Supply and demand in a nutshell by Alfonso Moreno | Page 57 | Forex Factory

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Supply and demand in a nutshell by Alfonso Moreno

  • #1,121
  • Edited 6:30pm Aug 18, 2013 6:17pm | Edited 6:30pm
Hi there Xkaern!
Welcome to the thread! I'm glad that you have finally decided to contribute to the thread

Let me answer your questions...

Quoting xkaern
1- Are we not supposed to use a set and forget entry when returning to a larger TF area in control if price is reaching it after bouncing from an existing opposite area of control? See pic here if I can attach properly: {image}
Set & forget trades depend on the imbalances of the higher timeframes as well as how fresh and original a level is at the entry timeframe's. The fact that there is a higher timeframe area does not mean that you should necessarily set & forget. You could if you wanted of course. You should score the level before you do...

Quoting xkaern
2- confirmation trades... sort of relating to caparzo's question. You said we don't need to wait for demand to be broken to short against a pullback in the higher TF supply area, unless the higher TF area is no longer fresh? I guess I'm a little confused here, so I'm going to try to type as I think.
3- You talked about measuring the curve from the extremes and not using speedbumps. A speedbump can be in control, but not part of the current curve? "You can have temporary curves taking the speedbumps during an uptrend/downtrend, but when the intermmediate zones start to break, it's better to go and choose extremes for set & forget."
Speedbumps are in control while the market is trending, if the trend starts changing and demand is being taken out in an uptrend, speedbumps are not higher odds. The curve is mearured from the extremes (valleys and peaks, swings). You can use speedbumps on the spreadsheet (I do it a lot) to know where the previous speedbumps are, but by nature a speedbump is good with the trend or at an area where an important S/R was broken. If the higher speedbump is got a really nice score, you can trust it if you want, but it's not that higher odds. Most of the times, there will be intraday opportunities on those speedbumps, but I don't qualify them as super higher odds.

Take a look at the 2 screenshots attached to see a couple of examples of D1 speedbumps not working against the newly formed D1 opposite trend.

Hope that clarifies some of your doubts!
Alfonso

P.D The webinar starts at NY Forex Market Open. 2 PM CEST. I've always seen it open at 2 PM CEST in summer time, never at :30
Attached Image (click to enlarge)
Click to Enlarge Name: Screenshot1.png Size: 436 KB
Set and Forget supply and demand trading community
  • #1,122
  • Aug 18, 2013 6:23pm Aug 18, 2013 6:23pm
Alfonso,

I do not understand what you mean by "is not valid because it has not taken out previous supply/demand".

Can you show examples where price has and hasn't taken out previous demand so I can see the difference?

Thank you.
  • #1,123
  • Aug 18, 2013 6:34pm Aug 18, 2013 6:34pm
There are a few examples on the thread, difficult to locate them. It's been discussed quite a bit.

The most recent one was a D1 supply zone on GBPUSD, I mentioned that this was not valid supply because it had not taken out any previous demand. Some hours later or so, as far as I can remember, the D1 "supply level" was absorbed, it was not supply.
In fact, the level is poorly scored. It has no strong imbalance and no margin at all (3:1 minimum), it's not well located (no higher timeframe supply area)

The post is here: http://www.forexfactory.com/showthre...93#post6894593
Hope that helps a bit! I am sure that tomorrow in the Webinar we'll see some live examples, they are all over.

Alfonso


Quoting Axlz
Alfonso, I do not understand what you mean by "is not valid because it has not taken out previous supply/demand". Can you show examples where price has and hasn't taken out previous demand so I can see the difference? Thank you.
Set and Forget supply and demand trading community
  • #1,124
  • Aug 18, 2013 6:37pm Aug 18, 2013 6:37pm
Quoting panoramia
There are a few examples on the thread, difficult to locate them. It's been discussed quite a bit. The most recent one was a D1 supply zone on GBPUSD, I mentioned that this was not valid supply because it had not taken out any previous demand. Some hours later or so, as far as I can remember, the D1 "supply level" was absorbed, it was not supply. The post is here: http://www.forexfactory.com/showthre...93#post6894593 Hope that helps a bit! I am sure that tomorrow in the Webinar we'll see some live examples, they are all over....
That is the example I saw, but I still do not understand what you meant.

I can see many speedbumps to the left that these areas have taken over. Does this not count as taking over supply areas, as speedbumps are marked as supply?
  • #1,125
  • Aug 18, 2013 6:42pm Aug 18, 2013 6:42pm
EDIT: nevermind. I keep looking at different charts and get confused.
  • #1,126
  • Aug 18, 2013 6:50pm Aug 18, 2013 6:50pm
The D1 supply level is poorly scored. It has no strong imbalance and no risk/reward (profit margin) at all (3:1 minimum), it's not well located (no higher timeframe supply area).

This is the basics of supply and demand. A level needs to have a decent imbalance, proved you it has rallied consistently, that it spent little time at the creation of the level.

This one has anything, it's not well scored. The d1 was taking out supply areas. It did not reach a higher timeframe area, so it's not that well located. You want to sell when there is just one candle dropping? I won't. There is no imbalance, it was just a correction. It has nothing to do with retested areas that will prove you anything, in fact, if retested part of that supply (if not all) might have been absorbed, not good!

That area is just not supply because it does not have of the characteristics that define supply. Take a look at the video on how to score levels, that should help!

Alfonso

Quoting Axlz
{quote} That is the example I saw, but I still do not understand what you meant. I can see many speedbumps to the left that these areas have taken over. Does this not count as taking over supply areas, as speedbumps are marked as supply?
Set and Forget supply and demand trading community
  • #1,127
  • Aug 18, 2013 6:51pm Aug 18, 2013 6:51pm
Quoting panoramia
The D1 supply level is poorly scored. It has no strong imbalance and no risk/reward (profit margin) at all (3:1 minimum), it's not well located (no higher timeframe supply area). This is the basics of supply and demand. A level needs to have a decent imbalance, proved you it has rallied consistently, that it spent little time at the creation of the level. This one has anything, it's not well scored. The d1 was taking out supply areas. It did not reach a higher timeframe area, so it's not that well located. You want to sell when there is just one...
Thank you Alfonso.
  • #1,128
  • Aug 18, 2013 7:58pm Aug 18, 2013 7:58pm
Hi Alfonso,
In tomorrow's webinar, Can you please take the following commodities from each of the asset classes for an analysis - precious metals, energy, grains:
Gold, Crude Oil and Wheat/Corn
Thanks in advance.
  • #1,129
  • Aug 18, 2013 8:11pm Aug 18, 2013 8:11pm
Quoting panoramia
Hi there Xkaern! Welcome to the thread! I'm glad that you have finally decided to contribute to the thread Let me answer your questions... {quote} Set & forget trades depend on the imbalances of the higher timeframes as well as how fresh and original a level is at the entry timeframe's. The fact that there is a higher timeframe area does not mean that you should necessarily set & forget. You could if you wanted of course. You should score the level before you do... {quote} Speedbumps are in control while the market is trending, if the trend starts...

Thanks Alfonso, so it sounds like if D1 is bouncing from WK demand, and in an uptrend, you would use the most current speed bump as D1 curve demand until a trend line is broken, or WK supply is hit, after which you would revert back to the last D1 extreme for the curve calculation? Or am I understanding that incorrectly?

Actually it sounds like you never use them for the "official" curve calc re-reading it.
  • #1,130
  • Aug 18, 2013 10:55pm Aug 18, 2013 10:55pm
Could someone explain why Alfonso counts some areas as valid supply/demand and not others?

I've watched multiple videos, but there doesn't seem to be a criteria. It seems like its just up to what the person thinks?

I really don't understand.


There are areas that WERE absorbed, but he says they still don't count in his videos?
  • #1,131
  • Aug 19, 2013 1:22am Aug 19, 2013 1:22am
Hello Axlz,

There is a mechanical way of doing it, watch the "How to score supply and demand areas" video. The thing is that IT TAKES TIME TO DO IT RIGHT. This is not something you learn in 2 days, it takes MONTHS and thousands of hours in front of the charts. It's normal that you don't manage to understand is in the beginning, it happenss the same with any language, learning to cook, learning to drive or dancing...

You have to watch the videos a few times, you have to spend hours forward and backtesting the charts. That is what will give you the experience. Luckiky, life is good and will give you a nice prize if you do it: knowledge and experience.

There is also some "subjectivity" about drawing levels, life is subjectivity. Trading is not an exception!

Many of the levels don't count, like you said, but I'm sure it's because (amongst other things)

- Their score was not good
- They were speedbumps against current trend
- Spiky or used up levels
- In the middle of the curve.

Asking others about it won't give you answers, because I am sure they will have many of your same doubts. The answer is using a mechanical way of assessing the levels (score system), speedbumps vs extreme swings, and a lot of experience. That's all. It's the same in all fields of life after all, just be patient! It just takes time!

Alfonso

Quoting Axlz
Could someone explain why Alfonso counts some areas as valid supply/demand and not others? I've watched multiple videos, but there doesn't seem to be a criteria. It seems like its just up to what the person thinks? I really don't understand. There are areas that WERE absorbed, but he says they still don't count in his videos?
Set and Forget supply and demand trading community
  • #1,132
  • Aug 19, 2013 1:24am Aug 19, 2013 1:24am
Quoting panoramia
Hello Axlz, There is a mechanical way of doing it, watch the "How to score supply and demand areas" video. The thing is that IT TAKES TIME TO DO IT RIGHT. This is not something you learn in 2 days, it takes MONTHS and thousands of hours in front of the charts. It's normal that you don't manage to understand is in the beginning, it happenss the same with any language, learning to cook, learning to drive or dancing... There is also some "subjectivity" about drawing levels, life is subjectivity. Trading is not an exception! Asking others about...
I've watched all the videos and I can mark supply and demand, but there are so many levels that it is impossible to trade.

Your charts only have a few, and leave out many, many other ones, so I was wanting to know how you know which ones to leave and which ones to stay?

Like I said, I've watched all the videos, but I can't find the answer to this.
  • #1,133
  • Aug 19, 2013 1:30am Aug 19, 2013 1:30am
I will not use a speedbump as par of the "offical curve" calculation if a higher timeframe has been hit. Why? Because it will most probably be absorbed on its way way.

That's why it's been explained several times on the thread:

- Speedbumps are good when the markets are trending. Not good when the trend is changing or a higher timeframe has been hit

Alfonso

Quoting xkaern
{quote} Thanks Alfonso, so it sounds like if D1 is bouncing from WK demand, and in an uptrend, you would use the most current speed bump as D1 curve demand until a trend line is broken, or WK supply is hit, after which you would revert back to the last D1 extreme for the curve calculation? Or am I understanding that incorrectly? Actually it sounds like you never use them for the "official" curve calc re-reading it.
Set and Forget supply and demand trading community
  • #1,134
  • Aug 19, 2013 1:42am Aug 19, 2013 1:42am
Hi Axlz!
The answer is SIMPLE: TIME and DEDICATION.

You can't expect to be able to filter out good and bad trades in the NOW moment. Learning works in a very different way.

Even if I told you step by step how you had to do it (which is in fact what the score system does but it takes practice), you wouldn't be able to do it. There are thousands of books written about The Secret and the Power of Attraction. How many people did make it? A very very low %. Why? It takes practice, a change of mindset, believe, faith. People think that if they read The Secret book, it will change their lifes overnight. That's not true!

Learning takes time as well as cooking a good and delicions meal.

If you start to learn a new language, Spanish for example. You think you will know how to speak spanish because you read a grammer book or the full dictionary? The teacher will you all the grammatical rules you will ever need to know. You will study them all by heart. Will you be able to speak spanish knowing all the rules? No, you won't. You need time.

My most sincere tip is: take your time, relax and learn little by little. This is not a 100m sprint race, this is a 5.000 km. marathon with hurdles every 5 meters. The good thing is that there is a mechanical method to learn it, but you need to relax and take your time to learn it over the months. There is no quicker way.

Alfonso

Quoting Axlz
{quote} I've watched all the videos and I can mark supply and demand, but there are so many levels that it is impossible to trade. Your charts only have a few, and leave out many, many other ones, so I was wanting to know how you know which ones to leave and which ones to stay? Like I said, I've watched all the videos, but I can't find the answer to this.
Set and Forget supply and demand trading community
  • #1,135
  • Aug 19, 2013 1:47am Aug 19, 2013 1:47am
Hi there,

attached aud cad

I took short, after creating new supply h1 level in the daily supply area.
Let's see if it will be ok
Attached Image(s) (click to enlarge)
Click to Enlarge Name: aud cad d.PNG Size: 106 KB
Click to Enlarge Name: aud cad h1.PNG Size: 101 KB
  • #1,136
  • Aug 19, 2013 1:54am Aug 19, 2013 1:54am
Quoting sebkor6
Hi there, attached aud cad I took short, after creating new supply h1 level in the daily supply area. Let's see if it will be ok {image} {image}
Does price have to be inside the daily area and do this for us to go short, or can it just touch it and create a new level outside?
  • #1,137
  • Aug 19, 2013 2:18am Aug 19, 2013 2:18am
Hi Axlx,


Price HAS to at least hit the higher timeframe supply area, in this case the D1 supply. If there is an existing H1/H4 supply area on AUDCAD which is fresh and original, like this case, it could have been set & forget.

All this is explained in more detailed on the "How to use trendlines" video and a slide in Post #1, you can see it here:
http://www.forexfactory.com/attachme...0&d=1376859969

That's why I always tell everybody that they should take their time, all the information is there, and it takes time to be assimmilated Don't take me wrong, I'm just trying to help, ok?

Alfonso
P.S. I've attached that slide from Post #1 again in this post

Quoting Axlz
{quote} Does price have to be inside the daily area and do this for us to go short, or can it just touch it and create a new level outside?
Attached Image (click to enlarge)
Click to Enlarge Name: Screenshot1.png Size: 332 KB
Set and Forget supply and demand trading community
  • #1,138
  • Aug 19, 2013 2:30am Aug 19, 2013 2:30am
Quoting panoramia
Hi Axlx, Price HAS to at least hit the higher timeframe supply area, in this case the D1 supply. If there is an existing H1/H4 supply area on AUDCAD which is fresh and original, like this case, it could have been set & forget. All this is explained in more detailed on the "How to use trendlines" video and a slide in Post #1, you can see it here: http://www.forexfactory.com/attachme...0&d=1376859969 That's why I always tell everybody that they should take their time, all the information is there, and it takes time...
I very much appreciate your help Alfonso. It is wonderful that there are people like you willing to help others. I thank you very much.

This is my current analysis of AUDUSD.

Can you tell me if its correct?


Attached Image (click to enlarge)
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  • #1,139
  • Aug 19, 2013 2:53am Aug 19, 2013 2:53am
Your analysis looks good to me.... Just one thing... You have to do multiple timeframe analysis to really know what is going on in the bigger timeframes.
Try to show us the whole zones, not just the proximal line or just one timeframe. It's very difficult to help if you don't show multiple timeframes. Mutiple TF analysis is KEY.

The AUDUSD has been extensively analysis on the thread, but in summary:

Price is bouncing off Monthly speedbump demand. Not the best scenario to sell.
The D1 supply in control is used-up, so no set & forget there, only confirmation trades if anything.



Quoting Axlz
{quote} I very much appreciate your help Alfonso. It is wonderful that there are people like you willing to help others. I thank you very much. This is my current analysis of AUDUSD. Can you tell me if its correct? {image}
Attached Image(s) (click to enlarge)
Click to Enlarge Name: Screenshot2.png Size: 119 KB
Click to Enlarge Name: Screenshot3.png Size: 129 KB
Set and Forget supply and demand trading community
  • #1,140
  • Aug 19, 2013 2:56am Aug 19, 2013 2:56am
Quoting panoramia
Your analysis looks good to me.... Just one thing... You have to do multiple timeframe analysis to really know what is going on in the bigger timeframes. Try to show us the whole zones, not just the proximal line or just one timeframe. It's very difficult to help if you don't show multiple timeframes. Mutiple TF analysis is KEY. The AUDUSD has been extensively analysis on the thread, but in summary: Price is bouncing off Monthly speedbump demand. Not the best scenario to sell. The D1 supply in control is used-up, so no set & forget there, only confirmation...
Thank you for the advice. I will make sure to do that.

But as I am trading 1h, do I place more weight on the daily supply/demand in control VS the monthly? Since 1h is short time frame, and monthly, even though is more powerful, is too long for us to make 1h decisions on?


and can you describe what you consider "confirmation"?
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