Supply and demand in a nutshell by Alfonso Moreno | Page 298 | 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

  • #5,941
  • Aug 29, 2015 9:53pm Aug 29, 2015 9:53pm
Hello,

. How to use the supply and demand Rectangle Extender indicator

The above video cannot be watched, it says private video.

In the indicator thread, people have also complained about the same.

Kindly rectify it. Looking forward to joining the S/D group
'To get something you never had, you have to do something you never did.'
  • #5,942
  • Aug 29, 2015 10:36pm Aug 29, 2015 10:36pm
Quoting crazzzzzy
Hello, . How to use the supply and demand Rectangle Extender indicator The above video cannot be watched, it says private video. In the indicator thread, people have also complained about the same. Kindly rectify it. Looking forward to joining the S/D group
You can watch all S&D videos on Alfonso's channel: https://www.youtube.com/user/supplyanddemandforex

..and there is hell lot of them :nerd:
Trade what you see..
  • #5,943
  • Edited Aug 31, 2015 1:33am Aug 30, 2015 11:48pm | Edited Aug 31, 2015 1:33am
Quoting dvarrin
Hi Alfonso, For the wiggle room on 4H charts, are you still using 7 pips for major pairs and 10 pips for the others?
I've come across a video (check 14:30) of Sam that if in doubt, he suggests finding the adjacent level on a lower timeframe (than entry one) and hold your stop off according to it. Though it might affect risk to reward ratio, method seems logical to me, I'm curious what Alfonso might say to this (if he wouldn't chew me out first for citing another one here )

Edit: Maybe this method can also be used when placing pending open orders as an attempt to prevent some set and forget trades being missed by few pips.
Trade what you see..
  • #5,944
  • Aug 31, 2015 6:47am Aug 31, 2015 6:47am
Thank you for your answer Chawl! I'm not sure it is a good idea. But let's see what Alfonso thinks about it.
  • #5,945
  • Aug 31, 2015 10:46pm Aug 31, 2015 10:46pm
Quoting crazzzzzy
Hello, . How to use the supply and demand Rectangle Extender indicator The above video cannot be watched, it says private video. In the indicator thread, people have also complained about the same. Kindly rectify it. Looking forward to joining the S/D group
Hello there,

That video is private for reasons explained in the thread, maybe you didn't reach that post but there are other videos at the free forex factory that explain the same, maybe you didn't locate them. The indicator's thread and posts older than 24 hours cannot be edited (Forex Factory rules) which is why that cannot be corrected.

Cheers,
Alfonso
Set and Forget supply and demand trading community
  • #5,946
  • Aug 31, 2015 10:50pm Aug 31, 2015 10:50pm
Quoting dvarrin
Hi Alfonso, For the wiggle room on 4H charts, are you still using 7 pips for major pairs and 10 pips for the others?
10-15 pips for majors/main cross pairs, then about 15% wiggle for exotics and indexes, some have 200 pips, others 3000 pips, it all depends on the instrument and pip value.

Cheers,
Alfonso
Set and Forget supply and demand trading community
  • #5,947
  • Aug 31, 2015 10:56pm Aug 31, 2015 10:56pm
Quoting John.
Hello Alfonso, I hope you can comment my last loss. NZDJPY H4 Sell. Was it just a loss or I made something wrong? Did you take that trade? ---------------------------------------- All trends are down (WK, D, H4). There were no opposing zone in control. My H4 zone was fresh and original. Thanks in advance! {image} {image} {image}
I can see a couple of issues on your short my friend, hope my comments help.

No close below previous fractal lows, didn't remove any opposing area, imbalance created was also very poor on H4 and previous WK/MN demand had no close on WK TF and rallied strongly with the pin candle. That normally stands bigger retracements

Cheers,
Alfonso

Attached Image (click to enlarge)
Click to Enlarge Name: Screenshot1.png Size: 135 KB
Set and Forget supply and demand trading community
  • #5,948
  • Aug 31, 2015 10:59pm Aug 31, 2015 10:59pm
Quoting Chawl
{quote} I've come across a video (check 14:30) of Sam that if in doubt, he suggests finding the adjacent level on a lower timeframe (than entry one) and hold your stop off according to it. Though it might affect risk to reward ratio, method seems logical to me, I'm curious what Alfonso might say to this (if he wouldn't chew me out first for citing another one here ) Edit: Maybe this method can also be...
You can use a lower timeframe adjacent zone to trail your stop loss, I wouldn't. Why? Price will usually retest your entry, if you move your SL too quickly and you even use a lower timeframe than your entry, you will be exposing your valid entry to be retested and will be kicked out of your valid trade more often than not. If the trade is valid, with a clear trend and room to reach your target and opposing supply and demand zone, just let it run. Protecting your trade too soon or looking for reasons to do it usually means "fear", fear is not allowed in trading, it will blow up your account or won't let it grow.

Hope this helps.
Cheers,
Alfonso
Set and Forget supply and demand trading community
  • #5,949
  • Edited 4:42am Sep 1, 2015 3:05am | Edited 4:42am
Quoting panoramia
{quote} You can use a lower timeframe adjacent zone to trail your stop loss, I wouldn't. Why? Price will usually retest your entry, if you move your SL too quickly and you even use a lower timeframe than your entry, you will be exposing your valid entry to be retested and will be kicked out of your valid trade more often than not. If the trade is valid, with a clear trend and room to reach your target and opposing supply and demand zone, just let it run. Protecting your trade too soon or looking for reasons to do it usually means "fear", fear is...
Thank you for your answer Alfonso, I'm totally with you that trailing the stop is a sure way of failing as you've said but I think I've made the point wrong as there is a misunderstanding. The method I've mentioned is about positioning the initial stop price (in other words determining the wiggle room) based on an analysis from an adjacent lower timeframe zone, nothing to trail anything or so. For example if you want to trade an H4 demand zone, you can place your stop 'below' the distal line of an adjacent M15 zone which is 'below' the distal line of your original H4 demand zone, thus not using a fixed pip for wiggle room but make a more educated guess instead. I also speculated that if we could use the trick for set and forget entries also.

Anyway here is my (pseudo) trade example:
Attached Image (click to enlarge)
Click to Enlarge Name: EURUSDM15.png Size: 75 KB
Trade what you see..
  • #5,950
  • Sep 1, 2015 3:08am Sep 1, 2015 3:08am
Quoting panoramia
{quote} 10-15 pips for majors/main cross pairs, then about 15% wiggle for exotics and indexes, some have 200 pips, others 3000 pips, it all depends on the instrument and pip value. Cheers, Alfonso
Thank you very much Alfonso!

I've a question about the validation of a supply/demand zone. For example for a demand zone to be valid, one condition is to break an opposing supply zone. What I don't understand is that sometime we have to look very far in the past to find the opposing supply zone. I know it works, but I don't completely understand the logic behind that. How is it possible that a supply zone on H4 in year 2005, for example, still has a very meaningful importance now?

I'm asking this question, because of one of my recent trade on USDCAD. I didn't had the complete history and traded a demand zone, because it had broken a historical high. The demand zone failed. Then I downloaded the whole history and noticed that it actually didn't brake an opposing supply zone, so this was not a valid demand zone.

Cheers,
Daniel
  • #5,951
  • Sep 1, 2015 5:54am Sep 1, 2015 5:54am
Quoting Chawl
{quote} Thank you for your answer Alfonso, I'm totally with you that trailing the stop is a sure way of failing as you've said but I think I've made the point wrong as there is a misunderstanding. The method I've mentioned is about positioning the initial stop price (in other words determining the wiggle room) based on an analysis from an adjacent lower timeframe zone, nothing to trail anything or so. For example if you want to trade an H4 demand zone, you can place your stop 'below' the distal line of an adjacent M15 zone which is 'below' the distal...
It makes complete sense now, I had completely misunderstood you I've never done that but it can work, I never look at lower timeframes to place my SL, the SL is based upon my entry timeframe's zone, nothing else. If my SL is hit, who cares, next trade. By doing so, I avoid looking at another timeframe and eventually widening my SL too much as well as spending less time switching timeframes.

But your idea makes sense to me. Thanks for sharing.
Cheers,
Alfonso
Set and Forget supply and demand trading community
  • #5,952
  • Sep 1, 2015 6:04am Sep 1, 2015 6:04am
Quoting dvarrin
{quote} Thank you very much Alfonso! I've a question about the validation of a supply/demand zone. For example for a demand zone to be valid, one condition is to break an opposing supply zone. What I don't understand is that sometime we have to look very far in the past to find the opposing supply zone. I know it works, but I don't completely understand the logic behind that. How is it possible that a supply zone on H4 in year 2005, for example, still has a very meaningful importance now? I'm asking this question, because of one of my recent trade...
Hi Daniel,

I know it can be difficult to understand but as you can see many of these zones are respected, but not because there are still pending orders from that far back in time, but because there are many other variables involved like other traders exiting their positions at the end of the day or week, traders that use other signals to take shorts and longs, fibonacci retracements, etc.

Those old zones offer support and resistance, used by a huge amount of traders to entry/exit their trades. They work because people use them for that purpose A historical Weekly or Monthly demand zone holds most of the time not because there are still sellers waiting there for years, but because those are areas institutions/speculators will use to enter/exit their trades, these zone will also be used as traps to fill their counter-trend orders by kicking out of their positions those who were trading with a clear trend direction. Reason why, it's advisable to wait for a candle close above/below a supply/demand zone, a candle as high as the highest SD zone in control. If at all time lows, Monthly close below the lowest low, at minimum Weekly close. Remember we are trading against professionals whose job is to make you lose in order to win, they will use all kind of tricks on order to trap you in their nets

The clearer the level and the further back in time, the most likely it will be overshot without a candle close.

We use these zones as well as present time zones as areas we need to see taken out in order to proceed operating in the same direction and validate the opposing zone, we use them as traffic lights that will tell us if we have green color to go or we just wait.

Hope these explanations make sense.
Cheers,
Alfonso

Hope this explanation makes sense.
Cheers,
Alfonso
Set and Forget supply and demand trading community
  • #5,953
  • Sep 1, 2015 10:11am Sep 1, 2015 10:11am
Quoting panoramia
{quote} It makes complete sense now, I had completely misunderstood you I've never done that but it can work, I never look at lower timeframes to place my SL, the SL is based upon my entry timeframe's zone, nothing else. If my SL is hit, who cares, next trade. By doing so, I avoid looking at another timeframe and eventually widening my SL too much as well as spending less time switching timeframes. But your idea makes sense to me. Thanks for sharing. Cheers, Alfonso
Thank you for considering Alfonso, u r welcome It really takes a little extra time to drill down lower but especially pairs like USDMXN indeed need a more 'visual' way to place things as having a pip value of 0.6 and spreads like ~30-40 pips I will try this trick myself and will see if it would improve things.

In fact I've fabricated an empirical method for H4 stop wiggle rooms and pending open margins that have been using to this day with quite successful results for all pairs though I'm not differentiating them as mains or exotics in this manner. I'd like to share my simple arithmetic as some might find this practical:

Pending buy margin in pips: (50/PipValue)+Spread
Sell stop wiggle in pips: (150/PipValue)
Pending sell margin in pips: (50/PipValue)
Buy stop wiggle in pips: (150/PipValue)+Spread

For example USDMXN has 0.6$ pip value and 35 pips (not pipettes!) spread and if you want to set and forget a buy order on a H4 demand zone, then u should place your pending buy 119 pips over the proximal line and your stop 250 pips below the distal line according to my formulae and yes, Mexican Peso has crazy pips like that

But don't forget to use a 'logical' spread value considering your trade lifetime, as for example your tiny 0.6 pip 14:00 UTC spread may very well soar up to 15.5 pips at 22:00 UTC
Trade what you see..
  • #5,954
  • Sep 1, 2015 10:17am Sep 1, 2015 10:17am
Thanks, alegargano!
Thanks, Alfonso! Are you back home? Hope you enjoyed your travel a lot! Any photos available?

I want to ask a question about good /bad base. Is it a good base for set & forget or it's better to work with confirmation with such bases?
Attached Image (click to enlarge)
Click to Enlarge Name: GBPJPYH4.png Size: 28 KB
  • #5,955
  • Edited 10:47am Sep 1, 2015 10:32am | Edited 10:47am
you are welcome John, i hope that your believe increase a little bit

That formation is not that great, and it seems like that it didn't make a lower low than the previous low from the spike. (i can't tell you becouse another rules that i have is the close of the platform at 12:00, i've copied Alfonso really, that is not a rules of thumb but an Alfonso's rules that i've maked mine)

By the look i would wait for that potential cp down there will form and close below the last LL on the left.
We have a lot of room to drop but don't forget where we are going and what is the bigger picture...
  • #5,956
  • Sep 1, 2015 11:15am Sep 1, 2015 11:15am
This is H4 DZ (1) I wanted to trade but I was not sure because of that small CP (2) above. DZ (1) did not accomplish anything in fact. Everything was accomplished by CP (2) but I did not like the base of CP (2). So I missed the trade. Any recommendations how to analyse such zones (when we have a small CP level on the top of our level)? I see such combinations very often.
Attached Image (click to enlarge)
Click to Enlarge Name: EURNOKWeekly-1.png Size: 61 KB

Attached Image (click to enlarge)
Click to Enlarge Name: EURNOKDaily-1.png Size: 55 KB

Attached Image (click to enlarge)
Click to Enlarge Name: EURNOKH4-1.png Size: 59 KB


Now I decided to trade brand new DZ which had been created. All trends are with us, no opposing control (even H4), good structure of DZ, good departure, opposing SZ removed.
Attached Image (click to enlarge)
Click to Enlarge Name: EURNOKH4-2.png Size: 58 KB
  • #5,957
  • Sep 1, 2015 12:41pm Sep 1, 2015 12:41pm
Quoting John.
This is H4 DZ (1) I wanted to trade but I was not sure because of that small CP (2) above. DZ (1) did not accomplish anything in fact. Everything was accomplished by CP (2) but I did not like the base of CP (2). So I missed the trade. Any recommendations how to analyse such zones (when we have a small CP level on the top of our level)? I see such combinations very often. {image} {image} {image} Now I decided to trade brand new DZ which had been created. All trends are with us, no opposing control (even H4), good structure of DZ, good departure,...
I'm already into this trade that don't want to start for now.
All the timeframe are up also the H4, so long is the way to go.
don't be focus on the cp on the wk for the moment, let's see what happen. It seems like that we didn't have any obstacole on the way up so let's see.
  • #5,958
  • Sep 1, 2015 2:14pm Sep 1, 2015 2:14pm
Quoting alegargano
{quote} I'm already into this trade that don't want to start for now. All the timeframe are up also the H4, so long is the way to go. don't be focus on the cp on the wk for the moment, let's see what happen. It seems like that we didn't have any obstacole on the way up so let's see.
Did you take the whole D1 DZ? Or H4?
Some days ago you mentioned that you monitor 100+ instruments. Are they currencies or some other instruments?
  • #5,959
  • Sep 2, 2015 2:35am Sep 2, 2015 2:35am
Quoting John.
{quote} Did you take the whole D1 DZ? Or H4? Some days ago you mentioned that you monitor 100+ instruments. Are they currencies or some other instruments?
i trade the daily imbalances so i took the d1 zone entirely. I have currencies, indices and shares
  • #5,960
  • Sep 2, 2015 3:35am Sep 2, 2015 3:35am
Quoting Chawl
{quote} Thank you for considering Alfonso, u r welcome It really takes a little extra time to drill down lower but especially pairs like USDMXN indeed need a more 'visual' way to place things as having a pip value of 0.6 and spreads like ~30-40 pips I will try this trick myself and will see if it would improve things. In fact I've fabricated an empirical method for H4 stop wiggle rooms and pending open margins that have been using to this day with quite successful results for all pairs though I'm not differentiating them as mains or exotics...
Thank you Alfonso! It makes sense ;-)
6 traders viewing now