Supply and demand in a nutshell by Alfonso Moreno | Page 153 | Forex Factory

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Supply and demand in a nutshell by Alfonso Moreno

  • #3,041
  • Oct 2, 2013 7:44am Oct 2, 2013 7:44am
Quoting andys0506
Hi Alfonso, great thread! I'm up to page 20, can I ask one question. How do you determine exits (TP) ? Is it simply the next valid opposing SD level or do you consider other factors?
Long to explain Andy, I still need to add a section about it. You will learn when you cover all pages... but price tends to travel from higher TF Demand to the opposing HF supply. You can either set a fix 3 or 4:1 TP, opposing valid entry timeframe to take the opposite trade, or trail your SL above/below entry TF's zones as price travels to your "realistic non-greedy" target.

Alfonso
Set and Forget supply and demand trading community
  • #3,042
  • Oct 2, 2013 9:10am Oct 2, 2013 9:10am
Hey guys. I found a Usd/Jpy trade. I'm not sure of the bias in this pair, but we are approaching a Demand level, a 4HR demand level within the Daily Demand. I know its Fresh but is it original? There was a previous Demand Level to the left but the low was broken, causing me to create a new area of Buyers. So is it Fresh and Original, allowing it to be set and forget?
The trend line on the Daily hasn't had a full OHLC below, but the 4Hr has. Does that invalidate it?

Also, if there's anything on my chart that can be improved on, please feel free to point it out.
Thanks.
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Greatness exists in all of us.
  • #3,043
  • Oct 2, 2013 10:17am Oct 2, 2013 10:17am
You have mentioned that a way of filtering SD areas is that a true zone will create a higher high (demand) or lower low (supply). I understand how this applies in a trend move with 'speed humps'. However does this concept also apply for a drop-base-rally. ie price drops, then creates a demand zone which rallies price higher, however not as high as the previous swing high. Would this be a true demand area or does price need to exceed the previous swing high?

Hope this makes sense!
  • #3,044
  • Oct 2, 2013 12:15pm Oct 2, 2013 12:15pm
I have a question about using the rectangle reader indicator. I am doing some demo work on my Mac via VMware. When I double click on an area on the monthly or weekly chart (so as to see the are in lower TFs) and press control while clicking the center of the area, nothing happens. It works like a charm on my windows VPs, but I don't think the control key works the same on a Mac keyboard. Any suggestions?
  • #3,045
  • Oct 2, 2013 12:59pm Oct 2, 2013 12:59pm
Quoting outapips
{quote} My mistake, set and forget level on H4 is higher up with peak around 1.6338 so I haven't missed that one yet!!
I agree with the eurgbp short at daily supply. Plenty of room to nearest weekly demand.
  • #3,046
  • Oct 2, 2013 1:57pm Oct 2, 2013 1:57pm
Quoting panoramia
Planning a set & forget H4 short on AUDNZD at D1 supply distal line. Strong H4 imbalance at a higher timeframe zone! We can't go long since we're too high in the D1 curve, in fact there is a H4 demand level (purple) but it's not valid because D1 supply has not been taken out. If we remove that demand we could have some selling. We need to be patient, but patience will pay off as you can see on the thread! Just be patient and look for high quality areas at the right location Alfonso {image} {image}
Hi Alfonso.

Just wanted to post how it looks like on my platform the specific trade u mentioned. I guess, we have to bear with that issue.... something i have wrote about already.
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  • #3,047
  • Oct 2, 2013 2:14pm Oct 2, 2013 2:14pm
Quoting markot
{quote} Hi Alfonso. Just wanted to post how it looks like on my platform the specific trade u mentioned. I guess, we have to bear with that issue.... something i have wrote about already. {image}
Yes Marko! We have to leave with the unregulated brokers, it's a pity! But it's always the same after all, we trade what we see on our charts... if it has several touches then we wait for a confirmation or we don't trade it.

Alfonso
Set and Forget supply and demand trading community
  • #3,048
  • Oct 2, 2013 2:19pm Oct 2, 2013 2:19pm
Hi Alfonso,

What are the padding and wiggle room variables that you are using on the daily trades also what is the max in pips (excluding padding) you are willing to risk on daily trades.

Thanks,
Joe
  • #3,049
  • Oct 2, 2013 8:10pm Oct 2, 2013 8:10pm
hi alfonso, i came across this thread in my search to fully comprehend and implement sup/em trading. however the videos you have put on post #1 are 'private'. is there any way you could possibly make them public? furthermore, i don't mean to be a nuisance however i am intrigued by your videos which have been removed by OTA and i wanted to ask whether these will possibly be available again.

in the meantime i'll get up to speed with how to use the indicator you provided and i want to say thanks for what you've opened my eyes up to. looking forward to your reply my friend.

Jay
  • #3,050
  • Oct 2, 2013 10:32pm Oct 2, 2013 10:32pm
I have ran into situations where I found many levels to trade off of on my old 1/4/Daily setup, some not working as planned. Someone suggested it would help to eliminate 1 TF. That leaves me with the 4hr/Daily. Now that I don't enter off the 1HR, does that force me to incorporate the weekly as the curve TF? I feel as if I'm aware of where the Weekly Zones are, I can still use the Daily as my curve and enter off the 4HR.

Also, has anyone seen a difference in their trading by entering off 4HR levels vs. 1HR Levels?

Thanks
Greatness exists in all of us.
  • #3,051
  • Oct 2, 2013 11:37pm Oct 2, 2013 11:37pm
Quoting panoramia
{quote} No problem Greg. AUDJPY long seems to be working so far, I had 2 entries. One on H4 set & forget demand at the D1 distal line and a second entry on my D1 account based on the whole D1 demand area. There was news on the Aussie last night, cash rate was kept at %2.50 (good for currency), price at higher timeframe demand... so I am holding it... we'll see what happens. My H4 is at breakeven already, my D1 trade is not yet. Attached my D1 trade, moved my SL underneath new H4 demand area. Alfonso {image}

Hi Alfonso, I have a couple of questions concerning the AUDJPY trade you took the other day. First of all you mentioned that you had a S&F daily demand area you were going to trade off of but isn't that a counter trend CP and by rules should not be S&F? The second question is concerning where you set your TP. It seems you ignored the 2 lower supply levels on the Daily and I'm trying to understand why. It looks like you had 3:1 to the peak supply level but not the CP supply level so I'm wondering why those would be invalidated.
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The next question I have is concerning the H4 level on the same pair. I wanted to experiment so I took the first pullback on the H4. Am I correct in reading the rules that this meets the exception rule for confirming a level therefore this was a valid level to trade off of?
"Exception: if we are at the extremes in the curve (D1 demand fresh zone, it does not apply to non-fresh zones) we won't need that the new lower timeframe demand (H1 in this case) takes out previous H1 supply area for our entries, since the D1 demand is fresh. If the D1 demand was not fresh then we'd need that previous supply be removed before the brand new demand is considered for a confirmation type of trade"

Thanks for your help, Greg
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  • #3,052
  • Oct 3, 2013 1:44am Oct 3, 2013 1:44am
Quoting fortunateson
Hi Alfonso, What are the padding and wiggle room variables that you are using on the daily trades also what is the max in pips (excluding padding) you are willing to risk on daily trades. Thanks, Joe
Hi Joe!

I am using 2 pips padding for D1 levels as well, 25 pips wiggle room. 125 pips is the maximum number of pips I am willing to risk, that risk will be adjusted in the lots. Some pairs like EURGBP or EURCAD do no have such big D1 levels, which is better for the number of lots traded. But others like the Yen pairs or NZD cross pairs are more volatile. On others like the Exotics it's higher because 125 pips is nothing, on the S&P and indexes it is a bit different!

Hope that helps
Alfonso
Set and Forget supply and demand trading community
  • #3,053
  • Edited 2:01am Oct 3, 2013 1:47am | Edited 2:01am
Planning a D1 short on EURGBP. I took a D1 short a few days ago, closed it already. This trade is a longer term trade.
There is a D1 CP demand which goes against the trend at 0.8300 that could be a turning point, but it's against the trend. I will manage my SL closely if I get triggered and I am close to that D1 demand.

I am planning a new one because the higher timeframes are down, new levels of supply are being formed, demand areas are being taken out. Normally I only take D1 levels on EURGBP, this pair does not move much and lower timeframe's levels are normally compressed and do not look that good. I will only trade H4 levels if they look great, else only D1 levels which are not too wide normally.

Alfonso
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Set and Forget supply and demand trading community
  • #3,054
  • Oct 3, 2013 2:02am Oct 3, 2013 2:02am
Planning a D1 long on GBPUSD at 1.5817-ish. I am not using the upper purple rectangle because it's too much trading in the area, departure is not that good and not a great profit margin.

The lower one has an unfilled gap, a great explosive departure and little time at the level.
Alfonso
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Set and Forget supply and demand trading community
  • #3,055
  • Oct 3, 2013 2:17am Oct 3, 2013 2:17am
Quoting Nvrgvup
{quote} Hi Alfonso, I have a couple of questions concerning the AUDJPY trade you took the other day. First of all you mentioned that you had a S&F daily demand area you were going to trade off of but isn't that a counter trend CP and by rules should not be S&F? The second question is concerning where you set your TP. It seems you ignored the 2 lower supply levels on the Daily and I'm trying to understand why. It looks like you had 3:1 to the peak supply level but not the CP supply level so I'm wondering why those would be invalidated. {image} The...
As far as the D1 CP demand I took on the AUDJPY, let me explain to you my rationale, it "makes sense" you will see.There are many little nuances that experience will tell you, like @kanzler said the other day.

  1. It's a D1 CP, my curve is the Monthly. Take a look at the monthly and tell me what you see. My Monthly supply is way above, price reverted to the mean (20 EMA) and hit a D1 CP demand with an unfilled gap that caused the absorption of the previous resistance (supply)
  2. D1 CP with unfilled gap, strongest look of demand you can have
  3. Since my trade is based on my monthly direction and curve, I am allowed to take the D1 CP
  4. If I am allowed to take a D1 CP against the D1 trend because my D1 level GOES WITH THE MONTLY trend, then I am allowed to drill the level down to H4 to take longs
  5. BUT... there is a always a but.. the H4 level formation has to be correct. You can't take levels that are not well formed like the H4 demand you took with 3 dojis in the base, you shouldn't even draw them

Hope the logic makes sense to you Greg! I am in fact long on the lower H4 demand area (didn't move my SL to BE but closed part of my trade to account for the partial close), and also holding my D1 long. Hopefully they will both be runners, else I will look for another trade

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Quote
I have is concerning the H4 level on the same pair. I wanted to experiment so I took the first pullback on the H4. Am I correct in reading the rules that this meets the exception rule for confirming a level therefore this was a valid level to trade off of? "Exception: if we are at the extremes in the curve (D1 demand fresh zone, it does not apply to non-fresh zones) we won't need that the new lower timeframe demand (H1 in this case) takes out previous H1 supply area for our entries, since the D1 demand is fresh. If the D1 demand was not fresh then...

That H4 levels was NOT good at all, look at the basing Greg, super wicky candles in the bases. Don't even draw those levels! 3 dojis at the base, long wicks. Don't even draw those levels, the base formation negates the level. Refer to Post #1 on what parameters define a good level, the basing and time at the level is KEY.
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Hope my answers helped!
Alfonso
Set and Forget supply and demand trading community
  • #3,056
  • Oct 3, 2013 2:20am Oct 3, 2013 2:20am
Quoting jay24
hi alfonso, i came across this thread in my search to fully comprehend and implement sup/em trading. however the videos you have put on post #1 are 'private'. is there any way you could possibly make them public? furthermore, i don't mean to be a nuisance however i am intrigued by your videos which have been removed by OTA and i wanted to ask whether these will possibly be available again. in the meantime i'll get up to speed with how to use the indicator you provided and i want to say thanks for what you've opened my eyes up to. looking forward...
Hello Jay!
Read the 1st post, at the end (in red) you will see the explanation. You haven't gone through the whole thread yet, there are reasons for that!
Alfonso
Set and Forget supply and demand trading community
  • #3,057
  • Oct 3, 2013 2:40am Oct 3, 2013 2:40am
Quoting panoramia
Planning a D1 long on GBPUSD at 1.5817-ish. I am not using the upper purple rectangle because it's too much trading in the area, departure is not that good and not a great profit margin. The lower one has an unfilled gap, a great explosive departure and little time at the level. Alfonso {image}
Hi Alfonso! Agree with your EURGBP D1 Short but I'm confused about the GBPUSD Long. If price comes back down to the D1 demand where you're looking to long, it would be counter trend as the upper demand would have been taken out, and the up trend line would probably be broken. Even though the departure from that CP demand was very strong, wouldn't going long on CPs when countertrend be against the rules? Please enlighten me if I'm overlooking something!
  • #3,058
  • Oct 3, 2013 2:44am Oct 3, 2013 2:44am
I had a small loss on GBPNZD H4 long. The trade was valid according to the rules but it didn't work. We can't win always. But rules are rules, I had to take the trade. Demand was being respected, supply absorbed, trendline with us, higher timeframes as well. Next one!

Alfonso
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Set and Forget supply and demand trading community
  • #3,059
  • Oct 3, 2013 2:50am Oct 3, 2013 2:50am
Quoting Myst1z
{quote} Hi Alfonso! Agree with your EURGBP D1 Short but I'm confused about the GBPUSD Long. If price comes back down to the D1 demand where you're looking to long, it would be counter trend as the upper demand would have been taken out, and the up trend line would probably be broken. Even though the departure from that CP demand was very strong, wouldn't going long on CPs when countertrend be against the rules? Please enlighten me if I'm overlooking something!
You said the right word there: PROBABLY It's all about probabilities, I will know when price reaches the area, approach, etc.

Look at where the D1 demand level is located. One of those SD flips you mention sometimes. I will only trade those SD flips if there is a level there, like in this case

Last month high (blue beads) and previous supply becoming demand. Even if the D1 CP is against the D1 trendline, this is one of the occasions where that rule "might be tweaked" a little bit.

That D1 CP demand is a confluence of a SD flip together with a nice SD area, in this case a D1 CP with an unfilled gap.
Alfonso
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Set and Forget supply and demand trading community
  • #3,060
  • Oct 3, 2013 3:34am Oct 3, 2013 3:34am
Quoting panoramia
{quote} You said the right word there: PROBABLY It's all about probabilities, I will know when price reaches the area, approach, etc. Look at where the D1 demand level is located. One of those SD flips you mention sometimes. I will only trade those SD flips if there is a level there, like in this case Last month high (blue beads) and previous supply becoming demand. Even if the D1 CP is against the D1 trendline, this is one of the occasions where that rule "might be tweaked" a little bit. That D1 CP demand is a confluence of a SD flip together...
Ah ic thanks for the clarification, so its like the confluence of positive factors allows for some tweaking, got it!

Btw regarding your GBPNZD trade, price came really close to D1 CP supply, not sure if that had anything to do with the H4 demand failing.

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Also took a loss on NZDJPY H4 short, grrrrr.....

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