Wondered if anyone minded going down the “Supply and Demand” discussion path for a wee while. You can all probably guess that this means I have loads of questions about the subject rather than having loads of answers LOL .
and on the subject of questions…why do bottles of Radox not have the “Required Dosage Per Bath” amounts printed on the side of the bottle?
(In case anyone doesn’t know what Radox is it’s just bubble bath that is supposed to ease the aching bones and muscles of an old git like me)
Came home today after working on a couple of roofs and could already tell that the old body may be a bit stiff tomorrow. Mrs HoG tells me to go for a bath and that there was a bottle of Radox in the bathroom cupboard. " Use some of that." was the last instruction she offered me.
Now never having used Radox before, I scanned the side of the bottle for the “Recommended Dosage.” but nada !!
So I’ve started the bath running, poured in half the bloody bottle and off I’ve went to get the towel, rubber duck and clean clothes.
WELL!!! When I’ve returned to the bathroom, or as it’s now known, the bubbleroom, what do you think I found???
Mrs HoG has taken this event as confirmation of her long held belief that I’ve “Lost the plot completely.”
Driving forces in the marketplace. But the true supply & demand, talking the real bids/offers on the order book coming in from large financial entities, is not available to you in any kind of usable way. There’s sites that will offer up “rumours” of where the big bids/offers are resting, but if you feel comfortable trading on rumours… that’s pretty risky in my book.
As a retailer, you can identify previous reaction points, and get some level of information on the implied Supply/Demand. Solid Supply/Demand zones can reject price multiple times before giving up the ghost, if they do at all.
Well then that for me is the first question, “reaction zones” with the emphasis squarely on the word “ZONE”.
It’s easy to see the exact point in which price has reacted. It’s either the very high point, or the very low point.
But how to determine a “zone” isn’t quite so straight forward. Is it determined as the range of the consolidation?
But these are a lot easier to determine in some cases than in others.
In this example, even if you scrolled back left on the chart, this is a long term high that doesn’t even correspond with a previous price level as far as I can see.
So the first question to ask, if you ask me, is how to determine a “zone”.
Last week’s EUR/JPY and USD/JPY both printed bearish engulfings on the weekly chart. The charts actually look quite similar.
My preference for shorting one of them would go with the EUR/JPY, but not at current level (97.975) I’d probably be looking to short should it get back up around the 98.800 level
Alright, I’m not avoiding your question, but you really gotta zoom out those charts. You’ll do a great service to yourself by getting a wider perspective on the market.
Throw up a more practical viewpoint and I’ll try and help you out. It’ll be more helpful if you share a pair and timeframe that you actually trade. I’m not so sure that you actually use the EUR/USD monthly chart to make your trading decisions
Evening all :13: Currently still short GBP/JPY hovering around 125 pips. Entered long EUR/GBP on swing low @ 0.8425 and looking for an entry on GBP/NZD and GBP/USD short… probably London.
The uncertainty (aka margin of error) in determining a significant price level stems from the fact that clusters of Stop/Limit orders don’t exist at a pip-specific level. It is also timeframe dependent. So if you want a “rule of thumb” I would say 5-15 pip zone for Sub-1H timeframes, and 15-25 pips for 1h&greater timeframes. Don’t worry about weekly/monthly charts for these levels… they are just too broad for practical trading purposes IMO.
I can’t answer about ‘zones’ since I try to be more precise than wide zones but I do see where this EurAud high is reacting to previous price action. Opens and closes are more significant than highs and lows. On the EurAud chart the recent high corresponds to monthly closes. See the M1 (monthly level) SR picked out some time ago (the yellow line). On this monthly chart you can see how recent price reached up to the bottom of a previous bank of sr (consolidation zone, red box). Note the closes in that area.
The size of the range HOG to tell the are of S/R (sorry have not looked into S/D enough to comment). Now for me if you look at a are of S/R on a higher time frame. Then drop it down to smaller time frames. You know the term top down analysis (keep that term in mind). Now in these areas of S/R on higher time frames when you look at the lower time frames they tend to “range”. Ok well these ranges can tell you quote a bit about the next move.
In this scenario since I like to short I will use a short setup. Say price is moving up into resistance. There are a few things to note as price makes it way into the “zone”. To determine the “zone” note the previous ranges and what did price do (did it reject and move back down or did it break and now retesting the zone). Keep in mind peoples mentality going into this zone. You will have some that were short already and are not wanting to carry on the madness so they are making buy entries along with some that are trailing there stop below this area to cash as much as they feel they can. This will push price up. Now you must also look at the move that pushed price into this resistance. How fast did it move? This can tell you how many scalpers and other bears are in the market. That is important as they are going to be looking to get out (assuming you are trading with the trend). This is placing sell orders in the market. So now with both the bulls and bears fighting off to cash out there orders we have people looking to get short (like me). If you are looking to get short where would be your best entry? At the top of the new range that is in the previous zone. Ok great so where place a stop right? Well you have a couple places to logically put it. Either at the top of the new rnge as pirce entered resistance or the top of the zone. Keep in mind your R:R when placing your orders and also keep in mind short term traders are going to have stops placed based on immediate price action and if they are hit. They will be buy orders there pushing price up more. So what pace it at the top of the zone? Not necessarily due to the fact trend traders that were already short where are there stops? The top of this zone right? More buy orders. You also now have short time framed breakout traders hopping in the market creating even more buy orders. Price should now sky rocket taking everyone out.
Based of the above how do you determine if you have a trade or not? I cant and I typed it. This is why I have never really looked into S/D. On a retail and even institutional level I dont see the point. I hear institutions have robots and floor traders. Well the last I checked most robots dont place orders but place entries. Shoots that hole order flow crap right out the window. Or does it? It does work on the institutional level as they see your orders and can react to those orders.
Ok now lets say int’s (institution is just to long to type) dont have robots but live traders. Most int’s have many traders. They dont all trade the same. If they did why have live people you have to pay and why not just have robots? With that in mind how does anyone know if these guys are position traders, swing/trend traders, or scalpers? How do we know what timeframe they are basing these trade off? Its my opinion that why we have fakeouts and breakouts. A fakeout could have just been a bunch of scalper with dough pushing price up. Only to get out for there buddy wing traders that got short. Guess what happen after the scalpers ran stops and then got out? Price dropped like a rock making me lots of cold hard cash thats what
I had more to say but my finger are done typing lol
Hey HoG,
Have been studying Supply/Demand Zones as taught by Sam Seiden for awhile now. Actually have spent too much time studying and not enough time implementing. My best suggestion is that you watch all of Sam’s archived webinars on FXStreet. I’ve watched most of them 2X. Yes, he repeats the basic, core strategy a lot but there are a lot of nuances (which is why I watched them 2X, plus I’m a bit dense), sometime seemingly contradictory, that he does provide that will help you refine identifying & defining the size and location of the zones. Just go to FXStreet, Webinars, Archives, Sam Seiden. Hope that helps.
I’ve been studying S&D on a thread from a different forum.
From what I understand you are looking for a consolidation zone, it’s quite arbitrary but between 2-5 candles where price levels off with small bodies before price moves away in a strong fashion.
The two types being a drop in price, consolidation then a rise in price (or rise/cons/drop) or price rises, consolidates then rises further (or drop/cons/drop).
The interesting thing about this method is that as opposed to S/R which is always subjective having a range there is a very precise way for measuring S&D levels.
There’s obviously a bit more to it than that but if you PM me I can direct you to the thread which has a great pdf on the first post. I would be interested in further discussion here though as I’m still exploring it myself.
Hi slipp3ryWhippit,
Hope you won’t think I’m poking my nose in here unwanted. What you described looks similar to a portion of the core strategy taught by Sam Seiden. I’m interested in learning as much as possible about Supply/Demand Zones. Would you be willing to share the ID/location of the forum thread you mentioned either to me via PM as well or just post it in here? Sorry if I’m overstepping here.
Nope, am interested in any S&D discussion. Yes, the thread owner attributes Mr. Seiden and the discussion is only around the publicly and freely available material so there is no problem with IP being infringed.
Can’t PM you, must be too new, PM me when you get permissions and I will PM you the link or it’s pretty easy to find in Google.
Hi yunny1,
Thanks for that link. You reminded me to read that PDF that I saved awhile ago.
I’ll investigate when I get PM priveleges here on BP and get back to you, slipp3ryWhippit, then. Unless the link yunny1 included is what you were referring to? Thanks!
