Supply and demand in a nutshell by Alfonso Moreno

I even held on my breath Can I breathe now?

Yes, you are absolutely right. Thanks for the heads up. I forgot to add that rule I've edited the previous post and added it like this:

1. Wait for confirmation and trendline break if the higher timeframe level is not fresh and not used up (more than 2 retests)

I've also add these statements to Post#1.
Alfonso

Haha, I was referring to your last point :

why can we not trade a used up HTF area if we bounce off of it and get confirmation?

Well, because it's low odds, that's it.

Let me ask you a couple of quick question Samir, very straight forward ones...

1. Why should you bother and waste my time waiting for a confirmation trade on a higher timeframe used-up area?
2. Wouldn't you prefer to switch to other pairs where you will probably find fresh and/or original levels?

Does it make sense to you?

You know what in my humble opinion the problem is Samir?

1. We load a chart and we want to set an order no matter what
2. We are not objective enough to say "Hey, there is no diretion" or "No, we're too low in the curve". POINT

Now do one thing... Look at any pair that you like or that you hate and do this, for example on the EURNZD H4:

1. Go back in time only one month on the H4 chart
2. Draw a vertical line at the 13th August
3. Draw your D1 SD zones
4. Now in hindsight (can't be done in another way), count the number of valid H4 trades that happened on that H4 chart which were valid according to the rules, don't sell too low or buy too high remember
5. Come back to me after you do that and tell me please. Choose any other pair, all are the same! It's the same bloody thing over and over, it's how the market works.
6. BUT, your mind does not think or work how the market works

Another of my rules is:

1. If after 20 seconds of looking at a pair, I don't know what trade I can take, I will skip it
2. Experience is paramount, be patient

You see? We're only discussing about psychology and not trade setups. It's all about that after all

Alfonso

OH, now I understand the difference between the last and second last points.

when you say used up, you're referring to MORE than 2 retests.

when you say non fresh , you are saying it is valid as long as we have no more than 2 retests to the fresh area.


and regarding your comments on the other pairs, the issue is most pairs are correlated, and I never seem to find many trades.

Alfonso, do you recommend I find a broker that trades many CFDs like stocks? Maybe this will help me find more entries?

You know what? I believe... it's a belief...that

1. You are over-trading
2. You are not walking away and disconnecting
3. You are not using the H4 timeframe as an entry as you said you would, you posted an AUDCAD H1 long before
4. You are not treating each pair independently, by looking at correlations you will always find a reason not to take a trade. The best setups will run without you, which is probably what is happening to you now, you see them in front of your eyes and you are not riding them

Ain't I right?

Trade should be relaxing and will become "boring" after some time IF you have the strict rules and the plan.

Conclusion:

1. Walk away and disconnect!
2. Do not trade more than 3 hours a day!
3. DO NOT OPEN YOUR LIVE ACCOUNT AFTER THOSE 3 HOURS. Your office is closed, you can't have access to your computer, only tomorrow you will be able to do it since you don't have the office's keys, think like that since you are working probably from home. You need that mindset
4. In order to accomplish point 2, you need to trade on H4
5. Do it for at least 2 months
6. Forward test 2 hours a day for 2 months with Forex Tester

You will see the difference, your life will change!
Alfonso

You confirmed my suspicions with that question! You are not only over-analyzing but you want to super-over-analyze and overtrade.

You told me you are like 15 hours in front of the computer. That's the biggest mistake a trader can ever make!

Do not add more pairs or CFDs to your list, do just the opposite, remove them! Some days like this week, it will be slow and there won't be high odds trades.

You know what you need in order to achieve 15% a month? Just a few good trades, not 200! Concentrate on clear setups!
Alfonso

P.S
In the meantime, disconnect... this is what I did last week... Hope OTA does not remove my video, I believe there is no infringment, but you tell me... Paragliding from 2500 meters high on the island on Tenerife! Sea of clouds, 2500m above the sea, landing at the lighthouse! Lovely!


I love extreme sports as well, canyoning, caving, diving, climbing. That's what I trade for, to travel and enjoy life! There is a purpose, money is just a means to get what fills my heart with joy!

Off to bed... Zzzzzzzzz

cool video

Hi is USDCHF H1 supply zone a valid level to go short? It seems like it is but something just doesn't sit right. I think it could be the fact that price just cannot close below the S/R flip on the H4 and there is apparent strong rejection from that level.





Btw Silver Daily has formed a nice speed bump supply, I think it looks like a great area to go short.

Well done and excellent rules as always Alfonso.



TSD

It looks like you had spotted a nice H1 speedbump supply I was sleeping so I didn't see that one. I am not trading Silver (metals and CFDs) until I solve some problems with my EA.

H1 CHART:
But now the H1 silve look has changed completely according to the rules:

1. The speedbump you mention (the top one on my chart) is no longer a valid spb supply now since it would be against the H1 descending trendline AND not at the brand new D1 supply
2. There is a lower H1 speedbump which is already playing out
3. So there is no fresh level WITH the trend that can be used for now

D1 chart:
There are 2 brand new levels of D1 supply though, 1 speedbump and 1 valley. The lower speedbump looks like a nice spot to short at

The lower speedbump is original, so even better. The top d1 supply is fresh but not original so if price makes it there when the D1 descending trendline is broken, we need confirmation BECAUSE it would be counter trend on the timeframe it's been detected.



Conclusion:

1. we just have to wait either for new levels of supply OR price to reach the previous D1 speedbump supply in order to go short
2. Since we can't do anything on H1 "for now" unless there are brand new fresh levels of supply on the way down, we have to trade at the D1 supply, where there is a nice H4 supply area we could try IF that happens and the D1 is still with the trend (respecting trendline) when price gets there

​H4 chart:

Hope the analysis looks logical to you! I just followed the rules. Can it work? We never know, but they are the rules!
Alfonso

Great movies Alfonso, and fantastic to be able to live the life you want.

By the way, the rules could not be explained more simple the you just did in post 2341, it's up to us to learn them by hard and apply them accordingly.

Have fun on your next outing, see you this afternoon

On the EURUSD, things are not looking good, there is nothing we can do according to the rules...

We need some IF scenarios in order to trade the EURUSD on H4.

H4 SHORT:

1. I would short on the H4 purple supply zone (purple because it's not valid supply yet) IF last week low (red beads and hozizontal line) are broken
2. The trendline would be broken, but we are not in a higher timeframe D1 supply, so we'd not be allowed to short. We need those IF conditions

H4 LONGS:

1. We would need to break higher and wait for brand new H4 FRESH demand areas
2. We would be allow to go long IF the D1 opposing supply is not touched or it's not very near, else we'd be too high in the curve and no trade
3. The lower H4 speedbump demand supply is purple, why? Because it's no longer valid, it would be a speedbump against the current H4 dynamics IF price makes it there, so the purple speedbump zone is negated. Speedbumps are not taken against the trend AND/OR against a trendline

Hope that it makes sense to you... I am just showing you an example of how to apply the rules, common sense and logic. We want CLEAR setups with ODDS on our side, ELSE skip the pair like I am doing now.

Alfonso

Thanks for your comment! Yes, the rules are THAT simple but also THAT difficult at the same time.

WHY?
Because we have our worst enemy living within us, at home and inside our bodies! Our emotions!
That's why you need to start thinking like a robot!

1. If a zone is broken by 1 pip, it's no longer a zone
2. If a trendline is broken, don't continue trading in that direction
3. If the level is not fresh, do not trade it
4. Etc, etc...

Imagine you were a robot, you have been programmed to read and understand 0 and 1 only. An scenario is either valid or it's not valid.
In our case, we are humans, our minds boosted by our ego's thirst do have these scenarios:

1. 0, 1, 2, 3, 4, 5, 6, 7, 8, 9

Which one to chose?

1. Create habits and very strict rules. You have the latter in this thread (you can use them or tweak them, up to you, but backtest any tweaks)
2. No more than 2-3 hours of live trading a day on a swing basis
3. Walk away and enjoy life, your woman/man and family/friends
4. No matter how long you stay looking at the charts like an autistic person, the candles won't move to your side, You don't have that power, neither do I

Alfonso

Ho Alfonso,

One question about the broken zone by one pip. Does this also apply to the higher time frames D, W and M, the digital answer would be yes of course.

What would a robot think about your question?

Are there fakeouts and traps? Yes, many. But? You just have rules. If you want to trade those fakeout areas, you gotta have rules for them. I do not have rules for fakeouts so I don't trade them. I just make it simple for me so that I spent the least time possible taken a decision.

I am sure we could talk about the EURUSD for 2 hours and no decision would be made! That's why I do have my rules, if rules say GO, I GO

Alfonso

Thanks, you are right, because I did not looked at the D1 TF, only H4 and W1...my W1 demand is low, so I tought I could risk a short trade...

OK, I will have a look for the really pretty women outside...

Thanks Alfonso, it's clear

It is the statement "we need a solid break of a supply level to go long" that got me confused on this point.

So it is clear to me that without a solid break of a supply level we do not go long, and when that level is broken by one pip it is no longer valid as a supply level to trade of.

Hi Alfonso,

On the EURUSD analysis:

I understand that you are saying, thanks for the explanation of your way of doing this, I'm learning a lot from this.
I miss the H4 supply on your chart and the D1 supply above. I can see the H4 speed-bump would not be valid since it's against the trend, is this your reason for not drawing it?
I don't see why the D1 level shout not be there

Hi Alfonso,

Thanks for your Silver analysis, it looks completely logical to me. Indeed I saw the H1 supply and placed an order but it missed my order by a few pips (I didn't draw my H1 supply like you did so my order was slightly higher). Now left with an order on the D1 speed bump supply, maybe price will get there next week