Supply and demand in a nutshell by Alfonso Moreno | Page 172 | Forex Factory

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Supply and demand in a nutshell by Alfonso Moreno

  • #3,421
  • Nov 1, 2013 7:59am Nov 1, 2013 7:59am
Quoting Trader999
{quote} Thanks ISKO for your reply, yes I know MTF for my trading, but I looking only for SD fresh, or all SD level (fresh and no-fresh) for the curves?

It's like this. It is not necessary that the SD curves will be fresh or not fresh (but of course if fresh it will be a big advantage).

As long as these SD curves are not broken, they will always be in-control everytime price reaches these levels. And if these zones are broken (from proximal to distal line) the next SD Curve will be in-control.
SMT, IPDA, Market Structure
  • #3,422
  • Nov 1, 2013 10:05am Nov 1, 2013 10:05am
Thank You Isko for the reply.

If I may ask one more question, a few pages back (http://www.forexfactory.com/showthre...28204&page=169) I see You and also Alfonso have drawn a Weekly supply on GBPUSD that is lower than the lowest supply I found. Didnīt that lower supply intersect with the higher supply and can an intersecting zone be considered valid?
  • #3,423
  • Nov 1, 2013 10:38am Nov 1, 2013 10:38am
Quoting Deitreider
Thank You Isko for the reply. If I may ask one more question, a few pages back (http://www.forexfactory.com/showthre...28204&page=169) I see You and also Alfonso have drawn a Weekly supply on GBPUSD that is lower than the lowest supply I found. Didnīt that lower supply intersect with the higher supply and can an intersecting zone be considered valid?
Well, I compared your chart with mine, it seems, we have the same chart. Try to adjust your supply levels according to my chart. I only checked the obvious ones on you chart awhile ago.

Attached Image (click to enlarge)
Click to Enlarge Name: GBPUSD Weekly - 01112013.png Size: 118 KB


Anyway, drawing SD levels at start is quite confusing. But in the long run, you will have the hang of it (screen time helps a lot).



Francis
SMT, IPDA, Market Structure
  • #3,424
  • Nov 1, 2013 11:22am Nov 1, 2013 11:22am
Thank You again for the reply Francis! How far back do You look for levels on Weekly? I ask because the highest level visible on Your chart seems to be a reaction to a level more further back (proximal 1,66826 and distal 1,7042) that is visible on the chart I posted. Of course maybe that level does not have good enough imbalance.
  • #3,425
  • Nov 1, 2013 11:55am Nov 1, 2013 11:55am
Quoting Deitreider
Thank You again for the reply Francis! How far back do You look for levels on Weekly? I ask because the highest level visible on Your chart seems to be a reaction to a level more further back (proximal 1,66826 and distal 1,7042) that is visible on the chart I posted. Of course maybe that level does not have good enough imbalance.
Hmmm... I see, the pin bar. I saw that one when I was building my wkly levels on this pair, but I did not qualify that range as supply because demand level beneath it was not taken out. Second, it's a used up area. Drawing SD is quite subjective.
SMT, IPDA, Market Structure
  • #3,426
  • Nov 1, 2013 6:05pm Nov 1, 2013 6:05pm
Quoting Deitreider
Was just wondering if You agree or disagree with my GBPUSD Weekly chart SD analysis.
Very similar - see attached copy of your chart

What I am trying to work out by asking questions is whether there is any point in plotting Weekly zones in the area between 1.5100 up to 1.8300, and whether this area should be used to only look for RBR continuation patterns on H4 Execution TF.

My Weekly curve percentage indicator is showing 25% so I am not looking for any short trades - only looking for long trades unless I see that price CANNOT break above 1.6700

Attached Image (click to enlarge)
Click to Enlarge Name: GU.png Size: 56 KB
  • #3,427
  • Edited 8:57pm Nov 1, 2013 7:11pm | Edited 8:57pm
Quoting GregT
{quote} The FAQ Group is up and running For those who wish to participate please visit https://groups.google.com/d/forum/su...nd-faq-alfonso
We have over 20 would-be traders subscribing to the FAQ Group already.

I have had to reject a few requests because people forgot to answer the two questions I asked.

I particularly want you to provide your Forex Factory name so that I can confirm you are a subscriber (and preferably a contributor) to this forum and have previously shown some "positive" interest in asking questions or exposing your trading intentions as a contribution to the success of the other subscribers in this forum.

I will be fiddling with the structure of the Group over the weekend to introduce CATEGORIES rather than TAGS so we can organise the content into categories that make sense.

Hope you are all liking the approach - if not then do please let me know what you would prefer and I will see what I can do.

Cheers
Greg
  • #3,428
  • Nov 1, 2013 7:24pm Nov 1, 2013 7:24pm
I gotta add my two cents here. I think Alfonso is a really good guy, and good trader. However your idea of supply/demand is no different then support/resistance. You can package it however you want, put a pretty bow on it, and try and sell it as something different, but it's not.

You will notice something about all these boxes that you guys draw. They are right at, or very close to obvious s/r levels. Look at the charts here that have been posted. Its all right there.

You need look no further than the blue box that Greg drew in his post. Look to the left major support.
  • #3,429
  • Nov 1, 2013 8:35pm Nov 1, 2013 8:35pm
Quoting GregT
{quote} Morse ... I have approached the predicament that TraderinSD points out, by collaborating with a close friend who is interested in trading forex and actually teaching him what I know. This has resulted in me finding someone I can trust to help me learn about myself and apply the SD strategy with discipline. We both are forward testing the SD principles using live accounts and micro lots. Our aim is to build our relative returns then inject more cash into the account doing exactly the same approach that nets us consistent profitable percentages....


how your brain reacts to the stresses of trading. Your brain will react differently if you are only trading in a demo account.

Exactly, Precisely... Absolutely!!!

This is the REWIRE I have referred to many times in my posts. IMHO it is the most difficult challenge we face in trading. One that MUST be overcome if you are to be successful. It is very painful, arduous, expensive task. Staying in the right mindset is essential. Recognizing your issues, short comings, is more important than your method or system. .


I have mentored several people over the years. Here is one thing all can do to make sure they stay right in their thinking when trading. Start a journal... Not this type of journal on FF (although it can be part of the bigger journal)...


A much deeper journal into what really drives your success or failure in trading.


Write everything down. I mean everything! EVERYTHING!



What you were thinking before you entered, your set up.


Why are you taking this trade? What do you feel about taking this trade (very important)? Right stop. Right trade. Right judgment... or... Are you second guessing? Are you just pulling the trigger


When you entered the trade, what were you thinking, feeling... where you fearful, comfortable, and scared to friggin death... WHAT?? Right it down... Be specific.


Now you’re in the trade. What is your thought process? Are you even thinking about it? Should you thinking about it (set and forget trades)


The market is moving in your favor... What is your thinking? Take profit now so I don’t lose? Move my stop. Take a partial. I'm focused on my TP, no worries... What? Write it all down..!! Do not kid yourself.


The market is moving against you...What is your thinking? Am I calm, relaxed. My stop is in place. I am comfortable with the risk; it is part of my plan. Even if I lose it will still be a successful trade as you executed according to plan. You exercised correct money management as it relates to my equity. You know intuitively that you are profitable trader but that not every trade is profitable.......... or............. Are you coming apart like a cheap watch? Do you feel a case of the sh*ts approaching... You want to through your computer out the window (I did that


)Are you angry at everything and everyone. Are you telling yourself this does not work? The market screwed me. The banks or big money has my number... what the F**^% !!!


The trade is done... What are you thinking, felling... Are you higher than a kite or you looking to take out the neighbors dog. You can’t wait till you spouse get home or would rather not see them for the next week.


The point: Write it all down. Dig deep... I mean real F**^%ing deep.


OK... now that I have this all down... What am I to do with it? Review it; look for patterns in your thinking that relate to your trades. Did you make the right decision; did you make the wrong decision? What were you thinking when you did either. One of the best ways in which to see that is.. the visual.. because you wrote it down. It’s almost like a movie or book, the principal is the same.


You are trading in an Environment that is made up of patterns. Those who trade, “smart money”, “dumb money”, everything in between...The physiological structure represented in visual form... it is all pattern based.Their thoughts are represented in large part by the chart you look at. Discovering the patterns within yourself as they relate to the pattern you see before you (the market) determine greatly your ability to act correctly... in your best interest...Incorrect thinking, ego, need to be right disrupt you ability to see what is REALLY happening. Understanding this will propel your trading to levels you never thought possible. Why? Ever notice that the Smart Money seems to know exactly where you are... your stops would be the classic example. the really dont.. but if you do the obvious the will.. Pattern.

Weak hands vs. strong hands. Supply vs. Demand... The examples are endless.


What defines the great traders of our time, past and present... Their mind set 1st, their method 2nd. IN THAT ORDER Look at all that has been written about trading. The one constant is what the trader was thinking... yet we all tend to skip over this part (and we have all the excuses as to why we do...)

YET!!! This is the most important part!

Is it a lot of work...? OH!!! You bet your a$$ it is!!!

INHO. It is the single biggest reason I am profitable today.


Good trading to all

TSD

  • #3,430
  • Nov 1, 2013 11:12pm Nov 1, 2013 11:12pm
Quoting TraderinSD
{quote} how your brain reacts to the stresses of trading. Your brain will react differently if you are only trading in a demo account. Exactly, Precisely... Absolutely!!! This is the REWIRE I have referred to many times in my posts. IMHO it is the most difficult challenge we face in trading. One that MUST be overcome if you are to be successful. It is very painful, arduous, expensive task. Staying in the right mindset is essential. TSD
Great advice for me to ponder over the weekend!
  • #3,431
  • Nov 2, 2013 3:45am Nov 2, 2013 3:45am
Quoting GregT
Very similar - see attached copy of your chart What I am trying to work out by asking questions is whether there is any point in plotting Weekly zones in the area between 1.5100 up to 1.8300, and whether this area should be used to only look for RBR continuation patterns on H4 Execution TF. My Weekly curve percentage indicator is showing 25% so I am not looking for any short trades - only looking for long trades unless I see that price CANNOT break above 1.6700
I have made it a rule that the curve is between the two zones in control no matter how close or far they are. If a zone gets broken or a new one forms, then the curve changes. I donīt know if this is correct, because I am still forward testing.

Quoting TraderinSD
how your brain reacts to the stresses of trading...
Great post TraderinSD! The number one reason for my previous failures in trading have been due to a weak mindset. I came to the conclusion that this is due to me focusing too much on making money. Might seem a bit strange, because in the end I think we all are in this business to make money, but thinking about money is what drives me to gamble. I now have a large written reminder on my desk that says - "BIG MONEY IS NOT THE OBJECTIVE!!! THE OBJECTIVE IS FOLLOWING GOOD TRADING PRINCIPLES!!! THATīS ALL!!!".
  • #3,432
  • Nov 2, 2013 3:49am Nov 2, 2013 3:49am
Quoting GregT
{quote} We have over 20 would-be traders subscribing to the FAQ Group already. I have had to reject a few requests because people forgot to answer the two questions I asked. I particularly want you to provide your Forex Factory name so that I can confirm you are a subscriber (and preferably a contributor) to this forum and have previously shown some \"positive\" interest in asking questions or exposing your trading intentions as a contribution to the success of the other subscribers in this forum. I will be fiddling with the structure of the Group...
I think TraderinSD has made a very valid point, Greg please add trader psychology as a category.

It never gets easier, you just get better
  • #3,433
  • Nov 2, 2013 3:59am Nov 2, 2013 3:59am
Quoting lonewolf1
I gotta add my two cents here. I think Alfonso is a really good guy, and good trader. However your idea of supply/demand is no different then support/resistance. You can package it however you want, put a pretty bow on it, and try and sell it as something different, but it's not. You will notice something about all these boxes that you guys draw. They are right at, or very close to obvious s/r levels. Look at the charts here that have been posted. Its all right there. You need look no further than the blue box that Greg drew in his post. Look to...
It's very similar but not the same. Support and resistance is normally a historical price, last month/week high/low, several months highs not being broken repeteadly, etc. With supply and demand you have a laser beam entry/SL because you have zones not a single price like you have with support and resistance, many times with SR you will get huge stops, you will never have those with SD. That's the advantage of having a SD zone, if we add certain rules of momentum trading, fresh versus unfresh, original versus not, it will by then nothing to do with SR.

That's my personal opinion, I see that on the charts everyday.
Alfonso
Set and Forget supply and demand trading community
  • #3,434
  • Nov 2, 2013 4:12am Nov 2, 2013 4:12am
Quoting lonewolf1
I gotta add my two cents here. I think Alfonso is a really good guy, and good trader. However your idea of supply/demand is no different then support/resistance. You can package it however you want, put a pretty bow on it, and try and sell it as something different, but it's not......
The clear differences are in this article:

http://www.fxstreet.com/education/re...es/2011/04/05/

It is like saying a trendline is the same as a moving average. You can get the same info from both, but the methodology of how they are drawn is very different.
It never gets easier, you just get better
  • #3,435
  • Nov 2, 2013 4:41am Nov 2, 2013 4:41am
Quoting GregT
{quote} Very similar - see attached copy of your chart What I am trying to work out by asking questions is whether there is any point in plotting Weekly zones in the area between 1.5100 up to 1.8300, and whether this area should be used to only look for RBR continuation patterns on H4 Execution TF. My Weekly curve percentage indicator is showing 25% so I am not looking for any short trades - only looking for long trades unless I see that price CANNOT break above 1.6700 {image}
The area you are not plotting in your chart is where I am looking to take profits. That area is nothing more than a flip as some as you call it. I call it a swap zone. But nice trade as I got in it also. Lets just hope it can break this chicken shit daily level. If it does then we get to our area and will look at this daily level that breaks as a new flip/swap zone. Be a nice place to jump back in short. Good luck
  • #3,436
  • Nov 2, 2013 4:42am Nov 2, 2013 4:42am
I have a question about how far to look back for SD levels. I understand that in theory one should look back as far as possible, but I aslo see that this will ignore newer levels that are not original if looking back far enough, but where price still gets good reactions. If I were to limit my lookback period I would consider most of the newer levels as original. Do you guys/girls have a limit for looking back or will you look back as far as possible? Thanks!
  • #3,437
  • Nov 2, 2013 4:53am Nov 2, 2013 4:53am
Quoting Deitreider
I have a question about how far to look back for SD levels. I understand that in theory one should look back as far as possible, but I aslo see that this will ignore newer levels that are not original if looking back far enough, but where price still gets good reactions. If I were to limit my lookback period I would consider most of the newer levels as original. Do you guys/girls have a limit for looking back or will you look back as far as possible? Thanks!
Look back as far as you need to, weeks, months of years. Study your charts and see how the zones react even if they were created a few years ago. It's the same thing over and over and over, on any pair, index, equity or commodity, remember supply and demand rules our lives.

Alfonso
Set and Forget supply and demand trading community
  • #3,438
  • Nov 2, 2013 5:01am Nov 2, 2013 5:01am
Quoting isko
I am scaling in. Set limit order for my 3rd lot on GBPUSD. Waiting for price to hit my limit order. 2nd lot on play has no more risk involved (moving SL gradually below BE). Set Limit Order on new Supply Area formed by FOMC yesterday. * TL is still down. * Price is still high on the curve (look to go short only). * Still lots of room for TP. {image} Watching closely on this pair. {image}
Same setup on mine Francis, we both looked at the same setup. Trading both the H4 supply zone you marked on your charts, it was the next obvious H4 supply zone having the pound bouncing off Monthly supply.

I am also holding the D1 supply entry based on a Monthly/D1 combo short I posted 10 days ago, been holding it and it's now become a nice runner. My D1 supply trade was right at the D1 proximal line, it looks like yours was a bit lower.

Find attached my 2 short trades on the pound, each of them in a different account. Those that have been subscribed for sometime will know that I have a different live account for each combo setup, H1, H4 and D1 combos.

Need to move my TP lower and try to manage my SL technically above new supply areas. Initially my entries have a fix 6-8% TP. I took my day off and I can't manage my trade now that the markets are closed.
Attached Image(s) (click to enlarge)
Click to Enlarge Name: gbpusd_h4.png Size: 137 KB
Click to Enlarge Name: gbpusd_d1.png Size: 63 KB
Set and Forget supply and demand trading community
  • #3,439
  • Nov 2, 2013 5:06am Nov 2, 2013 5:06am
Quoting Deitreider
I have a question about how far to look back for SD levels. I understand that in theory one should look back as far as possible, but I aslo see that this will ignore newer levels that are not original if looking back far enough, but where price still gets good reactions. If I were to limit my lookback period I would consider most of the newer levels as original. Do you guys/girls have a limit for looking back or will you look back as far as possible? Thanks!
Won't that depend on what type of trader you are ?

A position trader would probably need to look back years using a monthly chart as his curve, whereas an intraday trader would probably only look at the current yearly chart using daily charts as his curve.
It never gets easier, you just get better
  • #3,440
  • Nov 2, 2013 5:17am Nov 2, 2013 5:17am
Quoting Shabs19
{quote} Won't that depend on what type of trader you are ? A position trader would probably need to look back years using a monthly chart as his curve, whereas an intraday trader would probably only look at the current yearly chart using daily charts as his curve.
Even if you are a daytrader, I believe (its my belief and opinion) you should be aware of where the bigger timeframes are located.

Imagine this scenario:

  1. The D1 TF is dropping like a rock making new supply areas and removing demand areas
  2. Brand new H1 CP supply with 4:1 or more RR
  3. Price hits a fresh and original Monthly demand area from 3 years ago, you were unaware of this HTF demand area
  4. Besides the monthly is in an uptrend, but you don't know that because you are not taking it into account, it's low in the Monthly curve

What do you think that could probably happen to that H1 CP supply when price hits a fresh and original Monthly demand area? Look at the GBPUSD scenario now, bouncing off the Monthly supply area and look at the H1 demand areas.
Alfonso

Set and Forget supply and demand trading community
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