Price Will Tell - Supply/Demand Price Action Trading

Seems more like a huge buying on release of better than expected US data.

I saw that 124.00 area for the previous peak there on the monthly can't complain with a well placed well timed short if price ever gets to that previous peak back in 07 or whenever it was.

yeah I meant if it did go down to there by today not saying it's going to lol. idk if it retraces back down that far today or not.

Could be a possibility...

For me, this has been the best week of trading since I started. Not in the profit sense - not really interested in that - but in the sense of bringing some clear and clean direction back to my own analysis.

I wasted 2 full years indicator trading. No point dwelling on this and it's all a learning process in the end I guess, but the truth for me is that the only clarity I ever found was in a naked chart.

The "Cold Turkey" of trading without indicators was the toughest. And after 2 months profitable trading without them, I allowed the indicators to slip back into the charts resulting in the last week of February being a loser. The indicators have now gone forever. In their absence the air tastes fresh.

Have a great weekend

Just been discussing a few charts on Skype today. This is the same setup I keep looking for, and the one I keep posting in the thread. It's not always this clear, but it's amazing how simple it can be.

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very good postÂ

The other day I had a really good chat with a fellow trader. During the conversation I was prompted to repeat again something that I came to realise during my own learning. In our trading journey we'll often hear other traders (and even trading books) repeat various trading-related phrases that seem somehow designed to make our job of navigating the shark-infested waters of the retail Forex market safer and easier. There's the infamous phrase about bulls, bears and the slaughter of pigs; the more speculative, "Trade what you see and not what you feel", and one of my particular favourites, "There's nothing 100 percent in trading".

It's all very well to condense trading into a series of axioms and I'm sure that some of these have merit, however, it's important to remember that much like Archimedes' Eureka! moment these axioms are often the result of a subjective experience, and while some phrases may hold true in the empirical sense, others may have much less of a universal meaning. As such, certain trading axioms may actually do our learning more harm than good, and therefore need to be treated with caution.

Take the phrase, "There's nothing 100 percent in trading" for example. Whenever I hear a phrase delivered as an absolute my immediate reaction is to always consider the opposing position to be true. Why is this? I've no idea; sense of balance, suspicious personality perhaps; upbringing, who knows. Sure, on the one hand refusing to swallow absolutes as such can make us seem cynical, combative even. But on the other hand (and particularly where trading is concerned) this kind of mindset may save our skin. It may even be one of the key ingredients to developing a rounded view.

When I first heard the phrase, "There's nothing 100 percent in trading", I was very unhappy with the concept. Trading is a business. How can I afford not to be 100 percent about this business that I have embarked on? The phrase seemed so profoundly negative that I found myself considering it more and more, and kept it in the forefront of my mind on a daily basis - not because I intended to embark on a quest to disprove it but just because the statement seemed so absolute.

The more I encountered successful traders the more my suspicions regarding the 100 percent phrase seemed to ring true. Although the successful guys were all trading with completely different styles it was obvious that they all shared one thing in common - they were each totally confident about when and how they entered the market. In other words, each trader had 100 percent confidence in his signals.

For me, this was a Eureka! moment that blew the axiom of there being nothing 100 percent in trading straight out of the water. Sure, once we enter the market, we can never be 100 percent confident about whether or not the trade will work out. But this is not the point. In fact, this is what risk management is for. The more important point that we need to consider is that if we're not 100 percent (or aim to be so) certain about why we enter the market then we really have no place trading real money. Or put another way, it's not just that 100 percent confidence in our signals does indeed exist in trading, in order to trade with real money, 100 percent confidence in our signals must exist in our trading.

Of course this point leaves us with an awkward question. How do gain 100 percent confidence in our signals? Well, there are a lot of teaching websites out there purporting to hold the key to various trading strategems; "When price touches this indicator printed supply zone, sell it", "When price prints a quasimodo…", "When the red line crosses the blue line…", "Backtest, backtest, backtest", etc etc etc. At first this kind of advice may sound very slick and sophisticated but in my view what each and every one of these statements/instructions supposes is that the trader understands the underlying terminology being used. I'm afraid that in my experience this is not the case. What in my experience the various "teachers" and gurus laying out these instructions have failed to ask the traders following them is, when you hear the phrase, "Supply Zone" do you really understand what it means? And I mean, really? Can you articulate it? Do you really understand the concept of "order-flow"? Before trying to trade or even backtest, have you taken the proper time out to study order-flow? Are you able to understand and appreciate the difference between a supply and a resistance? Do you know the difference between "demand" and a pivot-low? If you were in a head-to-head debate with another trader regarding the notion of what is and what is not a "Decision Point" could you defend your point of view to the hilt? Can you articulate what a quasimodo is and why in certain circumstances it is a far more powerful chart pattern than a symmetrical head-and-shoulders?

It's not my aim to come across as a kind of aspiring "clever-clogs" or anything like this. And I certainly don't wish to sound strident or intolerant (although I was recently accused of being intolerant towards bullsh*tters, which incidentally is a charge that I plead guilty). But the truth is this - if a retail trader, particularly one trading on margin, has not taken the time out to understand the very nature of the tools of his trade then his expectations of trading the market for a consistent profit are unrealistic.

I don't have a view on whether it's right or wrong to hunt animals but trading is like hunting. Remember, a real hunter doesn't simply purchase a gun and go wading into the forest pulling the trigger at anything that moves. His mentality has forced him to accept that in order to make the swift kill that he so desires he not only understands his weapon, he must understand how the animal that he is hunting, moves. And to do this takes a lot of observation. In trading it's no different. It's simply not enough to inherit from others what we believe is a decent enough method and then gaily go and backtest it, or even worse attempt to trade it live. We must first understand how and why the market moves. Then and only then will we be able to formulate this knowledge into a method that we can (hunt) trade with a tactical and profitable advantage.

How can a student of supply and demand gain the quickest and most efficient understanding of how the market moves? Principally, a trader needs to work hard to formulate his own terminology that accurately describes the various key aspects of price action in the context of supply and demand. Sure, adopt others' terminology when it makes sense to do so. But be sure to dispense of that terminology which doesn't make sense. Once a trader is confident that he or she has a firm grasp of the core concepts then what I would consider a reasonable plan of action to carry out would be:

1. Purchase a copy of Forex Tester or some other preferred trade test software.

2. Brew a very large pot of tea and then spend as much time as is necessary observing price action on a NAKED chart. Work in one timeframe only and let price cycle over a period that is long enough until such time as one begins to pick up on the ebb and flow of the market. This exercise should be carried out at a playback speed that is quick enough that one may cycle through the process in reasonable time but slow enough for the accumulation and distribution cycles of the market to play out in a way that is observable and makes sense.

3. At such time that the ebb and flow of the market begins to make sense, the person should begin to add hand-drawn horizontal lines to the chart marking out areas that are considered to be support and resistance, and supply and demand.

4. Observe how price reacts to these lines/areas.

5. Observe the various price actions that occur at said lines/areas. Make a note of the price action.

6. Make notes of and understand the distinctions between chart patterns and candle patterns.

7. Make notes about how one could have profited from the moves that one observes.

Over time, these movements should begin to suggest to a trader a reliable enough trading method whereby they mark out certain areas of a price chart and are able to trade the reactions to these areas successfully for a profit. THEN AND ONLY THEN should a trader consider this to be the "green shoots" of their trading method that they consider backtesting it. NOT A MINUTE BEFORE.

With enough data gathered from backtesting the time may come that a trader feels more and more confident in their signals. I'm not suggesting that it is at this point that a trader should aim to feel 100 percent confident about why they would enter the market. Myself, I would say that I currently have between 75%-80% confidence in my own signals. But what I am saying is that confidence builds confidence. This is key. It is critical if we're going to survive this market.

In closing, it's important for me to say that I'm not a teacher, neither do I consider myself to be one. The above information is only intended to offer a personal view and potential starting point for anyone wanting to learn how to trade. It's up to the individual whether or not to use it. We must all bear responsibility for our own learning and trading. It's only when we cross the rubicon that we finally get to understand why this is.

great post simond!, I am doing a lot of screen time lately and must say it really helps. Sometimes I just watch intentionally without trading, specially in news time or in sup/dem zones that I am not totally confident to pull the trigger, draw some up/dn arrows where I should trade and watch afterwards the results, I think is helping me to build confidence.

good trading week for you and all

AUDUSD H4

We now have a higher-low in the flag.

Although this pair sits in a monthly downtrend, on H4 it makes sense for it to try and retest 0.7960.

Grizzly looking SR above but I'll be keeping an eye on lower timeframes for any buy opportunity that might set up.

* Not really a major concern but IC Markets changed the time offset to I think GMT +3 over the weekend. GMT offset is a factor with all brokers and must be considered when assessing H4 PA.

That's the spirit, melly

Keeping an eye on "the elevator".

The final one of the three pairs I'm watching today and the current timeframes of interest.

It's NFP hangover day... I've already missed two good setups through not paying attention, and now I want to headbutt my monitor.

If you do headbutt your monitor make sure your stops are in

In an attempt to be more focused on charts, I've decided that as of tomorrow, I won't be going on any forums etc until 11am! I missed two very easy entries earlier because I was elsewhere on the internet.

Anyway, here is one I was just watching for, and something that I've been looking into with compression, and how to trade it.

And a little more about compression.

EDIT: I screwed up the images. They should be like this:

Re the above post:

MTFA suggested M15 for an entry. Entry candle is the white arrow.

Market has now taken out the swing low, therefore trade is protected.

This will now either run to target or stop me at b/e+