Supply and demand in a nutshell by Alfonso Moreno | Page 218 | Forex Factory

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Supply and demand in a nutshell by Alfonso Moreno

  • #4,341
  • Jun 3, 2014 4:44pm Jun 3, 2014 4:44pm
Hi Alfonso,

First all, Thanks a ton for making such beautiful and easy to understand videos . I had some doubts related to validity of sup dem zones; however after watching your videos, everything was very very clear. Thanks a lot for all the efforts that you put in to help fellow traders.

However, one thing that left me puzzled was the 'validity of the base' that was being discussed in the last 5 min of the video that was published on 24th March 2014 (Youtube - How to draw supply and demand levels and trendlines). I got confused as to what creates a valid base and what was the rule that was broken by the base being discussed in the video mentioned.

Though, I have not been able to go through all the videos that you have published so not sure whether this has been discussed before, but it would really help me if you can refer any video where drawing of bases (with ref. to specific rules of validity ) has been discussed.

Thanks again for the wonderful videos!!
  • #4,342
  • Jun 3, 2014 6:54pm Jun 3, 2014 6:54pm
Quoting bulbuli
Hi Alfonso, First all, Thanks a ton for making such beautiful and easy to understand videos . I had some doubts related to validity of sup dem zones; however after watching your videos, everything was very very clear. Thanks a lot for all the efforts that you put in to help fellow traders. However, one thing that left me puzzled was the 'validity of the base' that was being discussed in the last 5 min of the video that was published on 24th March 2014 (Youtube - How to draw supply and demand levels and trendlines). I got confused as...
Thanks for your message and your kind words, I am glad that you see things clearer now, that helps me to continue helping others.

As far as drawing the zones there are 2 videos that talk specifically about that, what a good base is and how to draw them in a mechanical way. They are in the first post of this thread, but I have included them in this post so you can easily locate them.

Inserted Video


Inserted Video
Set and Forget supply and demand trading community
  • #4,343
  • Jun 3, 2014 10:54pm Jun 3, 2014 10:54pm
Quoting panoramia
{quote} Rules are very clear on how to draw a level, there is a video that explains it in detail, how to locate those patterns that form the bases. Picture 2 is the right base. Picture 1 is not basing. Price didn't reach the demand zone yet, it will in the future sooner or later. Many times zones are not reached in present time. But like I said, I just trade what I see on my broker. Sometimes I will miss a trade, others you will miss it. Sometimes I will have a loss, others you will. It's that simple. Nothing to lose any sleep over. Alfonso
Thanks mate for the explanation... I've read the rule n watch some videos with learn by doing but sometimes I've got some problem to make a base when i found unusual base of SnD. by the way.... very thanks for your time to explain...

Cheers..
SGL
  • #4,344
  • Jun 4, 2014 1:07am Jun 4, 2014 1:07am
Quoting sonigl
{quote} Thanks mate for the explanation... I've read the rule n watch some videos with learn by doing but sometimes I've got some problem to make a base when i found unusual base of SnD. by the way.... very thanks for your time to explain... Cheers.. SGL
That one is easy... when you find an unusual base, do nothing and skip it Concetrate onm the non-unusual bases, they are high probability

Alfonso
Set and Forget supply and demand trading community
  • #4,345
  • Jun 4, 2014 3:15am Jun 4, 2014 3:15am
IF price removes WK/D1 supply on Dollar Index, we could have some more shorts happening in the euro and pound, else we need to remove some demand to go long.
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Set and Forget supply and demand trading community
  • #4,346
  • Jun 4, 2014 12:59pm Jun 4, 2014 12:59pm
Quoting panoramia
{quote} Thanks for your message and your kind words, I am glad that you see things clearer now, that helps me to continue helping others. As far as drawing the zones there are 2 videos that talk specifically about that, what a good base is and how to draw them in a mechanical way. They are in the first post of this thread, but I have included them in this post so you can easily locate them.
Thank you so much Alfonso. Watched the videos. It had the exact content I was looking for

Thanks again... Will practice them on charts now :-)
  • #4,347
  • Jun 5, 2014 9:41am Jun 5, 2014 9:41am
ECB Bid Rate announcement caused some volatility and Dollar Index WK/D1 supply has been overshot, there is a high wave candle on D1 due to news volatily. Some clear direction is needed, tomorrow is NFP, so anything could happen. It could be a fakeout! Neither the D1 or WK candle closed above supply and resistance.

Since the US Index broke higher, the EURO normally does the opposite since 70% or so of the US Index is made of european currencies.

Attached Image (click to enlarge)
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Set and Forget supply and demand trading community
  • #4,348
  • Jun 5, 2014 8:32pm Jun 5, 2014 8:32pm
Hello Alfonso,
i have some trouble understanding the curve timeframe, i think it would be nice if you could explain the curve in more detail and examples or point me to what i did not notice. If i choose the D1 as my curve, do i have to look for supply levels above and demand levels below current price? When to stop looking at the D1 supply levels without knowing Weekly Demad ins in control or if there is no demand in history. i would have a problem when i choose the monthly as my curve where there is no higher timeframe. Am I mixing up somthing?

have a nice day
Joe
  • #4,349
  • Jun 7, 2014 6:16am Jun 7, 2014 6:16am
Quoting JoeMcCool
Hello Alfonso, i have some trouble understanding the curve timeframe, i think it would be nice if you could explain the curve in more detail and examples or point me to what i did not notice. If i choose the D1 as my curve, do i have to look for supply levels above and demand levels below current price? When to stop looking at the D1 supply levels without knowing Weekly Demad ins in control or if there is no demand in history. i would have a problem when i choose the monthly as my curve where there is no higher timeframe. Am I mixing up somthing?...
Hello Joe,
There are quite a few videos that go through the curve at the YouTube channle link you can find at the first post of the thread, plenty of them in fact. But you have to watch them and understand how the curve works. The first post also describes what to do and what to wait. I can't summarize it in a few words, you need to watch the videos, understand the rules, and most important of all, practice a lot and gettting your brain used to locating the curve. There are different curves, D1, WK and MN, you need to decide which type of trader you are and your entry time, that will give you the curve. It's all explained in the first post and videos, it couldn't be done in a few words.

An image is worth a thousand words, a video is worth a thousand words!
Alfonso
Set and Forget supply and demand trading community
  • #4,350
  • Jun 9, 2014 3:38am Jun 9, 2014 3:38am
Hi Alfonso,
you put very good information together on this site. I have a guestion regard to S and D . I did a short video so you will anderstend much beter. here it is:
Inserted Video
  • #4,351
  • Jun 9, 2014 5:32am Jun 9, 2014 5:32am
Quoting FXmagnets
Hi Alfonso, you put very good information together on this site. I have a guestion regard to S and D . I did a short video so you will anderstend much beter. here it is: https://www.youtube.com/watch?v=FFpboxrqmd8
Hello my friend!

Thanks for posting your question in video format, that helped The answer is simple, that limit buy order would be negated and cancelled because the ascending Trendline would be broken, so no long possible the second time price goes into that demand zone, it's one of the core rules of set and forget's supply and demand strategy.

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There is such an Expert Advisor or tool created, that will close the trades as per the rules, it will be available in a few days for the members of the supply and demand community, it will close the trades as per the rules, as well as managing it, there is a video I uploaded to the YouTube channel that explains how that Expert Advisor is going to work.

Inserted Video


I believe the EA will will be a great tool to help you trade according to the supply and demand rules laid out at Set and Forget. It will be a trade management tool more than anything, you will no longer have to think if a Trendline has been broken or not, if the exact TP 3:1 target is well calculate or not and so on.

These are the features the EA it has:
- Entry Timeframe:
* H4 by default. This variable can be changed at any moment, so you will be able to trade H1 or lower TFs if you change it, you can configure as you want
* If you want to trade H4 and D1 at the same time, you will have to have a second MT account to trade D1 entries. It's advsiable that you separate accounts so you can track progress on each timeframe, mixing up H4 and D1 entries on the same account is not recommended. The EA will not be able to manage H4 and D1 at the same time
- Close trades if TL is broken: You can configure the EA to detect TLs breaks on your entry TF, if this is enabled, the EA will close all the trades on that TF when that happens
* The EA will skip all limit orderst to which you have added a comment with the keyword "set", this is useful when you want to cancel all H4 longs if the ascending TL is broken but you want to keep the limit order within the D1 demand zone because that's still valid if the H4 TL is broken (D1 and HTFs are up)
- Only 1 Trendline will be allowed on your entry TF, if the TL is solidly broken
* If the EA's Trendline variable is disabled, the EA will not close any orders if the TL is broken
- Different EA profiles/sets: you will be able to save any profile/set for each pair, so you can configure it as you want for the breakeven, targets, etc, and load it when you need it. Some instruments like exotics, indexes and CFDs require different wiggle rooms, so you can save a .set file and load it whenever required
- Breakeven: the EA will move SL to breakeven after a defined Risk Reward, 2%, 3% or any RR specified. You will be able to add padding, spread to the entry price as well to cover the broker's commissions if you have them on your account
* If the order's comment = no, the EA will not manage the trade, so you can post trades that will not be taken over by the EA
* I highly recommend you to use one account just for SD trading, DO NOT mix it with other strategies
- Take profit and targets:
* 3 targets will be available, by default only 1 predefined target will be activated
* You will be able to configure up to 3 targets based on a RR % exit or a fix price. That is, you want to close a % of your lots at 3% profit, a second % close at 6% and final % close at 10%. You can configure it as you want.
* You can select the price mode for your exits, so the EA will exit your trade at predefined fix prices
* You will be able to toggle on/off the profit target lines, that is, you will see on the charts where those RR% / Price targets are located on the chart
- Close your trade if the TL is broken:
* This feature will allow you to close a running/winner trade if your entry TF TL is solidly broken, this is also a trading exit strategy
- Take screenshots of your trades:
* The EA will automatically take a screenshot of your entry TF on the entry AND the exit so that you can keep track of your trades
And many other features, for more information contact www.set-and-forget.com

And a few other functionalities, hope that it makes sense!
Alfonso
Set and Forget supply and demand trading community
  • #4,352
  • Jun 9, 2014 6:28am Jun 9, 2014 6:28am
Very good. I will try to use this trend line. Nice job Alfonso.
  • #4,353
  • Jun 9, 2014 6:56am Jun 9, 2014 6:56am
Alfonso,

I have been utilizing Forex Tester 2, as you recommend and I feel like this is helping in many ways. However, I believe I still lack in my fundamentals in that I still miss certain Supply and Demand zones. I noticed on one of your recordings of Forex Tester that you had your indicators uploaded onto your Forex Tester template. Is your rectangle reader available for Forex Tester like it is for MT4? Because that would be a great help in my forward-testing and to confirm I am drawing the appropriate Supply & Demand levels. Thanks for everything!

Ely
  • #4,354
  • Jun 9, 2014 7:36am Jun 9, 2014 7:36am
Quoting trackntrader
Alfonso, I have been utilizing Forex Tester 2, as you recommend and I feel like this is helping in many ways. However, I believe I still lack in my fundamentals in that I still miss certain Supply and Demand zones. I noticed on one of your recordings of Forex Tester that you had your indicators uploaded onto your Forex Tester template. Is your rectangle reader available for Forex Tester like it is for MT4? Because that would be a great help in my forward-testing and to confirm I am drawing the appropriate Supply & Demand levels. Thanks for everything!...
Hello Ely,

No, the Rectangle Reader is not available for forex tester 2, I tried to create a basic version but FT2 has several limitations in the software (they told me about it) and it's not possible. But the good news is that you don't really need it because on FT2 you trade just 1 pair, so you create a workspace with the charts you will be trading and you will draw the rectangles manually, no need to know anything else. Just that and the trendines is enough to trade.

Hope that makes sense!
Alfonso
Set and Forget supply and demand trading community
  • #4,355
  • Jun 10, 2014 4:05pm Jun 10, 2014 4:05pm
Hello fellow traders!

I will be organizing a new supply and demand live webinar next Monday 16th June for all to join.

  1. TITLE: Live analysis for position trading
  2. DATE: next Monday 16th June 2014
  3. TIME: 9:00 AM - 11:00 AM CEST (Central European Time) | At London Open
  4. LINK TO JOIN: fill out the form at Set and Forget supply and demand community if you haven't joined one before, else you will have received the email the link in your email

We will go through a few pairs and analyze them with position type of trades in mind for longer term trading, one step beyond swing trading. The levels located can also be used for intraday and swing, it all depends on what type of trader you are and how much time or how busy you are in your personal live. We'll follow the rules one by one and you will be able to ask any questions.

The webinar will be recorded like always.

You can join now, you will automatically reminded by email 1 hour and 1 day before the webinar starts.

Hope to see you there.
Good night everybody!
Alfonso

Set and Forget supply and demand trading community
  • #4,356
  • Jun 11, 2014 1:28am Jun 11, 2014 1:28am
Alfonso,

I apologize for using EUR/USD, but it was the first chart that came up when I downloaded MT4 and it is actually a great example of something I have been struggling with on my Forex Tester, on what to do. In my pictures, I show the MONTHLY on an UPTREND but the DAILY and 4HR on a DOWNTREND. Could you describe what setups we should be looking for in a scenario like this? I only drew levels on the DAILY which were fresh and original. I understand that there are levels which price is currently at on the DAILY, but they are not fresh and they are not with DAILY trend. My levels might not be 100% accurate either, I understand this.
Attached Image(s) (click to enlarge)
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  • #4,357
  • Jun 11, 2014 7:18am Jun 11, 2014 7:18am
Quoting trackntrader
Alfonso, I apologize for using EUR/USD, but it was the first chart that came up when I downloaded MT4 and it is actually a great example of something I have been struggling with on my Forex Tester, on what to do. In my pictures, I show the MONTHLY on an UPTREND but the DAILY and 4HR on a DOWNTREND. Could you describe what setups we should be looking for in a scenario like this? I only drew levels on the DAILY which were fresh and original. I understand that there are levels which price is currently at on the DAILY, but they are not fresh and they...

Thanks for sharing your thoughts on the euro my friend. Each timeframe has its "own trend" based on supply and demand and trendlines, or any strategy you might use to analyze any given instrument.

There is one thing I call "the sequence" or "realignments" which is a mechanical way of locating the exact timeframe where you have to be looking for in order to take a trade and the direction you want to take. It's a more "advanced" (it's not the right word, it has not been covered in this thread but it's covered in the community with several videos and most trades are based on this concept). But the idea is simple...let's assume the Monthly is up in your analysis:

  1. Monthly is up, so you can't trade the MN since it's already playing out
  2. WK is up, same thing applies
  3. D1 is down... Oooops... This is wrong

The D1 is out of alignment, price will normally drop into valid Weekly demand to realign with the MN and WK uptrend. In the meantime, counter-trend is possible in a more aggressive way, not expecting the hell of a trade because the bigger timeframes are up.

That's the way it goes.
Hope that makes sense.
Alfonso

Set and Forget supply and demand trading community
  • #4,358
  • Jun 12, 2014 7:33am Jun 12, 2014 7:33am
Hello panoramia,

i purchased Forex Tester 2 and it is very helpful. I try to start with a few simple things and slowly use more stuff.
For now i watch the level in control on the daily. That is my trend. When i figure it out i go to the H1 and trade with the trend.
It does work pretty well at first. However i do have a problem.

Attached Image (click to enlarge)
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You see on this screenshot. I found the demand and supply beforehand. So far so good. When price reached 1 i went long. Wenn price reached 2 i went short.
The problem is 3. I understand that just because the price was already inside the demand it doesn't mean it is invalid. I would maybe hold of trading in this area.
But i would never go long there and that would mean to lose a good move.
I have two questions:
1.Do you have to wait for point 2 to break to start buying?
2.Is there a way to recognize that from point 3 it is back to an uptrend?

I know that this question is rather simple or stupid for you but i hope you can point me to the right direction.
Thank you.
  • #4,359
  • Jun 12, 2014 4:31pm Jun 12, 2014 4:31pm
Quoting Distinction
Hello panoramia, i purchased Forex Tester 2 and it is very helpful. I try to start with a few simple things and slowly use more stuff. For now i watch the level in control on the daily. That is my trend. When i figure it out i go to the H1 and trade with the trend. It does work pretty well at first. However i do have a problem. {image} You see on this screenshot. I found the demand and supply beforehand. So far so good. When price reached 1 i went long. Wenn price reached 2 i went short. The problem is 3. I understand that just because the price...
Hello my friend!

I don't understand what you are trying to say. There are very specific rules as per which levels are levels, fresh, fresh and original and so on, as well as the trend. All that combined gives you green light to buy or sell, you just play your odds and see what happens.

You only posted a H1 chart, you need 2-3 timeframes minimum to make a decision since you need a top-down analysis. By looking at your H1 chart I can't make any decision to buy or sell, it's not enough to make a decision or reply any doubts sorry.

We use color codes and indicators to draw the zones on all timeframes, but I don't see that on your chart either!
Alfonso
Set and Forget supply and demand trading community
  • #4,360
  • Jun 12, 2014 7:49pm Jun 12, 2014 7:49pm
Hi Alfonso,

I can't help smiling at the way you title the thread "in a nutshell", and then proceed to write the most comprehensive, information-packed post that I've ever seen, in my 9 years of reading trading forums! An awesome amount of research must have gone into this. All I can say is....... WOW!

Cheers,
David
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