, I agree with you Jasmine! $index was bearish, so the majors were rallying... The problem is that we'll always find a reason not to trade, that's why a solid set of rules will help us achieve our goals!

That NZDUSD short didn't work, but others will work. The good thing is that we only need a 40% success ratio or less to be profitable if we close the trades at a minimum 3:1 risk/reward!

Next one!
Alfonso

Quoting larra
Guys, in my modest opinion, the only "problem" with that kiwi short from yesterday, is that it was really not in line with US DOLLAR index which is in clear downtrend. And of course, not all can be winners. But it was nice looking zone.
Set and Forget supply and demand trading community
  • #648
  • Jul 26, 2013 4:33am Jul 26, 2013 4:33am
Have you been wondering why the majors (eurusd, gbpusd, etc) have been rallying for the last days?
Jasmine (larra) mentioned it a couple of posts back as well...

Take a look at the Dollar Index chart on the D1 timeframe and you will see what I mean...

  1. If the $ index is bouncing from higher timeframe supply areas, the majors will be rallying
  2. If the $ index is violating D1 demand areas, the majors will be rallying and absorbing supply areas

That's why watching the dollar index is key to trading forex. $ index correlation with Forex is very imporant, it can be of much help to us.

You can view the dollar index charts on metatrader downloading www.hotforex.com platform, it's free for demo accounts. It's the one I use for $index, commodities and CDFs.

Hope that helps!
Alfonso

Attached Image (click to enlarge)
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Set and Forget supply and demand trading community
  • #649
  • Jul 26, 2013 4:53am Jul 26, 2013 4:53am
Hi Alfonso, i would like to try the supply/demand indicator but the colors don't go with my set up and it wont allow me to modify the colors in metaeditor?
Keep your blades sharp!
  • #650
  • Jul 26, 2013 4:57am Jul 26, 2013 4:57am
Quoting panoramia
Have you been wondering why the majors (eurusd, gbpusd, etc) have been rallying for the last days? Jasmine (larra) mentioned it a couple of posts back as well... Take a look at the Dollar Index chart on the D1 timeframe and you will see what I mean... If the $ index is bouncing from higher timeframe supply areas, the majors will be rallying If the $ index is violating D1 demand areas, the majors will be rallying and absorbing supply areasThat's why watching the dollar index is key to trading forex. $ index correlation with Forex is very imporant,...
But there demo account is only valid for thirty days?

"By checking this box I place my digital signature stating that I have read and agree to all Terms and Conditions and am at least 18 years of age or older. Demo accounts are only valid for 30 days."
Keep your blades sharp!
  • #651
  • Jul 26, 2013 4:57am Jul 26, 2013 4:57am
Hi there!

Both the supply/demand indicator and the rectangle indicator allow you to change color under inputs when you drag them onto the charts, have you tried that? Once you have all set up and fitting your template's colors, you save it as default.tpl template and new charts will have that template applied?

Hope that helps!
Alfonso

Quoting Nametaker
Hi Alfonso, i would like to try the supply/demand indicator but the colors don't go with my set up and it wont allow me to modify the colors in metaeditor?
Set and Forget supply and demand trading community
  • #652
  • Jul 26, 2013 4:58am Jul 26, 2013 4:58am
Hi again!
I've been using the demo account for some months and no expiration. They say 30 days but mine it's been running for months now. If it expires, I will open a second one, a third one.. up to N times.

Please use the QUOTE button instead of the reply button when replying to a specific topic, by doing so it will be linked to original post so that anybody can track it.

Alfonso

Quoting Nametaker
{quote} But there demo account is only valid for thirty days? "By checking this box I place my digital signature stating that I have read and agree to all Terms and Conditions and am at least 18 years of age or older. Demo accounts are only valid for 30 days."
Set and Forget supply and demand trading community
  • #653
  • Jul 26, 2013 5:22am Jul 26, 2013 5:22am
Quoting Nametaker
{quote} But there demo account is only valid for thirty days? "By checking this box I place my digital signature stating that I have read and agree to all Terms and Conditions and am at least 18 years of age or older. Demo accounts are only valid for 30 days."
Try Forex Ltd, their demo seems unlimited
  • #654
  • Jul 26, 2013 6:12am Jul 26, 2013 6:12am
Quoting panoramia
Hi there! Both the supply/demand indicator and the rectangle indicator allow you to change color under inputs when you drag them onto the charts, have you tried that? Once you have all set up and fitting your template's colors, you save it as default.tpl template and new charts will have that template applied? Hope that helps! Alfonso {quote}
Thanks.
Keep your blades sharp!
  • #655
  • Jul 26, 2013 6:30am Jul 26, 2013 6:30am
Hi Alfonso! My risk management on forex is 2% and 3% from my account. From your experience how many losses in a row you had with supply and demand?
  • #656
  • Edited 7:01am Jul 26, 2013 6:43am | Edited 7:01am
Hi Boby!
For me 2-3% is just too much, I want to be trading for a long time My risk is always 1% and I have my rules for losses in a row and so on.

The maximum number of losses in a row that I've ever had has been 6, 3 times. All of them news related, so not trading during news, I pause everything. With 6 losses in a row at 3% it's a 18% drawdown. You need a few runners to recover from that, psychologically it would be too much for me, so my risk is 1% and I am happy with it.

That's my personal experience, each one will have its own experience. 1% is quite fair, you won't lose your account trading with 1% and a low 40% success, you will make money. With 3% emotions would be too active on my side, harder to control!

Alfonso

Quoting bobyv87
Hi Alfonso! My risk management on forex is 2% and 3% from my account. From your experience how many losses in a row you had with supply and demand?
Set and Forget supply and demand trading community
  • #657
  • Jul 26, 2013 6:50am Jul 26, 2013 6:50am
The AUDJPY H1 short we planned 1 day ago is working fine. Already at BE now.

Look at all the circles on H1, compressed demand all the way up, no fresh levels and price is bouncing from the D1 supply area. Since all levels are used-up, price has higher probabilities of going through them easily. There is room for a non-greedy target at previous H1/H4 demand area

Attached Image (click to enlarge)
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Look at the H4 chart. There is a potential H4 speedbump supply that could be validated if price keeps on dropping, it's in purple because it's not yet valid

Attached Image (click to enlarge)
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Quoting panoramia
Planning a short trade on H1 supply on AUDJPY. Missed the top entry area in green on the retest, The new zone has absorbed demand on the left which is compressed (reaction to reactions) Price bounced from D1 supply, and absorbing demand in the lower timeframes while respecting supply. There was a nice H4 original supply area which should have been my order, but my order was sitting on the distal line instead, rules were OK for the entry on the lower one, pity! {image} {image}
Set and Forget supply and demand trading community
  • #658
  • Jul 26, 2013 7:02am Jul 26, 2013 7:02am
Quoting panoramia
Hi Boby! For me 2-3% is just too much, I want to be trading for a long time My risk is always 1% and I have my rules for losses in a row and so on. The maximum number of losses in a row that I've ever had has been 6, 3 times. All of them news related, so not trading during news, I pause everything. With 6 losses in a row at 3% it's 18% loss. You need a few runners to recover from that, psychologically it would be too much for me, so my risk is 1% and I am happy with it. That's my personal experience, each one will have its own experience. 1%...
Hi Alfonso, thanks for answer. I see that in trading you use pairs which are correlated with each other. eg: EUR/USD - USD/CHF, NZD-USD - AUD-USD. Could this be a problem?
  • #659
  • Jul 26, 2013 7:04am Jul 26, 2013 7:04am
The only problem with correlated pairs is that if you go long in one and short on the other one, I'd be risking 2%.
I try to choose the one that has the better look, but sometimes I am on both. That's the only problem I see.

If risking 3% then the problem is bigger, because if the correlation fails, then both will be losers. One more reason for me to keep a low profile risk!

Alfonso

Quoting bobyv87
{quote} Hi Alfonso, thanks for answer. I see that in trading you use pairs which are correlated with each other. eg: EUR/USD - USD/CHF, NZD-USD - AUD-USD. Could this be a problem?
Set and Forget supply and demand trading community
  • #660
  • Jul 26, 2013 7:29am Jul 26, 2013 7:29am
A new version of the Rectangle Reader indicator has just been been released, you can download it from the attachment on the first post, it's called RectangleReader.ex4. http://www.forexfactory.com/showthread.php?t=428204

What's new about this version:

  1. Some bug fixes
  2. Manual_TL_On_Current_TF_Only = true;
    If set to True, trendlines painted will only be visualized on the timeframe where it's been drawn. If set to False then they will be painted on all timeframes. I have it true as default, because I use the trendlines as direction on the entry timeframe H4 and H1, or even D1. I don't want them to be visible on the other timeframes, only on the ones where they relate to.
  3. Manual_Text_On_Current_TF_Only = true;
    The same feature can be applied to text objects painted with the A icon tool
  4. We now use description fields instead of the rectangle name in order to excluse a rectangle from drawing the automatic trendlines

I must thank a member at Forex Factory for helping me and the community we're creating. He's fixed some things and helped me add a couple of features. He'll be ading others that we need in the near future, so a big thank you to Peter (outapips). Thanks a lot Peter!

Alfonso

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