Supply and demand in a nutshell by Alfonso Moreno | Page 197 | Forex Factory

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Supply and demand in a nutshell by Alfonso Moreno

  • #3,921
  • Feb 6, 2014 1:54am Feb 6, 2014 1:54am
Can someone point me in the direction of the [highlight=rgb(244, 246, 249)]ftc_SupportAndResistance indicator for forextester please?[/highlight]
  • #3,922
  • Edited 2:31am Feb 6, 2014 1:57am | Edited 2:31am
Quoting kimis
{quote} SL has been hit after barely touching RR1:2. SL was not moved to be. Waiting for another oportunity. Ozzie has started to rise due to yesterday news regarding "good situation" and not changing rate {image}

  1. This AUJDPY H4 short trade was not valid because H4 TL was solidly broken with more than 1 full OCHL candle. The aussie is getting stronger, so H4 now is not possible because of TL break and aussie strength
  2. We also removed 2 H4 supply zones. Made lower lows then high highs, ranging
  3. Look at the D1 candles were you wanted to short again on H4, there is no imbalance. The sellers are much higher on the fresh and original D1 supply zone
  4. Short on H4 were no longer possible because of the lack of imbalance on the D1 candle's formations

Hope it makes sense to you Kimis.


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Set and Forget supply and demand trading community
  • #3,923
  • Feb 6, 2014 2:00am Feb 6, 2014 2:00am
Quoting grasberg
Can someone point me in the direction of the ftc_SupportAndResistance indicator for forextester please?
Hello Grasberd,

The SupportAndResistance indicator for Forex Tester will be shared with you all soon, right after the webinar on Forex Tester I'll be organizing the 17th February (as posted a few posts back) so you all understand the use of it. Hope that's fine with you.

Alfonso
Set and Forget supply and demand trading community
  • #3,924
  • Feb 6, 2014 2:03am Feb 6, 2014 2:03am
Thanks, Alfonso

yes, I wasn't looking at daily chart before entry. My mistake. And didn't noticed/thought about tl breakout on h4
  • #3,925
  • Feb 6, 2014 2:22am Feb 6, 2014 2:22am
Quoting panoramia
{quote} Hello Grasberd, The SupportAndResistance indicator for Forex Tester will be shared with you all soon, right after the webinar on Forex Tester I'll be organizing the 17th February (as posted a few posts back) so you all understand the use of it. Hope that's fine with you. Alfonso
Wow, fantastic Alfonso. I was searching hard all day yesterday for it and was at a dead end. Great your letting us have the indicator and more importantly the instruction on how to make the most of it. I look forward to the 17th of February

I will focus now on the II_SupDemMOD_WhiteBG and follow your videos on testing. Thanks and hope its less cold in the south.
  • #3,926
  • Feb 6, 2014 2:29am Feb 6, 2014 2:29am
Quoting kimis
Thanks, Alfonso yes, I wasn't looking at daily chart before entry. My mistake. And didn't noticed/thought about tl breakout on h4
Yes, the H4 TL was solidly broken, you see how price made a new PEAK and a lower lower than previous peak's leg? So there was a new H4 Trendline. That was the first reason, the second reason was that it was too much trading in those zones, lower lows, then higher highs, ranging on the H4 which can be seen on the D1 chart. So we need to avoid those areas and aim at a higher level.

Hope that makes sense!
Alfonso
Set and Forget supply and demand trading community
  • #3,927
  • Feb 6, 2014 2:29am Feb 6, 2014 2:29am
Quoting grasberg
{quote} Wow, fantastic Alfonso. I was searching hard all day yesterday for it and was at a dead end. Great your letting us have the indicator and more importantly the instruction on how to make the most of it. I look forward to the 17th of February I will focus now on the II_SupDemMOD_WhiteBG and follow your videos on testing. Thanks and hope its less cold in the south.
The south here where I live is nice, today we have like 23º C, yesterday it was raining a bit but normally it's sunny where I live
Alfonso
Set and Forget supply and demand trading community
  • #3,928
  • Feb 6, 2014 2:40am Feb 6, 2014 2:40am
Hi Alfonso,

On the daily AJ chart, I noticed that two trend lines can be drawn. The SZ would be invalidated when the aggressive trend line is broken and therefore no entry. However, with the less aggressive trend line, the entry is valid. Based on the rules in the drawing of trend lines, which trend line in this case would be used to guide our entry? Thanks.

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  • #3,929
  • Feb 6, 2014 2:43am Feb 6, 2014 2:43am
Quoting jack108
Hi Alfonso, On the daily AJ chart, I noticed that two trend lines can be drawn. The SZ would be invalidated when the aggressive trend line is broken and therefore no entry. However, with the less aggressive trend line, the entry is valid. Based on the rules in the drawing of trend lines, which trend line in this case would be used to guide our entry? Thanks. {image}
Hi Jack,

Based on the TL rules the lower TL is not valid because we don't use CP patterns to draw trendlines, we need valid and obvious peaks. The supply zone you drew is not a peak but a CP pattern, so that TL is not valid, only the top one.

Alfonso
Set and Forget supply and demand trading community
  • #3,930
  • Feb 6, 2014 3:16am Feb 6, 2014 3:16am
Quoting panoramia
{quote} Hi Jack, Based on the TL rules the lower TL is not valid because we don't use CP patterns to draw trendlines, we need valid and obvious peaks. The supply zone you drew is not a peak but a CP pattern, so that TL is not valid, only the top one. Alfonso
Hi Alfonso,

Thanks for the fast reply. The candle pattern does not resemble a drop base drop to me. Obviously my understanding about CP pattern is not correct therefore I hope you can explain a little detail why this is a CP pattern. Appreciate your comments. Thanks.
  • #3,931
  • Feb 6, 2014 4:13am Feb 6, 2014 4:13am
Quoting jack108
{quote} Hi Alfonso, Thanks for the fast reply. The candle pattern does not resemble a drop base drop to me. Obviously my understanding about CP pattern is not correct therefore I hope you can explain a little detail why this is a CP pattern. Appreciate your comments. Thanks.
Hi Jack,
The reason why that is not a peak is because we don't have an obvious and clear rally, a reversion to the mean, it's just a couple of candles, market did not consolidate a rally, it did not have enough of a correction, thus it's not a peak. To me the obvious valleys and peaks are those seen in yellow in the chart below. CP patterns have many shapes.
Hope that makes sense to you
Alfonso

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Set and Forget supply and demand trading community
  • #3,932
  • Feb 6, 2014 1:12pm Feb 6, 2014 1:12pm
Quoting panoramia
{quote} Hi Jack, The reason why that is not a peak is because we don't have an obvious and clear rally, a reversion to the mean, it's just a couple of candles, market did not consolidate a rally, it did not have enough of a correction, thus it's not a peak. To me the obvious valleys and peaks are those seen in yellow in the chart below. CP patterns have many shapes. Hope that makes sense to you Alfonso {image}
Hi Alfonso, is there a way to find and use more scientific definitions? That level does not fit my earlier understanding of a CP pattern either, also I heard in one of the last webinars about the V-shape. Well a V-shape does not seem to be a repeatable definition either. Would be something more descriptive like wave theory fibo ret (e.g. must retrace minimum 38.2 to call it a valley or peak as an example) or like price action candle shapes and numbers etc. be available and more repeatable?
Tnx.
  • #3,933
  • Edited Feb 7, 2014 5:53am Feb 6, 2014 2:50pm | Edited Feb 7, 2014 5:53am
Quoting lobogabor
{quote} ... is there a way to find and use more scientific definitions? That level does not fit my earlier understanding of a CP pattern either, also I heard in one of the last webinars about the V-shape. Well a V-shape does not seem to be a repeatable definition either. ...
Hi Lobogabor,

Don't make this to complex for yourself. This sort of stuff is not consistent so don't beat yourself up trying to find one answer that fits all situations. It took a while but I have become used to eye balling the swings from High to Low or Peaks and Valley's as Alfonso expresses it. Main idea I look for is whether each successive High or Low has taken out a previous swing point (a swing point is my generic term for any change of direction - it could be a high [peak] or a low [valley]). I have tried to show this on the attached copy of your chart with Alfonso's markups included.
Cheers
GregT
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  • #3,934
  • Feb 6, 2014 3:22pm Feb 6, 2014 3:22pm
Quoting GregT
{quote} Hi Lobogabor, Don't make this to complex for yourself. This sort of stuff is not consistent so you beat yourself up trying to find one answer that fits all situations. It took a while but I have become used to eye balling the swings from High to Low or Peaks and Valley's as Alfonso expresses it. Main idea I look for is whether each successive High or Low has taken out a previous swing point (a swing point is my generic term for any change of direction - it could be a high [peak] or a low [valley]). I have tried to show this on the attached...
Hi GregT, thank you very much for the effort you put into this explanation, and it is really valuable for me!
I am still puzzled with the subjective nature of deciding on peaks and waves and other significant mile stones in the method. This was the reason I gave up on Elliot wave...so subjective, however there are very well defined rules. The master could show and explain well, but when you want to follow, will find all kinds of subjectivity...
I do understand the trained eye is better than a silly hand, I do the same, there are always differences for sure in every case.
Really appreciate your thorough work and explanation for the case and for me!
Thank you.
  • #3,935
  • Feb 6, 2014 4:27pm Feb 6, 2014 4:27pm
Quoting lobogabor
{quote} Hi Alfonso, is there a way to find and use more scientific definitions? That level does not fit my earlier understanding of a CP pattern either, also I heard in one of the last webinars about the V-shape. Well a V-shape does not seem to be a repeatable definition either. Would be something more descriptive like wave theory fibo ret (e.g. must retrace minimum 38.2 to call it a valley or peak as an example) or like price action candle shapes and numbers etc. be available and more repeatable? Tnx.
You can make it as complex or as difficult as you want to make it. My definition is "obvious and clear valley or peak", that is, an obvious V or inverted V. A CP pattern or a small rally/drop is not a clear correction in the markets, so it's not a trend correction, it's just a small pause. If you want to define it with fibos, waves, elliott waves then you have to backtest that and obtain those definitions. I did that job and obtained those definitions and they work very well for me. But I have "that experience", I've seen in thousand of times on my tests. Once you see these scenarios thousands of times in urs, you will be able to come up with an even better definition.

If the markets could be defined scientifically, none of use would be here right now, we'd all be millionnaires
Alfonso
Set and Forget supply and demand trading community
  • #3,936
  • Feb 6, 2014 4:29pm Feb 6, 2014 4:29pm
Quoting lobogabor
{quote} Hi GregT, thank you very much for the effort you put into this explanation, and it is really valuable for me! I am still puzzled with the subjective nature of deciding on peaks and waves and other significant mile stones in the method. This was the reason I gave up on Elliot wave...so subjective, however there are very well defined rules. The master could show and explain well, but when you want to follow, will find all kinds of subjectivity... I do understand the trained eye is better than a silly hand, I do the same, there are always differences...
There will always be subjectivity on any definition you make, it's human nature. I just defined a pause in the markets and an impulse. To me there are pauses, impulses and corrections. A CP pattern is a pause, not a correction. A bigger rally/drop is a correction, a reversion to the mean. But again, it's just screen time, you won't find a proper scientific definition I believe, I wish there was. I use my definition with a high doses of screen time, that's my "formula"
Alfonso
Set and Forget supply and demand trading community
  • #3,937
  • Feb 6, 2014 4:32pm Feb 6, 2014 4:32pm
Quoting lobogabor
{quote} Hi GregT, thank you very much for the effort you put into this explanation, and it is really valuable for me! I am still puzzled with the subjective nature of deciding on peaks and waves and other significant mile stones in the method. This was the reason I gave up on Elliot wave...so subjective, however there are very well defined rules. The master could show and explain well, but when you want to follow, will find all kinds of subjectivity... I do understand the trained eye is better than a silly hand, I do the same, there are always differences...

You can try to filter swing points using the zigzag indicator.
  • #3,938
  • Feb 6, 2014 7:09pm Feb 6, 2014 7:09pm
Quoting jsr
{quote} You can try to filter swing points using the zigzag indicator.
Believe me, I have 4-5 zigzags on my chart, but you R right, I never tried for this purpose, tnx, I will have a look!
  • #3,939
  • Feb 6, 2014 7:17pm Feb 6, 2014 7:17pm
Quoting panoramia
{quote} There will always be subjectivity on any definition you make, it's human nature. I just defined a pause in the markets and an impulse. To me there are pauses, impulses and corrections. A CP pattern is a pause, not a correction. A bigger rally/drop is a correction, a reversion to the mean. But again, it's just screen time, you won't find a proper scientific definition I believe, I wish there was. I use my definition with a high doses of screen time, that's my "formula" Alfonso
Alfonso, I do know what you mean, but could you plz spend some time in your nxt webinar to explain on this topic?
I THINK, I exactly understand what you are saying, but trade like a robot concept of yours, would expect some higher degree of definition...if possible of course I know it is not always the case, especially with random walk, but lets try. Lets try to define what " bigger rally and drop" means...with numbers...like the wave theory does.
Dunno man, I know it is not that simple, but needs to be tried at least.
Tnx a lot.
  • #3,940
  • Edited 1:42am Feb 7, 2014 1:04am | Edited 1:42am
Quoting lobogabor
{quote} Alfonso, I do know what you mean, but could you plz spend some time in your nxt webinar to explain on this topic? I THINK, I exactly understand what you are saying, but trade like a robot concept of yours, would expect some higher degree of definition...if possible of course I know it is not always the case, especially with random walk, but lets try. Lets try to define what " bigger rally and drop" means...with numbers...like the wave theory does. Dunno man, I know it is not that simple, but needs to be tried at least. Tnx a lot.
Not that simple like u said I'm sure there could be a better way of defining it, the only way I know to help cover this "flaw" is lots of screen time and backtesting. I am now just thinking out loud:

  1. Having amounts of pips is very subjective, because each instrument has a different pip value and pip ranges, so "amount of pips is not a good thing"
  2. Number of candles isn't either because you could have a 2 candles correction or a 10 candles correction, however the 10 candles correction could be in a range forming a very wide CP pattern
  3. Moving averages isn't either, because MAs together with too many candles in a range allow the MA to get very close to price, so reversion to a predefined MA is not a valid approach either
  4. What could work is defining a % of retracement from the previous leg (drop/rally), but I need some screen time to test this idea

Right now nothing beats the screen time and "experience" watching the charts and reaction. When I say obvious it has to be "obvious and outstand on the charts for you, me and everybody else. The one CP supply we are commenting upon IS NOT a rally or correction, it's just a small pause, it has not retraced enough (a decent % of the leg that created it), so it's not a rally thus it's not a reversion to the mean, not enough of a retracement to consider it a peak to draw the second point for a descending TL.

You can draw that aggressive TL that you drew, many times there is the possibility of drawing:

  1. A more aggressive TL taking into account several CP patterns in a row (3 waves at least)
  2. A more aggressive one on those CP patterns that look like a correction, like this one on AUDJPY D1
  3. A least aggresive TL like the one I had painted

The funny thing about it is that BOTH are valid. You just have to have rules on what to do with each of them. There will always be more than 1 way of doing the same thing, this is why trading is not easy and why most of us fail to become "traders".


Quote
We need rules, and this is what I have for the TLs, sometimes they work, sometimes they don't work. But I am not worried about how many times I missed a trade for not having drawn the "othe trendline". I am more concerned on "how many losses my TL rules prevented me from having". We shouldn't have rules to have more winners, we should have them to avoid losses
But like I said, anything can be subjective. Whoever says the opposite is wrong, in my humble opinion. However, I will go through this in more detail in next webinar, but in the next one because it will be about how to backtest supply and demand rules to gain confidence, but for sure the next one after it.

By the way, on this AUDJPY D1 short, it's tricky now. The more aggressive TL we talked about is being broken, then the Nikkei index (inversely correlated with Yen) is rallying from fresh D1 demand at fresh MN supply, the Aussie is getting stronger across all cross pairs. A short on AUDJPY D1 supply is not a good idea, only on confirmation for me.

Have a great NFP day, not trading on NFP days! It's the perfect moment to take the day off
Hope that makes a little bit more sense.
Alfonso
Set and Forget supply and demand trading community
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