Supply and demand in a nutshell by Alfonso Moreno | Page 178 | Forex Factory

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Supply and demand in a nutshell by Alfonso Moreno

  • #3,541
  • Nov 17, 2013 9:36am Nov 17, 2013 9:36am
Quoting frenetic
Hi there Alfonso and fellow traders, After studying the 1st post a lot of times,I'm now facing a new problem. I hope you guys can help me out. I want to do my analysis to set and forget and write them down on my notebook,if there is a valid setup then take it and if not then do not do anything at all and turn off the platform. I think this is a very good way to track my progress and manage my emotions because everything is write down on the paper and just act based on it. I've tried to do that for several times but my mind is somehow still confused...
if price didn't bounce from anything it means basically nothing until it taken out a opposite level - if bounced and you think it's a potential demand than you need to wait for a supply area to be taken out, and then to announce it as demand area, it's nothing until then.
that's also for define the curve and define your entry zone. you count it as demand or supply only when is taken out opposite area, could be the CP or the peak/valley pattern.
  • #3,542
  • Nov 17, 2013 10:09am Nov 17, 2013 10:09am
Quoting Lou
{quote} Not sue if your comment is 'tongue in cheek' but it is because the starter of the thread now operates a separate non FFF site where subscribers pay to join.
I know you think you understand what you thought I said but I'm not sure you realize that what you heard is not what I meant.

  • #3,543
  • Nov 17, 2013 10:20am Nov 17, 2013 10:20am
Hi Alfonso and traders,

I have a full time job, live in Europe, and I can trade forex around 7 to 10 pm CET only.
I am working hard to become a consistently profitable trader. It has been two years, I know a lot, have quite an experience, but my results are around break even.

I came accross Supply & Demand, especially the set & forget approach, and I belive this can be a perfect system for me :-)

Please advise, the following approach, can it lead to consistent profits for me, if I apply it in a disciplined way?
- look at H1 and D1 charts once per day, in the evening
- if I see a fresh and ideally original zone on H1, from where the price departed fast after a reversal, set a limit set & forget order:
- with the limit entry at the edge of the zone, and a stop loss at "the other side" of the zone + 5 pips + spread
- filter: trade in line with the trend on D1, defined as price vs. EMA 50, and do not trade long nearby D1 supply, do not trade short nearby D1 demand
- take profit at 2R, two times the SL distance (I want to increase my win ratio to make it easier to stick to the system, avoid losing streaks)

What do you think? Is this s a setup for sucess? Or shall I do something differently?

I have manually backtested this approach. I identified 40 setups on historical charts (I know it is easy on history, but a valuable exercise to learn the system ;-) and I performed a few simulations, going bar-by-bar on EURUSD H1 with F12 key in MT4, and "imagined" trading the levels, no cheating, and my result was net 4R on 20 trades.

Thank you!
Michal9
  • #3,544
  • Nov 17, 2013 11:14pm Nov 17, 2013 11:14pm
When a trade has failed the requirements of being a "set and forget" trade, it is to my knowledge the trade is still valid to be taken. What other way could you enter if you don't place a pending order at the SD level? I know it has to be confirmed but what does that mean exactly?
Greatness exists in all of us.
  • #3,545
  • Nov 18, 2013 2:43am Nov 18, 2013 2:43am
@UpComerFX, my understanding of "confirmation" is a price action at the level, i.e. you watch the market to see how the price reacts to the level.

For example, the price touches the edge of the demand level, so you are thinking of going long. Watch the price. If it prints a perfect bullish pinbar, or a bullish engulfing, this can be your confirmation, and you enter the market. If the price keeps falling like a rock, even though it is in the demand level, you do not enter, and you avoid the loss.

But there is a flipside, too. You need to watch the market intraday, which some people cannot do. And, if you wait for a confirmatio, usually your entry level will be at a less favorable price, so it will be harder to get the same R ratio and the stop is likely to be a bit further away.

@all, what do you say to my question above? :-) Thanks!
Michal9
  • #3,546
  • Nov 18, 2013 3:13am Nov 18, 2013 3:13am
Quoting michal9
@UpComerFX, my understanding of "confirmation" is a price action at the level, i.e. you watch the market to see how the price reacts to the level. For example, the price touches the edge of the demand level, so you are thinking of going long. Watch the price. If it prints a perfect bullish pinbar, or a bullish engulfing, this can be your confirmation, and you enter the market. If the price keeps falling like a rock, even though it is in the demand level, you do not enter, and you avoid the loss. But there is a flipside, too. You need to watch the...
no.. you totally mixed up S&D and price action
two different things which doing fine together, you watch price action forming Lower Lows to draw a TL between peaks, or usually a engulfing candle form a nice peak to choose a supply area,
but that's not your confirmation,

CP pattern is RBR or DBD pattern those alfonso call confirmation(I have no idea if alfonso made this one but you've got the point)

when you have a huge supply zone area and you don't want to set and forget on a huge zone then
you should wait for price to drop somewhere from that level and then you watch for valid DBD pattern that taken out demand(RBR for departure from demand)

about your question from above,
I wish I could answer that
all I can say is don't look for winners, look for low risk/high reward opportunities
and if you have a full time job don't do 1h/d1 combo
you'll need to check the monitor every 4-6 hours~.
while 4H/1W combo I guess once/twice a day will be enough.
  • #3,547
  • Nov 18, 2013 3:55am Nov 18, 2013 3:55am
Quoting panoramia
{quote} Hi Sachu, Thanks for your kind words and comments, I appreciate that. The indicators can be found in the first post like always, the updated rectangle reader indicator that extends the rectangles now also calculates the % of the curve at the upper right of the screen but you need to draw the rectangles manually in order to have that information. There is also a video that explains how the indicator is used at http://www.forexfactory.com/showthread.php?t=428268 Get the indicators zip file again, install them on your MT platform...
Hi Alfonso,

Thanks a lot for the link and response. I have downloaded the file but, I can't open the video file. There is some security around it. Can you release this please.

Kind regards.

Sachu
  • #3,548
  • Nov 18, 2013 4:01am Nov 18, 2013 4:01am
Quoting panoramia
{quote} Hi Abzozo, The SD spreadhseet is on another thread I created, right here http://www.forexfactory.com/showthread.php?t=424894 Alfonso

Hi Alfonso,

Is this the latest version of your spreadsheet? Dose this link to the rectangle indicator?

Regards.

Sachu
  • #3,549
  • Nov 18, 2013 5:16am Nov 18, 2013 5:16am
Quoting Sachu
{quote} Hi Alfonso, Is this the latest version of your spreadsheet? Dose this link to the rectangle indicator? Regards. Sachu
Hi there!

That spreadsheet thread has the original spreadsheet I created for Open Office Calc. The only thing that changes on the one I have is the levels that I've added. There are is a new module and indicator being created by MadCow which I still need to fully test, but yes, that's the latest file which works very well with Open Calc.

Alfonso
Set and Forget supply and demand trading community
  • #3,550
  • Nov 18, 2013 5:21am Nov 18, 2013 5:21am
Quoting michal9
Hi Alfonso and traders, I have a full time job, live in Europe, and I can trade forex around 7 to 10 pm CET only. I am working hard to become a consistently profitable trader. It has been two years, I know a lot, have quite an experience, but my results are around break even. I came accross Supply & Demand, especially the set & forget approach, and I belive this can be a perfect system for me :-) Please advise, the following approach, can it lead to consistent profits for me, if I apply it in a disciplined way? - look at H1 and D1 charts once per...
Hi Michal,

If you have a full time job, I would strongly recommend you to use the WK/H4 combo or even the D1 curve with H4 TF entries. The H4 TF will give you provide you with a more relaxed trading since a H4 SD level needs at least 2-3 sessions to be formed, on H1 it goes much faster.

Using EMA 50 as a filter could work, but you need to forward test it not on 40 trades but 4.000 trades 40 trades is a very very small sample to make a conclusion. Also, visual backtest is useless most of the times, it can give u an idea. The best way to test anything is by forward testing your setups without seeing what price has done in the future, this is why I don't trust Metatrader visual backtesting at all and I use Forex Tester 2.

That's my personal recommendation.
Have a great day!
Alfonso
Set and Forget supply and demand trading community
  • #3,551
  • Nov 18, 2013 5:25am Nov 18, 2013 5:25am
Quoting UpComerFX
When a trade has failed the requirements of being a "set and forget" trade, it is to my knowledge the trade is still valid to be taken. What other way could you enter if you don't place a pending order at the SD level? I know it has to be confirmed but what does that mean exactly?
I will never take a trade which is not a limit buy/sell order. I always pre-plan my trades so that I know why I want to take that trade and where I would like to exit.

Confirmation can also use limits if you see the right level has been formed at the right location, there is no difference.

  1. A set and foget is an order that you won't cancel no matter what the market does, very high in the curve, HTF with you, etc
  2. A limit order does not necessarily have to be set and forget, it can be cancelled because the rules no longer apply. Whereas set and forget is just what its name says

Alfonso

Set and Forget supply and demand trading community
  • #3,552
  • Nov 18, 2013 6:03am Nov 18, 2013 6:03am
Thank you Alfonso. Ok, I will plan to act on your recommendation, i.e. Weekly / H4 combo and a forex tester 2.

One quick question though... why not H1 although I have a full time job? I mean... if I carefully pre-plan the trade, and set the limit order, it seems I will not need to watch the market intra-day, correct? What am I missing? Is it becasue I will be unable to move the stop loss intra-day? (to address this, I planned to have a TP @ 2R, also set & forget, so that I don't have to do anything after I set the trade, in the evening previous day).

Thanks & really appreciate your comments :-)
Michal9
  • #3,553
  • Nov 18, 2013 7:56am Nov 18, 2013 7:56am
Hi all,
pre-planned intraday trade I might take on AUDUSD 1H/1D combo
Attached Image (click to enlarge)
Click to Enlarge Name: audusddaily.png Size: 63 KB

that gap from the past formed a DBR pattern(big imbalance shown as gaps on the chart just like big candles)
we bounced from that daily demand and started taking out supply area, forming fresh demand
we are far from the TL because the last valley(DBR pattern) didn't taken out the recent supply.
Attached Image (click to enlarge)
Click to Enlarge Name: audusdh1.png Size: 54 KB
  • #3,554
  • Nov 18, 2013 2:43pm Nov 18, 2013 2:43pm
hi alfonso!
since it is my first post on FF i would like to first thank you for your kindness to share your knowledge.
what caught my eye specifically with your thread was the fact that u have a set of rules you follow in a very discipline way.
after taking the time to read throw the whole thread and watch the videos few times i wonder if i can get your attention to my attached charts.
i would like to understand whether im on the right track here or not and if i understand the rules correctly.


since we are low in the in monthly curve and we entered a fresh and original demand zone no shorts allowed and i want to look for buy signals.
the monthly zone is very wide so inside the monthly zone i identified 2 D1 demand zones.
ZONE A is not fresh so i would want to look for confirmation on LTF that willing buyers are still there.(confirmation can be new demand zones being created on the LTF like 4hr\1hr)
ZONE B is a fresh +original demand zone where we can set &forget

when price touched the proximal line it formed new valid demand areas(marked as purple zones on my D1 chart) but i didnt have a chance to join the move up since there was no Pull Back, so my Q is:
am i allowed to go long WHEN\IF price returns to the purple zones at current time or i must wait for lower D1 levels to get hit in order to go long?for ex,zone A or B..?
OR
does the fact that the move up after the proximal line has been touched broke the gap supply zone is valid enough to take longs from the purple zones?

sorry if my post was too long .would appriciate ANY input.thank you!
Attached Image (click to enlarge)
Click to Enlarge Name: s1.gif Size: 73 KB

Attached Image (click to enlarge)
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  • #3,555
  • Nov 18, 2013 3:47pm Nov 18, 2013 3:47pm
Quoting Sachu
{quote} Hi Alfonso, Thanks a lot for the link and response. I have downloaded the file but, I can't open the video file. There is some security around it. Can you release this please. Kind regards. Sachu

Hi Alfonso,

Thanks for your response to the spreadsheet. I am unable to see the video pertaining to installation of indicators as advised (refer link - http://www.forexfactory.com/showthread.php?t=428268). This is due to some security. Can you please advise how i can view the video?
Kind regards.
Sachu
  • #3,556
  • Nov 19, 2013 4:50am Nov 19, 2013 4:50am
There is no running away from losers that turn around in 1 point!

I had 6 pips stoploss
Attached Image (click to enlarge)
Click to Enlarge Name: audusdh12.png Size: 59 KB

***if only I had doubled that spread ***
  • #3,557
  • Nov 19, 2013 4:56am Nov 19, 2013 4:56am
Quoting oceanlia
hi alfonso! since it is my first post on FF i would like to first thank you for your kindness to share your knowledge. what caught my eye specifically with your thread was the fact that u have a set of rules you follow in a very discipline way. after taking the time to read throw the whole thread and watch the videos few times i wonder if i can get your attention to my attached charts. i would like to understand whether im on the right track here or not and if i understand the rules correctly. since we are low in the in monthly curve and we entered...

Thanks for your message. Let me reply to you.

You are not allowed to go long on CP patterns on demand if the trend on the timeframe where you have detected that CP has changed. A CP or Continuation Pattern is great when the TF where it was detected at is in a trend and entry at that level would respect that trend. I use TLs for that. On that SoyBeans D1 TF, the D1 uptrend is broken, so CP demand is not higher odds, you have to lean on fresh valleys (DBR) only. If the D1 trend has now changed you need fresh and original D1 demand areas to go with the MN uptrend, using the MN/D1 combination.

Hope that helps!
Alfonso
Set and Forget supply and demand trading community
  • #3,558
  • Nov 19, 2013 4:57am Nov 19, 2013 4:57am
Quoting Irad
There is no running away from losers that turn around in 1 point! I had 6 pips stoploss {image} ***if only I had doubled that spread ***
Pity you had a loss on H1. The level is working great on H4, but I am not in it, stayed out because of last night AUD news. If you look at H4, that's the level some of us were looking to go long at.
Alfonso
Set and Forget supply and demand trading community
  • #3,559
  • Nov 19, 2013 4:59am Nov 19, 2013 4:59am
Quoting michal9
Thank you Alfonso. Ok, I will plan to act on your recommendation, i.e. Weekly / H4 combo and a forex tester 2. One quick question though... why not H1 although I have a full time job? I mean... if I carefully pre-plan the trade, and set the limit order, it seems I will not need to watch the market intra-day, correct? What am I missing? Is it becasue I will be unable to move the stop loss intra-day? (to address this, I planned to have a TP @ 2R, also set & forget, so that I don't have to do anything after I set the trade, in the evening previous...
H1 works as well, the lower the TF the more levels you will have and the more time you will have to use to analyze pairs. H4 is perfect because you'd need maximum 1 hour a day for 20 pairs or so, obviously when you have everything set up correctly and you have enough screen time and experience trading SD.

Alfonso
Set and Forget supply and demand trading community
  • #3,560
  • Nov 19, 2013 5:01am Nov 19, 2013 5:01am
Quoting Sachu
{quote} Hi Alfonso, Thanks for your response to the spreadsheet. I am unable to see the video pertaining to installation of indicators as advised (refer link - http://www.forexfactory.com/showthread.php?t=428268). This is due to some security. Can you please advise how i can view the video? Kind regards. Sachu
Hi Sachu,

That video is not available anymore for public. The original one was removed by YouTube (long story described some time ago on the thread) even though the video talked about my own spreadsheet and indicators that I created myself (strange but they did it). So I had to record it again in a different way and it's only available to the private forum subscribers to avoid problems with anybody who could be bothered by it. I can't do anything about it sorry.

Alfonso
Set and Forget supply and demand trading community
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