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Price Action made simple with Supply and Demand levels

  • #301
  • Oct 24, 2013 8:15pm Oct 24, 2013 8:15pm
Quoting Stephen Thom
Quoting It is true that some of these supply/demand levels are created by news releases in that when the actual news is released some of these big players need/want to buy or sell a particular instrument.
Thanks, Stephen and dappa,

Another thing worth discussing here is that how old a supply/demand zone remains valid for trading. Conventional wisdom is that as long as supply/demand levels are fresh, they are valid and effective. I understand that big banks like to set limit orders at certain price levels for liquidity purpose. Sometimes they work the market to get the price moving towards their open orders. But if the price is moving away from their unfilled limit order, are they willing to sit on their limit orders for 3 months, 6 months or even 2 years? It's really hard for me to imagine that. I believe from time to time they have to move their unfilled limit orders with the market to create next supply or demand levels. That's why those newly created RBR or DBD levels can be very effective when trading with the trend. When the price eventually comes back to those old yet fresh supply/demand levels, market trend is most likely reversed. Now those levels are for counter trend trading. As we all know counter trend trading can be very risky. Most likely it's because those old yet fresh supply/demand levels don't have any open limit orders sitting there anymore. Of course when price is way high or low in the curve (extreme levels), those counter trend trading supply/demand levels can still be very effective because those levels represent value areas and big banks are likely to put their new limit orders there instead of some 2 year-old orders.
Any opinions/comments on this topic are very welcome.
  • #302
  • Oct 24, 2013 11:03pm Oct 24, 2013 11:03pm
sclz-

Thank you. I am happy to be doing more with my trading and instructing is filling a void.

Now about my up and coming trade for USD/JPY I am not worried about the huge indecision affecting my long trade at 96.95. Orders are getting filled and eaten up here.

Your first question: I will not trade a level with more than 5 or 6 candles on my zone set up chart.

  1. First chart is to determine trend
  2. Second is to find obvious and compelling zones
  3. Third is to set up my stop entry and target.(sometimes I will monitor this chart when trade is triggered)

Your second question I trade anytime my alert goes off. If it is around big news time I will just monitor but my orders stay open because their is always orders at my entries from bigger traders than me. News usually just pushes price right to my area and I have observed this.
I also know HUGH traders who will trade FOREX ONLY in the Asian session.
I trade what I know to be true on MY chart only, and that a fresh zone is a fresh zone.
I have more success being confident with my trade plan and discipline than any book or anyone in the trading worlds opinion about what should and shouldn't be.
I have control over my emotions and won't trade if I am not in charge of my trades.

Your third question.
Supply and Demand is created by indecision.
Now Your UNEXPECTED news can change every market out there.
I can not control that, but I can control my loss.
This is for anyone reading this: don't trade around news time if you are not ready. I know I don't need to explain this further.

One more note that I will add.
Price is already figured into the price before most major economical new is released. Price will always move to UNFILLED orders.
It just matters who's order is there waiting when price gets there. Large traders probably, Hedgers possible, novice traders maybe.
Usually Disciplined traders are taking money from novice traders. Thats just how it works.

  • #303
  • Oct 24, 2013 11:07pm Oct 24, 2013 11:07pm
Thx thomaas for sharing your system! It's very insteresting. I love price action forex, that's why this system suits me very well.
I saw this thread some days ago and just read the comment up to page 4. I have tried this system with my live account (with small lot), and it works perfectly.
I love the risk reward ratio. And i only do the trade if the ratio risk reward ratio is above 1:2, but mostly above 1:3, and sometimes above 1:5.
My SL is just like yours, but my TP is the closest next supply/demand level.
I trade on any level that i think this system can work, not just at good level. I still have to learn about it though.

Quoting bg_sunny
Forget trends. Trends are illusions you create in hindsight. The market moves somewhere because: a) many small players go somewhere collectivly, sharing the same belief OR b) some player with big pockets sells/buys huge amounts.
It's very interesting idea you have. You have opened my mind, it's a new point of view for me. And i totally agree with you on this. Thx!
  • #304
  • Oct 25, 2013 3:55am Oct 25, 2013 3:55am
This did not happened yesterday ....

Quoting mima
{quote} Is it "level above level" at 1.6249 or so? should be entry at this level?...price is in uptrend on m15 till 1.6252 or so...So why would be uptrend interupted at 1.6211 instead 1.6249 or so? {image}
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But happened today...so there were consequences for my wrong timing ...
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The Market pays you to be disciplined
  • #305
  • Oct 25, 2013 4:32am Oct 25, 2013 4:32am
iam just wondering?
Which one is better level to be traded and why ?

any comments are welcome
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  • #306
  • Oct 25, 2013 5:06am Oct 25, 2013 5:06am
Quoting dinnebolt
Thx thomaas for sharing your system! It's very insteresting. I love price action forex, that's why this system suits me very well. I saw this thread some days ago and just read the comment up to page 4. I have tried this system with my live account (with small lot), and it works perfectly. I love the risk reward ratio. And i only do the trade if the ratio risk reward ratio is above 1:2, but mostly above 1:3, and sometimes above 1:5. My SL is just like yours, but my TP is the closest next supply/demand level. I trade on any level that i think this...
Awesome, congratulation for your successful trades!

I have a question for you guys: does any of you has experience with Forex binary option? I've never used them, and I'm wondering if it would be interesting to use them with S&D levels. I think the main advantage is that there is no slippage with binary options. What do you think? Thanks!
  • #307
  • Oct 25, 2013 6:20am Oct 25, 2013 6:20am
Very interesting material, nothing new but the treadh is clear and well organized.
I will stay around to contribute and learn new stuff

thanks for this thomas
  • #308
  • Oct 25, 2013 7:26am Oct 25, 2013 7:26am
sorry gilamonster
but in first picture why you choose this area (in black circle) price move slowly to up direction its seem not perfect level
in second pictures
ican't understand anything you speak about 50% and something like that
you can explain that slowly (very slowly)
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  • #309
  • Oct 25, 2013 7:48am Oct 25, 2013 7:48am
thats my home work for today
i waiting you thomas or gilamonster for correct it
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  • #310
  • Oct 25, 2013 10:00am Oct 25, 2013 10:00am
Quoting rtkwar
thats my home work for today i waiting you thomas or gilamonster for correct it {image} {image}
Nice work! Some comments:
- First chart: I would have included more candles into the level instead of just one like you did
- Second chart:
-- top level, price movement not really strong, so not a good level
-- bottom level, seems okay, although I don't really like when there is only one big candle after the level
  • #311
  • Oct 25, 2013 10:07am Oct 25, 2013 10:07am
Quoting thomaas
{quote} Nice work! Some comments: - First chart: I would have included more candles into the level instead of just one like you did - Second chart: -- top level, price movement not really strong, so not a good level -- bottom level, seems okay, although I don't really like when there is only one big candle after the level

thank you for your reply
but you said you don't love big candles but this piture from sam saiden video
i understand from this video best level when price move fast
whats you think?
Attached Image
  • #312
  • Oct 25, 2013 10:13am Oct 25, 2013 10:13am
Quoting rtkwar
{quote} thank you for your reply but you said you don't love big candles but this piture from sam saiden video i understand from this video best level when price move fast whats you think? {image}
Sorry, I was not clear enough.
The stronger the price movement, the better. So I love big candles!
But if there is ONLY ONE candle, I don't really like it. It's way better when you have at least 3 candles in a row of the same color.
On your level below, there is only one candle that goes up after the level.

Attached Image


Is it more clear now?

But again, it don't mean that the level is wrong, it's just not the way I do it.
  • #313
  • Edited 10:41am Oct 25, 2013 10:22am | Edited 10:41am
Quoting thomaas
{quote} Sorry, I was not clear enough. The stronger the price movement, the better. So I love big candles! But if there is ONLY ONE candle, I don't really like it. It's way better when you have at least 3 candles in a row of the same color. On your level below, there is only one candle that goes up after the level. {image} Is it more clear now? But again, it don't mean that the level is wrong, it's just not the way I do it.
Odds Enhancer No 1 - How did price leave the level

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  • #314
  • Edited 11:34am Oct 25, 2013 10:50am | Edited 11:34am
Quoting adriann
iam just wondering? Which one is better level to be traded and why ? any comments are welcome {image}
The top level isn't fresh. If you use a 1 hour chart and scroll back then you will see that it is the fourth time that price has returned to that level. Price did in fact react strongly there later but fresh levels are very much higher probability and just choosing fresh levels will pay off in the longer term.

Therefore I would prefer the level just above the lower one but which you haven't marked. Levels on top of levels is another odds enhancer and if you switch to a 30 min chart you will see that price did react pretty strongly there.................although I am not a great fan of DBD levels myself (30 min chart shows that more clearly but it is of course debatable whether it is a DBD or a DRD level depending on whether you use a 30 or 15 min chart)..............but if I had to choose, this would be the level I would go for, or rather this one and the one just below it (which you have marked) combined.
  • #315
  • Oct 25, 2013 10:56am Oct 25, 2013 10:56am
Quoting thomaas
{quote} Sorry, I was not clear enough. The stronger the price movement, the better. So I love big candles! But if there is ONLY ONE candle, I don't really like it. It's way better when you have at least 3 candles in a row of the same color. On your level below, there is only one candle that goes up after the level. {image} Is it more clear now? But again, it don't mean that the level is wrong, it's just not the way I do it.
thank you thomas its clear now
  • #316
  • Oct 25, 2013 11:33am Oct 25, 2013 11:33am
Attention-

I am giving an update on the following USD/JPY Trade I am in currently.
I have moved my stop to lock in some profit already, and have moved my target up just below a small supply zone at 97.72.

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  • #317
  • Oct 25, 2013 11:53am Oct 25, 2013 11:53am
Hello Gilamonstar And Thomas, pls can you guys explain how to use Dollar index corelation to enhance Supply and demand strategy .Thanks
  • #318
  • Oct 25, 2013 11:59am Oct 25, 2013 11:59am
rtkwar-

Fine line placement is a process. You will need to practice this.

Let me see if I can help:

  1. Legs are "exciting"
  2. legs need to have a body that is more than 50% of range of the candle.
  3. Bases are "boring"
  4. Bases need to have a body that is 50% or less than the range of the candle.

I have included a chart example for you.

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  • #319
  • Edited 2:13pm Oct 25, 2013 12:33pm | Edited 2:13pm
Quoting fxbishop
Hello Gilamonstar And Thomas, pls can you guys explain how to use Dollar index corelation to enhance Supply and demand strategy .Thanks

Hope that you don't mind me butting in with an example.

1. USD Dollar Index - price is falling but approaching a strong Demand Level. USD is likely to reverse at the Demand Level and go up.

2. EUR/USD - price is rising but approaching a strong Supply Level. EUR/USD is likely to reverse at the Supply Level and go down.

The odds of EUR/USD reversing and going down are much higher in the above example because USD is also likely to go up (driving EUR/USD down as it does).

Hope that the above makes sense. Sorry that I don't have any charts to explain it better at the moment.
  • #320
  • Oct 25, 2013 2:53pm Oct 25, 2013 2:53pm
Hello guys, it's my first post in this thread but i read it with a lot of interest , thank you very much all for the helping.
just wanted to notice you that E/U just reached a 4H strong and fresh supply zone and took profit (1:1.5 because it's a 4H zone , pretty big zone of 32 pips , so 50 pips win by risking 32 is pretty good )
I'll try to be more active here to learn and help!
here's pictures: (i don't upload here because i use gyazo , i can mark the area that i want to print screen and it auto upload it )
the zone in the 4H chart:
http://gyazo.com/19b8daaf3c221afa68774b6c4518312a
the touch in the 4H chart:
http://gyazo.com/4b8836f6c4bd9d031a031b7fbeaf1b4e
the trade in the 1H chart:
http://gyazo.com/9fbe54630d70616cef0670318398f3ca
(the 1H chart looks pretty messy but it has very important tool like BRN [big round numbers] and weekly - monthly pivots - recommend everyone to use them)
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