Trading in Demand and Supply with Price Action- Step by step

There are lot of information and threads about S/D in FF. However , I find posts by Gilamonster in thread Price Action made simple with Supply and Demand levels easy and clear to understand.
With Gilamonster's permission , I would like to re-post his posts in new thread so everyone can benefit.
My purpose for this thread is very simple. I want to improve my way to trade S/D , so I will prepare charts every day and hopefully can get feedback from other traders.
I'll get all points about S/D from Gilamonster's posts and post here . However it will take time to complete it.

So below are some posts by Gilamonster.

Fine Tuning Line Placement

1. Has to have a Leg-in, Base, Leg-out( a "leg" is a large candle with more than 50% of the whole range [meaning shorter wicks] the "base" is a candle with 50% or less than the range [meaning longer wicks] can have one candle)
2. For "demand" or "supply" trades start at current price on your 1hr chart
3. Look left and up for fresh supply, or left and down for fresh demand
4. Leg candles have to be exciting(explosive especially the leg-out) usually very large candle
5. Base candles are going to be boring and have no direction and price is not moving around much
6. Once you find these candles, Draw a vertical line straight thorough the leg-in and leg-out
7. Make sure leg-out is explosive, BE PICKY!
8. Now calculate the range in the base, (Highest candle wick - the Lowest candle wick )
9. Then calculate the (Highest Body High - Lowest Body Low)
10. Divide the Base by the Range
11. Is the body of the base less than or equal to 50% of the range?
12. If the body is 50% or less then you have a good strong zone.
13. If more than 50% then NO BASE NO ZONE!
14. Now Place two horizonal lines to mark this zone
15. First line (closest to price) will be placed at the highest high of the Bases body for Long Trade or lowest low of the Bases Body for Short Trade
16. Second line will be placed at the bases lowest candle wick for Long Trade or Highest wick for Short Trade
17. Have your stop set above your second line for a short trade spread x3
18. Have your stop set below your second line for a long trade spread x3

Thats it for fine tuning let me know if there is any confusion. I will do my best to explain more.

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.

An example on how to calculate legs and bases in the first chart.

Attached Image

What makes a level good in Supply and Demand zones ?

DBD-Drop, Base, Drop

RBR- Rally, Base, Rally

Also RBD-Rally, Base, Drop

and DBR-Drop, Base, Rally

DBD and RBR are going to be your stronger set ups

I would like to make a point on how I have learned to trade DBR, RBD, RBR, and DBD.

Both RBD and DBR are good areas but from what I find more times than not is that these most extreme areas on a curve are not fresh anymore.
Remember the price was going one direction and then price reverse's in the other.
This happens because the sentiment at that time changes all to one direction.
For example price is in an uptrend, then reverse's to the downside. Big buyers and sellers have now joined the same boat to short.
So now this area has been eaten up quite a bit.

For RBR and DBD, the areas are created as price is moving.
Big players here will usually not load the boat again until price comes back to this area.
They know that other big traders that missed this area will want to enter here as well.
The areas are considered fresh demand and supply zones now.
Price has not yet been here yet and creates an opportunity.

Thats the short of it.

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Zones are not fresh, then not enter .

1. How to find SET UP

1. Identify trend on daily chart
2. Find STRONG zone setup on 4hr or 1hr charts
3. Setup your entry on 15 min or 5 min charts

Good work. Keep it up.

GBPUSD H4,
I expect GBPUSD fall down to zone ,,, but each brokers have different charts. Any comment

I think this is a good one too. I have not placed an order yet, I am still monitoring the price reaction toward this level.

Hi samsungs3,
you have forked thomaas thread because it became commercial and now your own thread is in commercial section too. What is going on?

GBPUSD hold in demand zone and return... I love this kind of reaction .

EURUSD H1 ,,, Gilamonster said

Price is already figured into the price before most major economical new is released.Price will always move to UNFILLED orders.




We'll see if price move into the zone as GBPUSD just did few hours ago.

I'm not sure, my friend. I learnt a lot from thomass and Gilamonster. But I find Gilamonster's style is fit with my style.
Be frank, I dont care commercial or normal thread. I just want to learn, to post charts , understand forex.
Sometimes i find forex consumed so much of my time.

USDJPY H4,,
We're in supply zone but the zone is not fresh..
Daily is bullish but I not really sure where USDJPY heading ? Anyone can comment or post some charts ?

Samsung: usdjpy is still in bullish mode. Watch the news today at 1:30 GMT, it might change the whole picture.