Supply and demand in a nutshell by Alfonso Moreno | Page 86 | 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

  • #1,701
  • Aug 30, 2013 4:48am Aug 30, 2013 4:48am
Hi Guys and Dolls,

Hi Alfonso maybe a stupid question. I lookt over and over at the video of Original levels because i have a problem with the Original levels.

So whe look left on the distal line of our level to see if the new level is a reaction on an older level.
Ok . Now the question
If whe look left on the distal line, in history, are whe alowed to break candles doing so or do whe have to see the candles as a wall again.

Thanks friend
  • #1,702
  • Aug 30, 2013 4:50am Aug 30, 2013 4:50am
Quoting whaka
Hi I am really new to Forex trading I am really loving this thread and how supply and demand really works by following everything in this thread. I have watched all the videos several times, and learn something new everytime I watch them and also some others on youtube, http://www.youtube.com/user/panoramia/videos . I have some really good results (really surprised myself) so far this week on the demo account I am using. Will start posting some charts soon. Can somebody suggested a good trade manager I can use in conjunction with this...
I agree! Supply and Demand trading has never been explained so well. you teach us everything about supply demand curve, how to use many timeframes, how to know if a level is fresh, original, in control.... Everything! And beside that you're providing really professional charts with color rules.

I'm at the very beginning of the thread, but not quite new to supply demand trading, because I've been watching all the Sam Seiden webinars and I'm really impressed!

Really beautiful work panoramia.
  • #1,703
  • Aug 30, 2013 4:51am Aug 30, 2013 4:51am
Quoting whaka
Hi I am really new to Forex trading I am really loving this thread and how supply and demand really works by following everything in this thread. I have watched all the videos several times, and learn something new everytime I watch them and also some others on youtube, http://www.youtube.com/user/panoramia/videos . I have some really good results (really surprised myself) so far this week on the demo account I am using. Will start posting some charts soon. Can somebody suggested a good trade manager I can use in conjunction with this...
Welcome to the thread Whaka! I am really happy that the thread and contributions made by all subscribed members are really helping you. I know for a fact that it's helping many of you, it will take more time for others. It all has to do with emotions control, patience and money management. The rules are the rules and you have to follow them. You left brain hemisphere does a good analysis, but it's the right one (emotional) that executes. So we need very strict rules, to execute the process in a mechanical way so that it becomes a habit.

Patience and emotions control are key to any strategy OR any important decision in life. Don't forget to work on those, they are the most important ones!
Alfonso
Set and Forget supply and demand trading community
  • #1,704
  • Aug 30, 2013 4:58am Aug 30, 2013 4:58am
Hi Panoramia,

A friend of mine just sent me your thread link, cause it looks like we're trading approximatively the same way.
I've only read the first page and he was wrong, you're actually doing a lot better !
Thanks for your thread, keep up the good work.
I'm going back to the first page, to learn from you
Attached Image(s) (click to enlarge)
Click to Enlarge Name: eurgbp.png Size: 39 KB
Click to Enlarge Name: nzdjpy.png Size: 98 KB
  • #1,705
  • Aug 30, 2013 5:00am Aug 30, 2013 5:00am
Quoting Stefaan
Hi Guys and Dolls, Hi Alfonso maybe a stupid question. I lookt over and over at the video of Original levels because i have a problem with the Original levels. So whe look left on the distal line of our level to see if the new level is a reaction on an older level. Ok . Now the question If whe look left on the distal line, in history, are whe alowed to break candles doing so or do whe have to see the candles as a wall again. Thanks friend
Hi Stefaan,

I don't really understand your question Stefaan. But let me be clear so there is no doubt.

How do we know if we have an original level of supply?

  1. By drawing a horizontal line at the distal line, and scrolling your charts UNTIL you see that it touches a candle
  2. If that candle is part of another supply level, then the supply level you were analyzing is not original
  3. You are not allowed to cut through candles, that is, once you look left by drawing the horizontal line and the line meets a candle, you stop and decide if it's a reaction to a previous supply level

Is that clearer?
Alfonso

Set and Forget supply and demand trading community
  • #1,706
  • Aug 30, 2013 5:02am Aug 30, 2013 5:02am
Quoting panoramia
{quote} Hi Stefaan, I don't really understand your question Stefaan. But let me be clear so there is no doubt. How do we know if we have an original level of supply? By drawing a horizontal line at the distal line, and scrolling your charts UNTIL you see that it touches a candle If that candle is part of another supply level, then the supply level you were analyzing is not original You are not allowed to cut through candles, that is, once you look left by drawing the horizontal line and the line meets a candle, you stop and decide if it's a reaction...
THX Alfonso it is clear now, thx
  • #1,707
  • Aug 30, 2013 5:06am Aug 30, 2013 5:06am
Quoting pres78
{quote} So far so good. Finally hit 3:1 so I closed the first half and moved the second half to BE. I normally close the first half at 1:1 just to bank some profits but decided to play this one a bit different. {image}
Well London open was kind to this trade as I am now sitting just above 6:1 at the moment. Have moved down to lock in at 3:1 since it's Friday and the end of the month so I want to be flat on all trading at the end of the day. There really is no where's good to be with my SL as after hitting 3:1 price ranged sideways and the last point of supply was just below my entry zone so I just picked the abitrary 3:1 which is just below the low of that messy range.

Attached are my 4hr and Daily charts... Not much support left when looking at the 4hr so I think we may see a return to that blue zone shown on Daily which is a clean RBR. I have not marked the zone above that from the higher RBR as it was a 5 bar daily base which is quite a bit of time but it is fresh so we could see support here also.

See where we go from here.

Alfonso what is your opinion on that nice Daily RBR that required a wick down before taking off (white arrow)? Does that make a zone not fresh?
Attached Image(s) (click to enlarge)
Click to Enlarge Name: xauusd.h4.png Size: 52 KB
Click to Enlarge Name: xauusd.daily.png Size: 45 KB
Today's zone = Tomorrow's opportunity!
  • #1,708
  • Aug 30, 2013 5:38am Aug 30, 2013 5:38am
Quoting panoramia
{quote} Welcome to the thread Whaka! I am really happy that the thread and contributions made by all subscribed members are really helping you. I know for a fact that it's helping many of you, it will take more time for others. It all has to do with emotions control, patience and money management. The rules are the rules and you have to follow them. You left brain hemisphere does a good analysis, but it's the right one (emotional) that executes. So we need very strict rules, to execute the process in a mechanical way so that it becomes a habit....
Can anybody suggest a trade manager to manage the trade.
  • #1,709
  • Aug 30, 2013 6:08am Aug 30, 2013 6:08am
Quoting panoramia
I have quite a few setups running always, it's very very difficult to post all of them here, it would take 1 post for each and I have like 30+ setups for swing trading, and lots of time for me to do it, sorry This is the last one from this morning, for the EURAUD. This is a personal software I developped for logging my Supply and Demand trades, it's for personal use, but you'll see details there. The charts are below. That's what I'm looking for EURAUD for now. {image} EURAUD D1 chart: {image} EURAUD H1 entry: {image} EURAUD H4 for targets: {image}...
HI, where i cant buy the login software?
regards
  • #1,710
  • Aug 30, 2013 6:33am Aug 30, 2013 6:33am
Quoting MickaelFx
Hi Panoramia, A friend of mine just sent me your thread link, cause it looks like we're trading approximatively the same way. I've only read the first page and he was wrong, you're actually doing a lot better ! Thanks for your thread, keep up the good work. I'm going back to the first page, to learn from you {image} {image}
Welcome to the thread Mickael! Glad to have you here!

It's not that anybody makes it better than others, we're all trying to help each other to be mechanical and not breaking the rules that we know work! Lot of emotional pressure, but if you backtest and forward test the rules, you will know that SD works this way. It can be trading in other ways ways, I am sure, but this is the one I am comfortable with.

Again, welcome to the thread!
Alfonso
Set and Forget supply and demand trading community
  • #1,711
  • Aug 30, 2013 6:46am Aug 30, 2013 6:46am
Quoting pres78
{quote} Well London open was kind to this trade as I am now sitting just above 6:1 at the moment. Have moved down to lock in at 3:1 since it's Friday and the end of the month so I want to be flat on all trading at the end of the day. There really is no where's good to be with my SL as after hitting 3:1 price ranged sideways and the last point of supply was just below my entry zone so I just picked the abitrary 3:1 which is just below the low of that messy range. Attached are my 4hr and Daily charts... Not much support left when looking at the 4hr...
Congratulations on your Gold trade Jason!

As far as the D1 demand areas, I have attached my D1 chart on Gold.

  1. Last month high was overshot but D1 candle did not close above
  2. Previous D1 speedbump demand area at 1371 is the one that overshot that last month high
  3. Gold is printing new D1 demand areas and violating supply

If I look at all those points, my view is that we're still bullish on gold on the D1 timeframe, demand is being respected. The D1 trendline is being respected, previous 2 levels of demand would probably respect that trendline. The level at 1371 is also previous month high and has not been retested.

Attached Image (click to enlarge)
Click to Enlarge Name: Screenshot1.png Size: 141 KB


The D1 demand level you mentioned, the one that required a wick down before taking off, is still valid for me. That forms the whole D1 basing area. I require that at least one full candle (OHLC) closes entirely above a D1 demand area in order for that demand area to be considered as non-fresh. It's all part of the base for me.

On the H4 chart, this would be the D1 wick down forming the whole D1 demand base. I would not set & forget there because it's not fresh, thus I would require confirmation.

Attached Image (click to enlarge)
Click to Enlarge Name: Screenshot2.png Size: 146 KB


Alfonso
Set and Forget supply and demand trading community
  • #1,712
  • Aug 30, 2013 6:46am Aug 30, 2013 6:46am
Alfonso,

I have been liking the trenline break and trading first supply or demand set-ups these seem to be quite good and we almost always seem to get a return to these zones. Many times we print the zone before the break and then get the retrace to the zone that caused the break.

How do you handle the first time backs to fresh higher TF zone like daily and weekly. Will you take these as touch trades or do you consider these counter trend? We would normally still be above the daily trendline but would be at the highest point in the curve. If we have a nice strong arrival and if this zone if fresh high ranked zone would this suffice for reason to set and forget? I have seen some example where price will near the zone and we get a sideways range that breaks the TL and then we get our final strong push up.

What I have noticed is that many times on Daily (USDCHF is a great example) we get a RBD (looks like railroad tracks on the daily) with strong candle up followed immediatly by a strong candle down which leads to the sell off. The next two times back to the back on USDCHF we printed the exact same pattern making a LL and thus stacked supply zone all off RBD's. Would you trade each of these new zones as fresh I assume not as they are reactions to each other but in making this pattern each of the zones are just barely being touched and a new zone is formed.

I am very interested where I work fulltime to try and work some higher TF set and forgets into my trading plan.

Any advice you can offer is as always appreciated.
Today's zone = Tomorrow's opportunity!
  • #1,713
  • Aug 30, 2013 6:50am Aug 30, 2013 6:50am
Quoting panoramia
{quote} Congratulations on your Gold trade Jason! As far as the D1 demand areas, I have attached my D1 chart on Gold. Last month high was overshot but D1 candle did not close above Previous D1 speedbump demand area at 1371 is the one that overshot that last month high Gold is printing new D1 demand areas and violating supplyIf I look at all those points, my view is that we're still bullish on gold on the D1 timeframe, demand is being respected. The D1 trendline is being respected, previous 2 levels of demand would probably respect that trendline....
So if the 4hr TL is broken but the Daily remains intact any trades taken off the broken TL's on the 4hr or 1hr would still be considered counter trend because of teh Daily TL?
Today's zone = Tomorrow's opportunity!
  • #1,714
  • Aug 30, 2013 6:57am Aug 30, 2013 6:57am
Quoting pres78
{quote} So if the 4hr TL is broken but the Daily remains intact any trades taken off the broken TL's on the 4hr or 1hr would still be considered counter trend because of teh Daily TL?
As you know, probably better than me (I have been into trading for only 2 years and a half), trend is relative to the chart you are looking at. So a H4 downtrend can coexist with a D1 uptrend and a Monthly downtrend.

What we need is a set of rules that will allow us to trade on our entry timeframe, let's say H4, in the direction of that H4 trend. But where is that H4 trend most likely to end? Where is the most likely turning point? At a higher timeframe SD area.

In the case of gold, I can see that the D1 is respecting an ascending trendline, it's printing brand new D1 demand areas. So if I trade a H4 short, I will need direction on the H4 (my entry timeframe). Where will I stop shorting on H4? When I am too low in the curve, near higher timeframe fresh/original demand areas. The D1 has all that, original and fresh, so it would be a place to exit any trades I had, where the D1 buyers would probably come into play.

If I see that the D1 trendline is being respected and brand new levels of demand are being created on the D1 chart, I am going to respect that always! It's mechanical, logical and makes sense to me, so that's what I will always be doing. I am not greedy, there will be other opportunities to short if that D1 demand is broken.

One key thing to remember is that any trendline that you may have painted on your chart on H4 or H1, will be negated IF the D1/WK opposing timeframe has been reached. Why? Because higher timeframes are where price is most likely to turn, thus changing current market dynamics on the entry timeframe's trend.

Hope that makes sense to you, it makes to me, so that's what I'm doing.
Alfonso
Set and Forget supply and demand trading community
  • #1,715
  • Aug 30, 2013 7:12am Aug 30, 2013 7:12am
Quoting panoramia
{quote} As you know, probably better than me (I have been into trading for only 2 years and a half), trend is relative to the chart you are looking at. So a H4 downtrend can coexist with a D1 uptrend and a Monthly downtrend. What we need is a set of rules that will allow us to trade on our entry timeframe, let's say H4, in the direction of that H4 trend. But where is that H4 trend most likely to end? Where is the most likely turning point? At a higher timeframe SD area. In the case of gold, I can see that the D1 is respecting an ascending trendline,...
Perfect sense and I always hated the word trend because it is all relative and as you noted you can have smaller TF trends that oppose higher TF trends. I have never used TL's in my past trading (well not much anyway) but I can see the benefit and the compliment it offers to S/D trading. As I noted I have seen many cases where the TL break, return to S or D offers a great initial entry.

I can see on Gold what you are saying but that daily TL is a ways down so shorts could be played on the lower TF's down to this trendline taking into account the new daily demands on the way down.

Sorry for all the questions just trying to disect all of the information down into a trading plan that works and makes sense for me. Thanks again!
Today's zone = Tomorrow's opportunity!
  • #1,716
  • Aug 30, 2013 7:12am Aug 30, 2013 7:12am
Quoting pres78
Alfonso, I have been liking the trenline break and trading first supply or demand set-ups these seem to be quite good and we almost always seem to get a return to these zones. Many times we print the zone before the break and then get the retrace to the zone that caused the break. How do you handle the first time backs to fresh higher TF zone like daily and weekly. Will you take these as touch trades or do you consider these counter trend?
First time to the zone created new the TL, where price broke out, are really great. I love those setups.


If the D1 or Weekly area is fresh, then I will look for good levels to set & forget, strong imbalance and departure, little time at the level, peak and valleys (extremes) but no speedbumps, little time at the level, that is, a score of 9 in the odds enhancers score. Else I will wait for confirmation.

Once a higher timeframe SD area has been hit, your entry timeframe's TL will no longer be valid, since those higher timeframes are normally turning points, moreover if they are fresh. If the D1 supply is fresh, within a fresh supply area on the Weekly chart, and the Weekly is in a downtrend. I will look for a set & forget on the H4 chart, that's for sure!

Quote
We would normally still be above the daily trendline but would be at the highest point in the curve. If we have a nice strong arrival and if this zone if fresh high ranked zone would this suffice for reason to set and forget? I have seen some example where price will near the zone and we get a sideways range that breaks the TL and then we get our final strong push up. What I have noticed is that many times on Daily (USDCHF is a great example) we get a RBD (looks like railroad tracks on the daily) with strong candle up followed immediatly by a strong...

  1. The first time we hit a D1 level, I will look for set & forget if there is a good level, else I won't. We need a nice level, no doubts about it, if there is a doubt, skip it
  2. The second time we reach that same D1 supply area, like the USDCHF, I will not look for set & forget, since the D1 level will no longer be fresh nor original, I will wait for confirmation trade in that area
  3. On the third pullback I will not wait for confirmation either. I will require that previous opposing SD area is taken out, that will prove there are still willing buyers/sellers at the zone
  4. If a confirmation short trade worked and we are again back into the level, I will require that the new supply level is higher than the first entry, that is, the higher timeframe are is penetrated further. Always look for the blank areas on the higher timeframes, that is, the non-traded areas

Hope that helps a bit!
Alfonso

Set and Forget supply and demand trading community
  • #1,717
  • Aug 30, 2013 7:14am Aug 30, 2013 7:14am
Quoting pres78
{quote} Perfect sense and I always hated the word trend because it is all relative and as you noted you can have smaller TF trends that oppose higher TF trends. I have never used TL's in my past trading (well not much anyway) but I can see the benefit and the compliment it offers to S/D trading. As I noted I have seen many cases where the TL break, return to S or D offers a great initial entry. I can see on Gold what you are saying but that daily TL is a ways down so shorts could be played on the lower TF's down to this trendline taking into account...
Yes, exactly Jason. You can trade the lower timeframe down trend using the trendline UNTIL you are low in in the curve on the D1. Once you are low in the curve, we should stop shorting the markets and wait for either a break of the D1 demand area or a long trade in the direction of the D1 trend, taking off the D1 fresh and original level.

That makes sense to me, it's logical to have it as a set of rules to add to a trading plan. It's mechanical!
Alfonso
Set and Forget supply and demand trading community
  • #1,718
  • Aug 30, 2013 7:18am Aug 30, 2013 7:18am
Last question this month I promise!

Using your GOLD chart and focusing on that lower fresh demand base. We look left and hit a messy range of PA that was most likely more a reaction to that broken red support level. No real supply in that area as we dropped from here into what was fresh demand and probably a great long entry and this gives us a new swing low that makes our daily uptrend line. When a demand base forms in an area that price had previously spent a long time does this make the zone any better or worse? Or does the fact that we based there and saw a nice reaction upward void all of the past messy action?
Attached Image (click to enlarge)
Click to Enlarge Name: Screenshot1.png Size: 133 KB
Today's zone = Tomorrow's opportunity!
  • #1,719
  • Aug 30, 2013 7:28am Aug 30, 2013 7:28am
I wish I could take this 4H trade with you Alfonso on USDCAD, but since its Friday I don't want to leave any positions open over the weekend.

Best of luck.

Attached Image (click to enlarge)
Click to Enlarge Name: usdcad4h.png Size: 51 KB
  • #1,720
  • Aug 30, 2013 7:38am Aug 30, 2013 7:38am
Quoting pres78
Last question this month I promise! Using your GOLD chart and focusing on that lower fresh demand base. We look left and hit a messy range of PA that was most likely more a reaction to that broken red support level. No real supply in that area as we dropped from here into what was fresh demand and probably a great long entry and this gives us a new swing low that makes our daily uptrend line. When a demand base forms in an area that price had previously spent a long time does this make the zone any better or worse? Or does the fact that...
Well, there is something I don't do, and that's cutting through candles. I mean, that's the past, that messy area of support does not add anything to my decision process. I always look right to see if my SD area is fresh, I always look left to see if my SD area is original or not. That's all I do, I just want my decision processes to be as simple as the neuron of a mosquito

If you look at that messy PA area, you could find a confluence if you want to, and that is that in the past price rallied from there. But again, I am not taking that into consideration. I look right and see if my previous level of demand is fresh and with the current timeframe's trend. The rest of the candles do not influence any decision I have to take. I just want to know where the opposing higher timeframe SD areas in control, trade the fresh ones if they are with the trend, and trade only the original ones if they are against. We can also stick only to trading with the trend only, which is very wise! That would be even simpler.

The past is the past, I just want fresh and/or original levels by looking at current price action. You can use the past levels as confluences if you want, I am not doing that, but I know many people do. I believe that with this, I did answer another post from you yesterday talking about flip zones, previous demand areas becoming supply, opposite for previous supply areas becoming demand. I don't trade those areas. I am aware of them, but I always look at current price action and fresh/original levels to take my trades. I may be missing many trades, but I don't care, it's the way I do it to prevent the only neuron I have left to overheat and collapse

Hope this makes sense to you as well.
Alfonso
Set and Forget supply and demand trading community
4 traders viewing now