Supply and demand in a nutshell by Alfonso Moreno | Page 186 | Forex Factory

Options

Go to
Permalinks
Print Thread

Similar Threads

Supply and Demand Zones 57 replies

Price movement as a function of Supply and Demand 43 replies

Supply and demand zones and EW principles 1 reply

How Markets Work, in a Nutshell! 32 replies

Demand and Supply 1 reply

Attachments: Supply and demand in a nutshell by Alfonso Moreno
Exit Attachments

Supply and demand in a nutshell by Alfonso Moreno

  • #3,701
  • Edited 1:21am Dec 14, 2013 1:04am | Edited 1:21am
Quoting coolmoss
{quote} Thanks very much for your comments. I really do appreciate your patience. At the moment I'm feeling totally lost. (not to mention a bit crushed, LOL). Right now I feel an awful lot like the practice I'm doing is just repeating mistakes. I don't feel like I'm learning anything, I can't shift out of the perception I'm stuck in. Anyway, I'm going to try and absorb what you've stated, practice at least an hour a day for the next week, and come back with the results. To help start, is the absorbed weekly supply level you mentioned what I have...
Don't despair my friend! I am sure that the mistakes you are doing are pretty much the same. Once you get one of those "aha moments", you will suddenly find yourself in a completely different stage, on the "believing" side of trading.

The weekly supply you drew is the one that was absorbed, it was not a good one but it was absorbed. There is also a WK demand right below, maybe the WK demand was sitting at a Monthly demand as well, price went definitely too low and reacted causing the WK TL break, in that scenario, buy buy buy with a H4 TL until you get too high in the curve where you either wait for the opposing HTF supply break to continue buying or new direction on H4. That didn't happen on your sample.

Stay with the trend for the next week, don't do any counter-trend even if you see a clear setup. Do that and come back with your results in a week time.

Post a second failed trade and let me see if you made a similar mistake or not.

Alfonso
Set and Forget supply and demand trading community
  • #3,702
  • Dec 14, 2013 3:33am Dec 14, 2013 3:33am
Nice work Coolmoss and Alfonso, you are making things much clearer for all of us.... Don't stop doing that kind of stuff
  • #3,703
  • Dec 14, 2013 5:22am Dec 14, 2013 5:22am
Ok just to make sure i've got the thinking process correct. Ignore the other indies on my chart, they are for another "experiment". The zones are very crudely drawn but just pretend I draw them correctly

Attached Image (click to enlarge)
Click to Enlarge Name: SDHW.png Size: 46 KB


I am day trader so I use D1, H1 combo.
D1 Supply area found but too wide for me, I wait for H1 supply to form and viola H1 supply form with overlap to D1 good zone!(just assume all zones fresh and original)
Price hit D1 zone for the 1st time so I short.

Now I observe PA and supply areas are forming with no test (pink areas), demand areas (blue) are also forming but they are not respected much so it is downtrend.
I wait for short opportunity like if price goes to the red circle and bounce of the supply zone there.

Something like this in a very very small nutshell?
I want more brain power!
  • #3,704
  • Edited 11:29am Dec 14, 2013 11:08am | Edited 11:29am
Quoting cfdtaleong
Ok just to make sure i've got the thinking process correct. Ignore the other indies on my chart, they are for another "experiment". The zones are very crudely drawn but just pretend I draw them correctly {image} I am day trader so I use D1, H1 combo. D1 Supply area found but too wide for me, I wait for H1 supply to form and viola H1 supply form with overlap to D1 good zone!(just assume all zones fresh and original) Price hit D1 zone for the 1st time so I short. Now I observe PA and supply areas are forming with no test (pink areas), demand areas...
Hey there!

I can't help you there, you have drawn many zones, most of them are not valid, just covering the wicks, others cutting through candles, breaking all available rules
So unless you have a clearer picture, I can't help. There is ONLY 1 H1 supply zone on your chart really and it's not fresh, so no trade (see red zone in my attachment)... you drew like 9 zones, NONE of them are valid zones! The only valid zone is a H1 supply, there is not a single H1 demand zone anywhere on that chart.

You need to read Post #1 rules and understand what a level is and how they are drawn, since none of the levels you drew are correct.

Alfonso
Attached Image (click to enlarge)
Click to Enlarge Name: Screenshot1.png Size: 248 KB
Set and Forget supply and demand trading community
  • #3,705
  • Dec 14, 2013 12:16pm Dec 14, 2013 12:16pm
Wow thank you!! It hit me like a truck! I must have really got off on the wrong foot or turned a wrong corner somewhere! Its embarrassing to say I was with your thread when it very first started. I will re-read everything and watch your videos again.
I want more brain power!
  • #3,706
  • Dec 14, 2013 1:22pm Dec 14, 2013 1:22pm
wrong replay, sorry
  • #3,707
  • Dec 14, 2013 3:34pm Dec 14, 2013 3:34pm
Since we're doing SD trading, once you supply or demand in control is taken out, it will be showing weakness in that currency pair's timeframe.

showing weakness This means that we will see, candlestick patterns, NRB dojis etc?
or we should see what?
Gracias abrazo
  • #3,708
  • Dec 15, 2013 1:12pm Dec 15, 2013 1:12pm
Quoting panoramia
Post a second failed trade and let me see if you made a similar mistake or not. Alfonso
Hello Alfonso, below is first the curve chart and then a sequence of entry TF charts. Two trades, one stopped out quickly, the other worked nicely. I put my notes directly on the charts. Thanks for looking!

Attached Image (click to enlarge)
Click to Enlarge Name: 1.png Size: 28 KB

Attached Image (click to enlarge)
Click to Enlarge Name: 2.png Size: 43 KB

Attached Image (click to enlarge)
Click to Enlarge Name: 3.png Size: 24 KB

Attached Image (click to enlarge)
Click to Enlarge Name: 4.png Size: 22 KB

Attached Image (click to enlarge)
Click to Enlarge Name: 5.png Size: 28 KB
  • #3,709
  • Dec 16, 2013 1:11am Dec 16, 2013 1:11am
Quoting coolmoss
{quote} Hello Alfonso, below is first the curve chart and then a sequence of entry TF charts. Two trades, one stopped out quickly, the other worked nicely. I put my notes directly on the charts. Thanks for looking! {image} {image} {image} {image} {image}
First trade: the base for the CP supply itself was WIDER. Also, very important, as a rule of thumb, we need that price stays away from the potential level that has been created, entering on the next candle is not a good idea, price needs to stay away for a while to consolidate entry level, and then pullback.
Attached Image (click to enlarge)
Click to Enlarge Name: Screenshot1.png Size: 251 KB


Second trade: It was a valid entry because the entry candle had not closed OHCL above the TL, that spike was the entry itself. If the next candle would have been the entry then the short would have been negated.
Attached Image (click to enlarge)
Click to Enlarge Name: Screenshot2.png Size: 284 KB


The top 3rd H4 supply limit set order should have been removed from the charts once the H4 TL was broken.
Also, I don't think you are adding a minimum of 10 pips wiggle room to your SL, so higher probability of being stopped out and then having the trade go your way.

Hope that helps
Alfonso
Set and Forget supply and demand trading community
  • #3,710
  • Dec 16, 2013 2:15am Dec 16, 2013 2:15am
Quoting panoramia
{quote} First trade: the base for the CP supply itself was WIDER. Also, very important, as a rule of thumb, we need that price stays away from the potential level that has been created, entering on the next candle is not a good idea, price needs to stay away for a while to consolidate entry level, and then pullback. {image} Second trade: It was a valid entry because the entry candle had not closed OHCL above the TL, that spike was the entry itself. If the next candle would have been the entry then the short would have been negated. {image} The top...
Hi Alfonso,

I see you are talking currently about a minimum wiggle room of 10 pips. On the first page you mentioned for the 1hr 5 pips and for the 4hr 7 pips. Have you changed the amount of wiggle room based on testing?

An other question: how to act or to trade with pending orders this week when al most every day there are almost all day news events with possible substantial impact on the market? How do you handle this? Can you give me some insight on how to act upon!

Many thx in advance.
"When the student is ready, the teacher will appear"
  • #3,711
  • Dec 16, 2013 2:34am Dec 16, 2013 2:34am
Quoting panoramia
{quote} First trade: the base for the CP supply itself was WIDER. Also, very important, as a rule of thumb, we need that price stays away from the potential level that has been created, entering on the next candle is not a good idea, price needs to stay away for a while to consolidate entry level, and then pullback. {image}
In a live market, I would have considered the first red candle (you marked as a BASE) a DROP, according to coolmoss... The candle is not so small and engulfed the previous low. Why did you consider it, part of the BASE?
  • #3,712
  • Dec 16, 2013 2:43am Dec 16, 2013 2:43am
Quoting lucariga
{quote} In a live market, I would have considered the first red candle (you marked as a BASE) a DROP, according to coolmoss... The candle is not so small and engulfed the previous low. Why did you consider it, part of the BASE?
If you are referring to the first trade's CP supply pattern, the first left red candle (see red arrow in attached screenshot) has a candle body (open to close) which is around 50% or lower than the whole candle range (high to low), that means that candle IS part of the base (consolidation). Any candle that have those basing parameters will be part of the base.

It's something that experience and backtesting has tought me. This is why I am ALWAYS saying "do not believe what I say or do, DO IT YOURSELF". Backtesting is paramount, if a trader is not willing to invest months of his time into backtesting, he willl possibly be giving up onto the most important element of the learning process, that is, gaining confidence and believing in what you are doing.
Alfonso
Attached Image
Set and Forget supply and demand trading community
  • #3,713
  • Dec 16, 2013 3:56am Dec 16, 2013 3:56am
Quoting panoramia
{quote} If you are referring to the first trade's CP supply pattern, the first left red candle (see red arrow in attached screenshot) has a candle body (open to close) which is around 50% or lower than the whole candle range (high to low), that means that candle IS part of the base (consolidation). Any candle that have those basing parameters will be part of the base. It's something that experience and backtesting has tought me. This is why I am ALWAYS saying "do not believe what I say or do, DO IT YOURSELF". Backtesting is paramount, if a trader...
Many thanks and crystal clear.

Do you think to add this "50% rule" on your first post? Maybe on a new section called "how to draw S&D levels". The video on S&D drawing is AWESOME, but sometime a step by step process resume could be easier for us to understand....

Anyway many many many thanks for your effort. You changed my way to watch at a chart
  • #3,714
  • Dec 16, 2013 4:25am Dec 16, 2013 4:25am
Hello fellow traders,

This is a reminder that I will be holding a new free live webinar TODAY Monday December 16th at 1 p.m C.E.T (12 PM GMT). Those who have not joined yet can do it on the link below, you will get the link to join the webinar after you have confirmed your email, right on the last email.

DATE: TODAY Monday 16th December 2013
TIME: 1 PM to 2:30 P.M Central European Time | 7 a.m to 8:30 a.m EST

What will this webinar cover?

  1. Trading supply and demand with the bigger timeframes, trading with the trend
  2. Questions and Answers

If you haven't previously joined the free webinars, fill out the next form and you will receive the link to join after you confirm your email address. If you have already joined, you should have received and email already.

LINK TO JOIN FREE WEBINARS: http://www.set-and-forget.com/free_webinars

Hope to see you there!
Alfonso

Set and Forget supply and demand trading community
  • #3,715
  • Dec 16, 2013 4:49am Dec 16, 2013 4:49am
Quoting FxDoji
{quote} Hi Alfonso, I see you are talking currently about a minimum wiggle room of 10 pips. On the first page you mentioned for the 1hr 5 pips and for the 4hr 7 pips. Have you changed the amount of wiggle room based on testing? An other question: how to act or to trade with pending orders this week when al most every day there are almost all day news events with possible substantial impact on the market? How do you handle this? Can you give me some insight on how to act upon! Many thx in advance.
Hi there!
Many times I reply taking into account that everybody knows the default settings. Since I have lots of extra detailed information on the private site (FF is very limited to allow me to have over here), I sometimes forget about it. My H4 wiggle room is 10-12 pips for majors, 15 pips for cross pairs. For H1 is like 7 pips on majors, 10 pips on cross pairs.

As far as news is related, there are 30+ pairs to trade, there are always options to trade. Once the news has passed, then you can resume what you were doing or plan a different trade if market dynamics changed on the affected pair.
Alfonso
Set and Forget supply and demand trading community
  • #3,716
  • Dec 16, 2013 5:37am Dec 16, 2013 5:37am
Quoting panoramia
{quote} Hi there! Many times I reply taking into account that everybody knows the default settings. Since I have lots of extra detailed information on the private site (FF is very limited to allow me to have over here), I sometimes forget about it. My H4 wiggle room is 10-12 pips for majors, 15 pips for cross pairs. For H1 is like 7 pips on majors, 10 pips on cross pairs. As far as news is related, there are 30+ pairs to trade, there are always options to trade. Once the news has passed, then you can resume what you were doing or plan a different...

and on the daily, what wiggle room are you using on that timeframe?
"When the student is ready, the teacher will appear"
  • #3,717
  • Dec 16, 2013 8:56am Dec 16, 2013 8:56am
Quoting FxDoji
{quote} and on the daily, what wiggle room are you using on that timeframe?
25 pips for majors on the D1 TF
Set and Forget supply and demand trading community
  • #3,718
  • Dec 16, 2013 9:41am Dec 16, 2013 9:41am
Quoting panoramia
{quote} First trade: the base for the CP supply itself was WIDER. Also, very important, as a rule of thumb, we need that price stays away from the potential level that has been created, entering on the next candle is not a good idea, price needs to stay away for a while to consolidate entry level, and then pullback. {image} Second trade: It was a valid entry because the entry candle had not closed OHCL above the TL, that spike was the entry itself. If the next candle would have been the entry then the short would have been negated. {image} The top...
Thank you. I understand your explanation and already feel different about my progress. I'm quite happy that your comments pretty much match my best guesses as to what I did wrong. Looking forward to a good week's worth of backtesting work. I'll report back in a week or so!
  • #3,719
  • Edited 3:53pm Dec 16, 2013 2:37pm | Edited 3:53pm
Hello fellow traders!

Today's free live webinar has been uploaded. I believe this webinar is a very important one.

We covered a few things while going through a bunch of trades I had triggered on my account:

  1. How to trade with the Monthly/Daily combo, position trading
  2. When to use H4 as your entry timeframe, when the D1 zone is too wide or we already have price bouncing off a SD D1 zone
  3. How trendlines can help us assess trend and negate/validate a level on our entry timeframe

We covered a few live trades (some of them could be losses, but they were valid ones when they were taken):

  1. AUDCAD H4 short at D1 supply
  2. EURJPY H4 long
  3. CHFJPY H4 long (similar trade to EJ)
  4. GBPJPY H4 long (similar trade to previous two, but a loss)
  5. USDCAD D1 long
  6. NZDUSD H4 short
  7. S&P e-mini H1 long at D1 demand

The trades were discussed in more detail at www.set-and-forget.com, on the weekly analysis videos and the forum itself.

Thanks again for your massive support!
Have a great night!
Alfonso

P.S. If you want to join the free webinars organized from time to time, fill out the form at this link: http://www.set-and-forget.com/free_webinars


Inserted Video
Set and Forget supply and demand trading community
  • #3,720
  • Dec 16, 2013 3:16pm Dec 16, 2013 3:16pm
very good strategy. cheers Alfonso
3 traders viewing now