Professional Trader offering Free mentorship via Babypips chat room

Beginner Questions
270

Jay a couple of questions… about your videos. I really like your trading style. When you are analyzing for the week…

  1. You draw your supply and demand levels using the previous swing high and swing low and not the previous weeks high and low.

  2. After that you draw the non-trational fib (weekly relative S/D Curve) you use the previous weeks high and low to determine where to draw it to determine your no-trade zone.

Are these correct. I watch the videos again and I think this statements are correct.

271

Hey guys…will answer all questions soon, but first i wanted to post up these pics… a few possible trades that would have met the most important criteria: first retest of a newly created daily supply or demand level.

In fact…of all the opportunities I saw this week and last week, all of of them could have been successful with only 1 exception (aud/jpy). Some pairs that presented opportunties were:

eur/aud
gbp/aud
aud/usd
aud/cad
cad/chf
eur/gbp

some people may have found other levels…depending on where their charting package breaks down which 24 block is a “day”

At any rate…each pair listed above provided an opportunity for profitable trading. In fact, most if not all of them would have been hard to mismanage to the point of a loss, imo.

here are a few i picked out at random to give a bit more in depth explanation.

AUD/USD:

Uploaded with ImageShack.us

As you can see, the red lines define the supply zone area on the daily chart below. The top red line is the swing high, the bottom red line is intended to capture the bulk of price action, without creating any empty “space” (this is described in video 2 or video 4, if i’m not mistaken…please watch for a full explanation of empty space)

Then… once I determined a virgin daily supply level, I zoom in to a smaller time frame to determine where exactly in that level is price most likely to turn…giving more emphasis to a level that exists at the very beginning, or the very end, of that daily supply level.

In this case, a 4 hour chart showed really only showed 1 level of significance within that daily level…shown by the yellow line in the pic below.

Uploaded with ImageShack.us

Knowing this… I put my order about 5 pips below the yellow line to go short, and a stop about 8 pips above the top red line… which is the end of the daily supply zone.

I took 2:1 reward:risk for profit on this trade…risking about 1.5%, and making 3%.

This particular order was set up about 2 weeks ago, since it was a very clear daily level, and had only a single sub-level (4 hr) within the daily chart… It provided a single solid zone from which a price reaction was likely. So, I felt comfortable setting up an order and simply forgetting about it. It triggered the order, and pulled in a profit.

A simple, solid, basic profitable trade IMO.

I will post other examples of this later… please feel free to post your own examples, win lose or otherwise…as I would like to help others figure out if they are doing things correctly or incorrectly as I see it.

Hope this helps…

Jay

272

Marcus -

Point 2 is correct.

As for point 1 - I try to capture the “bulk” or “meat” of a zone… the area where we had the highest possible concentration of transactions. I try to eliminate empty space. Empty space is explained below in the pics:

Uploaded with ImageShack.us

Uploaded with ImageShack.us

And as a final note… here is that same level I’ve used in the examples. It was a daily AUD/USD level, and you can see, by cutting off the empty space, you would have been able to pinpoint with more accuracy, less risk, and more reward, the beginning of a 300 pip move reversal occured some many days later.

Uploaded with ImageShack.us

This stuff works guys. Try it. you’ll like it :wink:

Jay

273

Enchanted, what I will say is considered sacreligious in some circles…but i don’t really pay much attention to the “trend” most of the time.

When price is entering into a daily level where it turned at previously…i pretty much ignore trend. I know it will likely cause a price reaction the first time there. I try to catch that first reaction. Where it goes after that…I don’t know. I wait until it makes a strong move to break the level, or reverses and makes a strong move the other way.

Once this strong move is finally made…I will primarly look for setups “with the trend” until it comes to a new daily level…at that point, i try to counter trend trade the first touch again…and then wait again…for price to again make a strong move to tell me which way it is going to continue…up or down to the next level.

SO, it’s “counter trend 1st touch. wait and watch for decisive daily move. trade with trend after this move is made until next daily level is hit. counter trend 1st touch…rinse…repeat”

Congratz on your 5 trades 5 wins! at 1% profit per trade… at that rate…you can catch 20% a month, which is fantastic by anyones standards!

Jay

274

Bronz…i draw the weekly relative sup/dem curve once a week, and use it as such. At the start of the new week, i redraw it from the previous weeks hi/low, and forget about the previous one.

My long term sup/dem curve analysis on a daily chart gives me static points where price is out of whack with fair value (either too expensive or too cheap)…where as my weekly relative sup/dem curve gives me just that…

a RELATIVE point from previous price action that will show me when price is overpriced or undervalued.

Of course, the best trades come when both the daily sup/dem levels and the relative weekly sup/dem curve are both showing a good entry in the same direction :slight_smile:

Jay

275

Great example ! Priceless - Thank you !

276

Turtle soup is a trading concept coined by market wizard linda bradford ratchkey (sp?) in her book regarding high probability setups.

The turtles were a group of traders taught by market wizards eckherhardt (sp?) and richard dennis. They taught a 20 day breakout to new highs trend following method. The breakout failed often enough to create a profitable trading opportunity short term by fading the breakout based on a specific set of rules.

Thus…the resulting strategy was named: turtle soup - because it took advantage of a counter trend move when the “turtles” strategy failed.

little bit of trading history there for ya :wink:

Jay

277

Here is a link to the last 2 videos in this series… please comment or ask any questions, it’s more helpful for all when doing so, thanks guys!

Jay

my weekly high probability trade analysis video 6 - YouTube

my weekly high probability trade analysis video 7 - YouTube

278

Here’s an example from cad/chf that set up in the last 24 hours.

As you can see below… a fresh daily level was established about 10 trading days ago.

It had not seen a retracement back into the level until the last day or so… but rather than just take the whole level, i broke it down on a 1 hr chart to see if i could “fine tune” my entry to give a higher probability for both success, and profit.

I took 2:1 on this trade. nearly got the turning point to the pip. easy 2:1.

Again, another very basic, very simple, A-B-C trade example that was successful.

for this, i based my analysis completely on daily and hourly virigin supply levels.

Daily chart and daily supply zone:

Uploaded with ImageShack.us

hourly chart and hourly supply zone:

Uploaded with ImageShack.us

The two pale yellow lines are the daily level…the purple thicker line is the beginning of the hourly level…as you can see price retraced almost exactly to the pip. I went short, with a stop a little above the top pale yellow line (highest on the chart). target was green line…2:1 profit.

simple trade. simple trading. consistent profit. try it.

Jay

279

after some debate, i’m gonna give out some live market calls for a little while, to demonstrate in “real time” the effectiveness of my approach.

Mind you, I will not always incorporate all elements shown in my videos, and i will sometimes use other elements i have no video for.

for the record, the video series is about finding the HIGHEST probabliity setups. There are other setups using supply/demand concepts as a core component of analysis that are also effective. I will specify if a setup meets the most crucial criteria for high probability which is “fresh/virgin daily supply/demand level” The rest i will mention at my discretion.

Disclaimer: This is NOT a recommendation to trade these setups, this is for academic purposes only. i am not responsible for anything you do or do not do in the markets, and trading forex or any capital market can (and often does) result in losses of some, or all, of your trading account money.

280

GBP/USD - long 1.5705.
30 pip stop initial target - may adjust stop as trade develops
35 pip initial target - may adjust target as trade develops

Trade will be taken during from now until london close… and order will cancel at london close if not triggered.

281

gbp/usd closed 50% at 1.5721
stops moved to BE

282

Is this typical or common with the start of London after Tokyo? I took a long on AU at the turn of the hour.

283

ddrankin… what do you mean by “typical”?

If you mean does the opening of a session (asia, london, etc) often coincide with the beginning of a short term directionl move/trend? i’d say in general yes. More often than not anyway.

Session openings and closings do provide a statistically significant opportunity if you combine it with other factors such as sup/dem analysis, pivots, fib retracements, longer term trends…etc.

Jay

284

Heres a screen shot of this weeks P&L and stats so far guys. Just for an idea of what is possible trading a single full lot in spot or single contract in the futures market using these concepts.

Uploaded with ImageShack.us

285

So, my gbp/usd trade took 50% profit at 16 pips, the rest closed at BE.

in this case, moving to BE and taking profits early was not the best move, as it would have made the full target.

however, i did have nearly the same trade in forex futures, and took a bigger profit on it. here’s a screen shot:

Uploaded with ImageShack.us

23 tick profit on this. Ask any questions

Jay

286

here are the two trades I took in crude oil tonight. One made 16 ticks, the other 19 ticks…for a total profit of 35 ticks, or $350.

Uploaded with ImageShack.us

287

Thanks Mate. Those examples are great at helping to understand your strategy.

If you have some time, could you elaborate on why the trades were/are taken? It is not only good to see the trades but to learn from your analysis in taking them.

Thanks again

288

Not to shabby if you ask me.

289

Hi Jay,

I just got rid of my armbands and have taken the plunge by opening a live account. Good insightful information on here. I will start following your thread :slight_smile: