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Price Action made simple with Supply and Demand levels

  • #201
  • Oct 22, 2013 6:18pm Oct 22, 2013 6:18pm
Quoting thomaas
Here's more information about the levels that should interest you! How to filter out bad levels What is a bad level? Well, it depend on what risk you are willing to take. If you don't mind risk, you should use every level you found. Or if you hate risk, you should wait for the perfect level. It's up to you! My way of doing is to use only perfect or close to perfect levels. And you already know what a good level is (read my previous comments), so let's look at some levels that I don't like. {image} From left to right: - This is a good level that...
simple quistion

which is the best levels

rbr and dbd

or

rbd and dbr
  • #202
  • Edited Oct 23, 2013 4:59am Oct 22, 2013 6:31pm | Edited Oct 23, 2013 4:59am
Quoting zelenko
{quote} simple quistion which is the best levels rbr and dbd or rbd and dbr
Rally Base Drop and Drop Base Rally are better levels.

(Edit: it seems that I said the opposite in another post. It was a mistake, and I can't edit it anymore.)
  • #203
  • Oct 22, 2013 8:14pm Oct 22, 2013 8:14pm
Thomaas,

Confused. Thought you mentioned DBD and RBR are better?

In post #158
Quoting thomaas
Great to see people exchanging knoweldge in my thread! {quote} I think I managed to keep the first post of this thread simple and clear. And it's good to see more information or other strategies talked about in the thread, it gives people a better understanding of the whole idea. About the rest of your post about banks, you are completely right! --- So the next big subject to cover is how to filter out bad levels with examples. But before that we should talk about "what makes a level good". What makes a level good Not all levels are created... So the next big subject to cover is how to filter out bad levels with examples. But before that we should talk about "what makes a level good".

What makes a level good
Not all levels are created equals. Some are more likely to work than others. Let's talk about the good levels.
Remember what the characteristics of a level are? Well, we'll use them to describe what would be a perfect level:
- The level is a DBD or RBR
- The price moves VERY STRONGLY in one direction. It means both big and multiples candles of the same colors in a row
- There is a small number of candles into the level
- The level is fresh, it was never tested before
  • #204
  • Edited 9:38pm Oct 22, 2013 8:25pm | Edited 9:38pm
Hi all,

Great discussion going on in this thread and even more on-lookers (based on the number of viewers). Kudos to Thomaas!

A key element that is missing from the discussion is the discretionary nature of these kinds of trading methods. I've come to appreciate that if you intend to trade using plain old price action, "support and resistance" or "supply and demand" discretion is a key element of your analysis. I certainly haven't mastered it and about the only way I can see to build up discretionary skill is screen time, research and analysis - and its an ongoing process that never stops.

The words "screen time, research and analysis" don't really communicate what "discretionary" means to a new trader though. Thomaas and Gilamonster have posted several great charts labelling "weaker" or "spent" areas and this is a window into the discretionary elements of this approach to trading.

In the chart (GBPUSD H1 Timeframe) I've attached a level (@ 1.6120s) is marked with a yellow line. After coming off early October highs price rallied twice into the level (@ 1.6120s) the 2nd time it moved away with momentum printing (an almost textbook) H1 bearish outside bar (BEOB) (Note: price printed a Drop-Base-Drop pattern as described by Thomaas). GBPUSD then went into an accumulation mode (I need to study the pattern printed between 9-16 October more but my limited data biased me toward a break high). Momentum (just used the MACD standard settings) didn't show divergence combined with supply being quickly depleted in 1.6160-95s range (possible profit taking or trend traders who sold the brake of 2nd last swing low getting stopped out) and the bullish outside bar (BUOB). So with this in mind I did not want to sell the run into the level.

I did sell the run into the previous supply area @ 1.6221 (targeting the previous supply area @1.6121) because it was the first time back (e.g. there is a high probability that there will still be some sellers in this area - lucky for me there was). I used the "flip" of the resistance to support as a signal to buy the re-test of the level @ 1.6120s. I think the flipping concept - former significant supply area becoming demand and conversely significant demand becoming supply. This is a concept that works well for support and resistance trading. I can think of a number good arguments/scenarios to "support" (no pun intended) the idea from both a support and resistance and supply and demand perspective.

Attached Image (click to enlarge)
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So:

  1. Please note supply and demand is new for me so I've only made these trades on a demo account so they may not be representative of "real" trading. (near the pip entries are hard to repeat in real life - but its hard not to feel like a legend when nail them ).
  2. Please ask questions about my analysis BUT please setup a chart like this one first and think about who is buying and selling and where they are doing it first - it may just answer your question (if it does post the results - you'll help somebody else!).
  3. Please critique my analysis also (e.g. if you think I've missed something or the point totally tell me).
  4. Thomaas (or anyone else) have you gathered any statistics on supply and demand levels "flipping"? If yes would you like to share some charts and findings?

Regards,

Michael

  • #205
  • Oct 23, 2013 3:20am Oct 23, 2013 3:20am
Down moves in the Yen pairs creating some new supply areas. In this case a Drop-Base-Drop area.

Chart for AUDJPY....

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  • #206
  • Oct 23, 2013 3:53am Oct 23, 2013 3:53am
Quoting thomaas
I like ot keep things simple, so I do not look at any news.
Hmm, that's what most SupDem traders are saying. I guess that's possible if you're doing it on H1 charts.


One thing i'll mention is that i noticed most rallys or drops is due to news releases, and those are apparently the best supdem levels when we draw them. I found that to be quite interesting.
  • #207
  • Oct 23, 2013 4:20am Oct 23, 2013 4:20am
i entered this trade today
stop loss=15 pips
profit=44 pips
[attach]1298253[attach]
[attach]1298255[attach]
[attach]1298256[attach]
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  • #208
  • Oct 23, 2013 4:25am Oct 23, 2013 4:25am
Quoting thomaas
{quote} I already talked about that in one of my previous post here: http://www.forexfactory.com/showthre...81#post7040081 Summary: RBD and DBR are better than RBR and DBD.
Hello, this is my first post in this thread. First compliment for creating a new "fresh and clean" thread!

Regarding your answer, here you say RBD and DBR are better. But in the link of your previous post you said the oppisite:

Quoting thomaas
describe what would be a perfect level: - The level is a DBD or RBR
Am I wrong?
  • #209
  • Oct 23, 2013 4:38am Oct 23, 2013 4:38am
Quoting Masudhossain
..... One thing i'll mention is that i noticed most rallys or drops is due to news releases...
In trading industry this is unparalleled and revolutionary discovery...
The Market pays you to be disciplined
  • #210
  • Oct 23, 2013 4:45am Oct 23, 2013 4:45am
Quoting rtkwar
i entered this trade today stop loss=15 pips profit=44 pips
i like your annotations
  • #211
  • Oct 23, 2013 5:01am Oct 23, 2013 5:01am
hi all ,,

This is my first post in this thread .... I am still confused with supdem .... I have a picture ... is this correct??
thanks


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  • #212
  • Oct 23, 2013 5:02am Oct 23, 2013 5:02am
Quoting clementngu
Thomaas, Confused. Thought you mentioned DBD and RBR are better? In post #158 {quote}

Quoting sanmiguell
{quote} Hello, this is my first post in this thread. First compliment for creating a new "fresh and clean" thread! Regarding your answer, here you say RBD and DBR are better. But in the link of your previous post you said the oppisite: {quote} Am I wrong?
Damn, you are right! I made a mistake earlier, sorry :-/
So to recap:
Best type of level: Rally Base Drop, and Drop Base Rally
Less strong levels: Rally Base Rally, and Drop Base Drop
  • #213
  • Oct 23, 2013 5:04am Oct 23, 2013 5:04am
whats you think thomas?
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  • #214
  • Oct 23, 2013 5:27am Oct 23, 2013 5:27am
Quoting thomaas
{quote} {quote} Damn, you are right! I made a mistake earlier, sorry :-/ So to recap: Best type of level: Rally Base Drop, and Drop Base Rally Less strong levels: Rally Base Rally, and Drop Base Drop
To summarize, the best levels are the reversal ones ... not the continuation ones.
MT4/MT5 EAs/Indicators/Alerts coder
  • #215
  • Oct 23, 2013 6:00am Oct 23, 2013 6:00am
Quoting FerruFx
{quote} To summarize, the best levels are the reversal ones ... not the continuation ones.

Yes. Orders waiting to be filled. They cause the "reversal".
Demo only
  • #216
  • Oct 23, 2013 6:09am Oct 23, 2013 6:09am
Quoting Masudhossain
{quote} Hmm, that's what most SupDem traders are saying. I guess that's possible if you're doing it on H1 charts. One thing i'll mention is that i noticed most rallys or drops is due to news releases, and those are apparently the best supdem levels when we draw them. I found that to be quite interesting.

Yes, but how do you interpret a news release? IS the raise in some randomly chosen interest rates going to bull up the EURUSD or is it to bear it down?
And then one would have to think about another man made concept: correlation. If EURUSD is up, GBPUSD is up also, what then about EURGBP?
Nothing. Unless a big order doesn't come in I don't se why a pair should move. News is action after the fact.
Demo only
  • #217
  • Oct 23, 2013 6:15am Oct 23, 2013 6:15am
Quoting rtkwar
whats you think thomas? {image} {image} {image}

about gbp/usd level
i make big mistake i draw bad demand zone
thats correct must look like this
so i must put my pending buy order below 10 pips
anyway if i was draw this level correct :
i was make my stop loss=8 pips
and now price move 19 pips
any way i want more profit so my profit will be 35 - 38 pips
and if i was enter correct my profit will be= 50 pips for just 8 stop loss
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  • #218
  • Oct 23, 2013 7:23am Oct 23, 2013 7:23am
Quoting bg_sunny
{quote} Yes, but how do you interpret a news release? IS the raise in some randomly chosen interest rates going to bull up the EURUSD or is it to bear it down? And then one would have to think about another man made concept: correlation. If EURUSD is up, GBPUSD is up also, what then about EURGBP? Nothing. Unless a big order doesn't come in I don't se why a pair should move. News is action after the fact.
Have to agree with bg_sunny.

From trading support and resistance and back testing the supply and demand levels (which are offering lower risk entries) if you've got the level/price area right then you'll generally be on the right side of news regardless. Take the recent "Tuesday" NFP, XAUUSD moved 10 minutes before the release - as retail traders we have NO hope of overcoming the information edge the wholesale players have.

Also I've watched the AUDUSD rally on an interest rate cut only to turn and wipe the floor of all lemmings that covered there shorts and got long. So whilst you need to be mindful of news (e.g. I'd pull a limit order if I was near the entry around major news releases to avoid getting squeezed out), I try to ignore the noise (a.k.a. news) and focus on price. Price carries a lot of information.
  • #219
  • Oct 23, 2013 8:35am Oct 23, 2013 8:35am
Quoting rtkwar
{quote} about gbp/usd level i make big mistake i draw bad demand zone thats correct must look like this so i must put my pending buy order below 10 pips anyway if i was draw this level correct : i was make my stop loss=8 pips and now price move 19 pips any way i want more profit so my profit will be 35 - 38 pips and if i was enter correct my profit will be= 50 pips for just 8 stop loss
Good thread so far.

RTKWar - I would have thought by looking at the H1 for that zone, the base was too 'long', price took a while before exploding skywards? In any event, the trade looks to be going your way. Nice one :-)
  • #220
  • Oct 23, 2013 8:46am Oct 23, 2013 8:46am
Quoting rtkwar
{quote} about gbp/usd level i make big mistake i draw bad demand zone thats correct must look like this so i must put my pending buy order below 10 pips anyway if i was draw this level correct : i was make my stop loss=8 pips and now price move 19 pips any way i want more profit so my profit will be 35 - 38 pips and if i was enter correct my profit will be= 50 pips for just 8 stop loss {image}

update:
i moved my stop loss to entry point now
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