Supply and demand in a nutshell by Alfonso Moreno | Page 124 | Forex Factory

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Supply and demand in a nutshell by Alfonso Moreno

  • #2,461
  • Edited 4:19pm Sep 14, 2013 3:48pm | Edited 4:19pm
Quoting panoramia
EURNZD H4 If the descending trendline is solidly broken, together with last week low (red bids), longs would be allowed on H4 Else, we need to wait for D1 non-fresh demand to be broken to keep on selling{image} On the D1 we are at non-fresh demand, so we need to wait for the TL break confirmation, set and forget is not allowed On the WK chart, we have lots of wicks, sort of a classic support area{image} I am planning a few swing trades on Saturday on my VPS so that I can take my Monday off and disconnect It's another way of doing it, when the...
Alfonso do you have a video on how to draw trendlines in a mechanical way? I keep seeing how you draw your trendlines compared to me and mine are slightly different to yours.

Also: Is it a good idea to set two trades with two different profit targets? (D1/H1 combo) e.g There is a profit target on H1 and there is a profit target on Daily. A trade for each.

NT
Keep your blades sharp!
  • #2,462
  • Sep 14, 2013 4:15pm Sep 14, 2013 4:15pm
Quoting panoramia
{quote} Hi Nick! Did I always tell you that I love your templates? Yes, I did! I have the black background because on my testing I am a lot of time in front of my computer, white hurst the eye, but your template looks really nice! I might probably start using a similar one very soon I agree with your analysis, Myst had the same one. I do have a limit sell order covering the whole 22ish pips D1 supply. I am not gonna wait for any reaction, the D1 TL is down, the D1 level is so thin that I am gonna take the trade based on MN/D1 combo, width...
Thanks Alfonso. I will also take trades with all 3 combos.
Keep your blades sharp!
  • #2,463
  • Edited 1:32am Sep 15, 2013 1:19am | Edited 1:32am
Quoting Nametaker
{quote} Alfonso do you have a video on how to draw trendlines in a mechanical way? I keep seeing how you draw your trendlines compared to me and mine are slightly different to yours.
No specific video on how to draw a trendline Nick, but I promise I will create one. It was the next one I intented to create. There is some information on how I draw the trendlines scattered throughout the webinars, but not a single one just on them. Trendlines can be subjective, anything in trading can be subjective, but I tried to remove subjectivity from it. The video will show you how.

Quote
Also: Is it a good idea to set two trades with two different profit targets? (D1/H1 combo) e.g There is a profit target on H1 and there is a profit target on Daily. A trade for each.

You can set two trades with two different profit targets based on 2 different combos. In fact I do that many times, I have now 3 accounts, one for each of the 3 different combos but in the beginning it's not advisable. What I will not do is setting all those trades in the same account. Each combo will have its own account and analysis, or emotions will pop in and ruin it all!

Hope that helps

Alfonso
OFF now with mother nature to practice some canyoning! Have a great weekend!
Set and Forget supply and demand trading community
  • #2,464
  • Sep 15, 2013 2:59am Sep 15, 2013 2:59am
Dear Alfonso,

I have drawn the daily and 4 hour supply and demand levels in Hangseng. Am i drawn correctly?
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  • #2,465
  • Sep 15, 2013 3:24am Sep 15, 2013 3:24am
Hi Alfonso,

I'm re-reading the rules from post one, and red this one:

I will consider a downtrend has ended IF the timeframe I use as direction has broken at least 2 D1 supply zones, that simple. If 2 supply zones have been violated, then I will consider the downtrend has ended and will start looking for longs. Opposite for an uptrend. That's the very simple rule I am following.
* If only 1 supply zone is broken I will not consider the trend has changed, but I will look further up to lean on the previous unbroken supply on my direction timeframe. If my trade fails at that level again, then I will not trade again in that direction (down), and will considered the trend changed and now it's up.

My question is how does this rule relate to taking a trade at a W1 level and hold on to it for a good long run?
  • #2,466
  • Sep 15, 2013 3:30am Sep 15, 2013 3:30am
Quoting panoramia
{quote} No specific video on how to draw a trendline Nick, but I promise I will create one. It was the next one I intented to create. There is some information on how I draw the trendlines scattered throughout the webinars, but not a single one just on them. Trendlines can be subjective, anything in trading can be subjective, but I tried to remove subjectivity from it. The video will show you how. {quote} You can set two trades with two different profit targets based on 2 different combos. In fact I do that many times, I have now 3 accounts, one...
Nice. Have fun!
Keep your blades sharp!
  • #2,467
  • Sep 15, 2013 3:45am Sep 15, 2013 3:45am
Quoting Reacto
Hi Alfonso, I'm re-reading the rules from post one, and red this one: I will consider a downtrend has ended IF the timeframe I use as direction has broken at least 2 D1 supply zones, that simple. If 2 supply zones have been violated, then I will consider the downtrend has ended and will start looking for longs. Opposite for an uptrend. That's the very simple rule I am following. * If only 1 supply zone is broken I will not consider the trend has changed, but I will look further up to lean on the previous unbroken supply on my direction timeframe....
The above statement does apply to the WK/D1/H4 combo. The daily is your trend direction. So draw a trend line on daily to assess trend and for even more confirmation do the above instruction. That is how i have interpreted the post. Or it could mean the tf you have your SD curve on (WK) has to break 2 SD levels before trend is re-realised.

We will wait for Alfonso to weigh in.
Keep your blades sharp!
  • #2,468
  • Sep 15, 2013 4:11am Sep 15, 2013 4:11am
Quoting panoramia
{quote} Thanks Max! You are welcome! There are a couple of wrong things on your screenshot: That trendline you drew is not a valid TL, second valley did not remove previous supply (High High), it's a basic rule for drawing the trendlines, the same applies for SD areas The valid TL is the one I painted, it made 2 peaks after hitting opposing HTF supply areaHope it makes sense! You need to pay closer attention to the Highs or Lows being removed in order to draw valid TLs. Alfonso {image}
Many thanks Alfonso, still have lots to learn.
  • #2,469
  • Sep 15, 2013 5:07am Sep 15, 2013 5:07am
Hi Alfonso,


In general, a level is not valid until it has taken out an opposing level. With the confirmation trades we some times use an less strict rule, where the taking out of the opposing level is not necessary. So we have two types of confirmation.
Can you confirm that the strict one is only applies to the fourth bullet of your text below, and the less strict one applies to bullet two and three?


When to wait for confirmation

  1. At higher timeframe supply and demand areas. If waiting to short on a D1 supply area, you have to wait for the D1 supply proximal line to be hit, do not try to go short before the zone is reached, you would entering too soon, be patient. If it doesn't make it to the D1 supply and price starts dropping, what for previous demand to be taken out on your entry timeframe
  2. At speedbumps located near ot within a higher timeframe supply and demand area. Since set & forget is not higher odds at speedbumps against the trend, we should wait for brand new levels being formed off a speedbump at a higher timeframe supply and demand area
  3. Level on top of level. When your entry timeframe has several levels stacked on top of each other, you can wait for brand new lower timeframe areas (H1 or H4) to be formed. Sometimes it's difficult to decide which level to take, if that is the case, use confirmation to filter out the levels and concentrate on the brand new one created at present time at those stacked areas
  4. When higher timeframe area has already been retested. If the D1 supply zone has been retested, don't only wait for a brand new area of supply to be formed on your entry timeframe, but also wait for previous opposing entry timeframe demand to be absorbed. You don't want to trade a restested D1 supply area without that confirmation. You can do it but it's not higher odds, remember the first retest has always the higher odds of working out

  • #2,470
  • Sep 15, 2013 5:16am Sep 15, 2013 5:16am
Quoting panoramia
{quote} That would be over-complicating the "simple" steps process laid out on the thread. That sounds like super advanced emotional stress Joe We'd need a therapy at a SPA resort in Kauai after that Just kidding my friend Keep It Super Simple Stupid! KISSS I love KISSSES Alfonso

I really could use some therapy --- anywhere!! That trade style was stressful but it was as edge that worked for quite awhile and that’s the thing with trading. You might think you have found some holy grail system or indicator that works but they usually if not always fail – thus the 95% trap. That’s why the SD trading methodology that Alfonso has laid out is key. Keep it simple stupid. SD is not going away, smart money is always in the markets and they leave traces you just need to learn to recognize it. I think post 2450 should be in the top 10 list of posts for us because it brings up the emotional side of trading, after all trading is 10% mechanical 90% emotional. I’ve been working on the 90%, following the thread and learning along the way. It has been a long roller coaster ride, not too long ago I was reading 10 different threads trying to learn everything on SD now I only read 1. Please don’t fall into the same trap, stick to one method (this one) and don’t jump around from one method to another (another emotional trap). It has taken some time for me to remove many years of trading misconceptions and junk from the little grey cells. I’m trying to simplify things!! Trading is all probabilities we have an edge laid out for us on this thread and a mentor to guide us. Learn it, use it and pass it on! Losses are part of the game, take them, embrace them and move on to the next trade. And if you miss one who cares? Trading has been conducted for hundreds of years so there will always be another trade.


Oh and I love kisses too!! My wife promised me extra kisses when I start trading again. So I better get going.


Joe

  • #2,471
  • Sep 15, 2013 5:25am Sep 15, 2013 5:25am
Hi Alfonso,

A question about two statements below that seem to contradict each other somewhat. According to bullet two we should not trade a used up level, this makes sense, because it is lower odds. Do you actually mean it as strict as it is stated here, even after proper confirmation i.e. the opposing level has been taken out?

When not to wait for confirmation

  1. In the middle of the curve. No diddle in the middle. Wait for confirmation when you are at a higher timeframe supply and demand zone. Look at the charts, price almost always makes it to those areas, why would you want to outsmart the markets? Hold back your ego
  2. At a used-up higher timeframe zone. An used-up area (retested several times) is not high probability, neither plan a confirmation trade nor a set & forget on these areas, or you will know what blowing up an account is

A weekly level can hold 1,2,3,4, ....10 times, as long as it is not broken it is still valid

  • #2,472
  • Sep 15, 2013 5:43am Sep 15, 2013 5:43am
Gold Daily

I would love to see a return to the DBD which was the decision to break the Daily TL. We have removed the demand in that RBR seen to the left so the path should be clear down to at least 1289.50 which is a 6 or 7:1 depending on how one decides to place their entry and SL off that supply zone.
Attached Image (click to enlarge)
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Today's zone = Tomorrow's opportunity!
  • #2,473
  • Sep 15, 2013 5:48am Sep 15, 2013 5:48am
Hi Alfonso (sorry, but I have another thing that is not quit clear for me)

Is the fourth bullet correctly stated? The way I read it, we should never take a set and forget on in a higher time frame.

Small summary of all these rules, they apply to any timeframe

  1. Trade only fresh levels when you are in a trending market and room to opposing higher timeframe area
  2. Trade original AND fresh levels at higher timeframes areas if you want to go counter trend
  3. Do not trade non-fresh levels on set & forget
  4. Wait for confirmation always at higher timeframe areas if they are fresh, original and/or fresh (set and forget as well here), or not used-up. Higher timeframe areas are D1, Weekly and Monthly
  5. Wait for confirmation AND trendline break if the higher timeframe level is not fresh and not used up (more than 2 retests)
  6. If a higher timeframe area is used-up, that is, 2 or more retests, neither trade it on confirmation nor on set & forget, pass on it

  • #2,474
  • Sep 15, 2013 6:48am Sep 15, 2013 6:48am
I am planning a trade on AUD/USD.

Bouncing off a MN speedbump.
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There is a speedbump on weekly. An opportunity to go short with the trend.
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On daily there is a chance to get a quick trade before higher TF supply is reached. I will go long at the speedbump demand up until higher tf supply. Then look for shorting opportunities.
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Nick
Keep your blades sharp!
  • #2,475
  • Sep 15, 2013 7:44am Sep 15, 2013 7:44am
Quoting Nametaker
{quote} The above statement does apply to the WK/D1/H4 combo. The daily is your trend direction. So draw a trend line on daily to assess trend and for even more confirmation do the above instruction. That is how i have interpreted the post. Or it could mean the tf you have your SD curve on (WK) has to break 2 SD levels before trend is re-realised. We will wait for Alfonso to weigh in.
Hi nametaker,

Thanks for the response, but as you say, it's not realy clear.
I have chosen to start off with W - H4, so when the W1 demand is hit, the lower TF trendline is no longer valid. If the W1 level is fresh, I can take a trade on a valid H4 level. There is no need to wait for a break of 2 daily supply levels.
  • #2,476
  • Sep 15, 2013 9:18am Sep 15, 2013 9:18am
Quoting Nametaker
I am planning a trade on AUD/USD. Bouncing off a MN speedbump. {image} There is a speedbump on weekly. An opportunity to go short with the trend. {image} On daily there is a chance to get a quick trade before higher TF supply is reached. I will go long at the speedbump demand up until higher tf supply. Then look for shorting opportunities. {image} Nick

Hi Nick,

We did this pair with Alfonso in the webinar a week ago, and came to the conclusion we would only go long after a solid break of weekly supply. That is not the one that is on your chart, there was one below. The lower one is broken now, but not solidly, so long would not be a higher odds trade.

Did you have a look at the dollar index chart (If you don't have it, it's on post 2451) The way I see it, is that the dollar index is low in the weekly curve, so trades against the dollar for me are not higher odds. (September 18 Fed announcement awaited about tapering)

just to led you know
  • #2,477
  • Sep 15, 2013 9:26am Sep 15, 2013 9:26am
Quoting Reacto
{quote} Hi Nick, We did this pair with Alfonso in the webinar a week ago, and came to the conclusion we would only go long after a solid break of weekly supply. That is not the one that is on your chart, there was one below. The lower one is broken now, but not solidly, so long would not be a higher odds trade. just to led you know
Thanks! I will take that into account.
Keep your blades sharp!
  • #2,478
  • Sep 15, 2013 11:55am Sep 15, 2013 11:55am
Quoting Myst1z
Just want to share some setups that I'm looking at for next week. Please feel free to comment or critique, thanks. {image} {image} {image} {image} {image}
Good evening Ivan,

Thanks for shearing your set-ups, for me it's a great way to speed up my learning curve. I have a question on the gold set-up. Looking at the weekly, we just touched a fresh demand level, after the supply level was broken three weeks ago, not solidly, but broken still. If we follow the rules, this would mean we should look for long positions rather than short. Given Alfonso's reaction to your set-ups, I'm wondering what is it that I see wrong here?
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  • #2,479
  • Sep 15, 2013 12:07pm Sep 15, 2013 12:07pm
Quoting Reacto
{quote} Good evening Ivan, Thanks for shearing your set-ups, for me it's a great way to speed up my learning curve. I have a question on the gold set-up. Looking at the weekly, we just touched a fresh demand level, after the supply level was broken three weeks ago, not solidly, but broken still. If we follow the rules, this would mean we should look for long positions rather than short. Given Alfonso's reaction to your set-ups, I'm wondering what is it that I see wrong here? {image}
Reacto, the gray demand level probably is not yet valid as it did not take out the opposite supply level.
  • #2,480
  • Sep 15, 2013 12:11pm Sep 15, 2013 12:11pm
Quoting rolfw
{quote} Reacto, the gray demand level probably is not yet valid as it did not take out the opposite supply level.
Yes it did, look at the left, just underneath the daily level was the weekly supply level
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