The last trade is called a “swap”… those kind of trades are better when there is a clear trend… and if there is not a clear trend then you’d better wait for a very good PA confirmation.
Don’t worry if you think you will miss some pips in the move… If price is rejected from that level the odds are that the last swing will be tested.
Since the “swap” is kind of a middle point, the risk of a losing trade is higher than when you play the extremes…
Haha thanks pip. I was wondering if people had already given up on this thread, but glad to see there’s some peeps sticking around. Much appreciated!
Yeah, I will take a look at Meihua’s again. It was one of the first threads that I followed when I joined babypips. It’s kind of funny how I have now made pretty much a complete circle with my trading strategies and am pretty much back from where I started with using supply and demand. I have picked up small things from each strategy that I am able to use in combination with the supply and demand strategy to make more effective, but I am in a very similar place to where i started.
This is very interesting. I can see how the trend had already made a reversal by break the most recent highs in a higher high, higher low, break of high formation and it tested the level i had marked. I will keep a note now to pay more attention to the trend and any possible trend change formations that could have occurred before my entry would be hit and also note if I am taking a trade in the middle of a range.
I am a little confused over what the difference is though on this chart that you noted was a good example below vs the AUDUSD Chart: Should I have technically waited for PA on the CHFSGD Trade?
Appreciate your help!
Hey All,
I will try to be better as posting more chart setups as I see them. It’s been pretty hectic lately, (moving, work, traveling…etc.) but if i see a good setup i may just give the trade parameters and then post the chart later.
Here is a potential setup on the USDCAD:
Comments welcome!
Bronz
Wouldn’t the demand zone be slightly lower than that?
Shouldn’t your entry be where the stop loss is?
I’m having trouble identifying these zones, so I’m asking this to satisfy my own curiosity.
Piptronix has a point. In general I dont like this level. its a Rally-Base-Rally that is basically unseeable on any higher TF. On 15 minute it looks like its ok, but we know that if 2 levels are stacked on top of each other the lower level is the more conservative play. But considering how long i had to think about this trade I would personally pass. If i find myself switching back and forth and not finding an obvious play in 30 seconds its a no go. I am struggling with this one. Here is a screenshot of your zone and my lower zone on a 4h. You cant even see your 1H level there. Also if you do eventually hit the 2nd lower zone you now have a built in speed bump right on top of you. We all know its how price enters that zone, that’s really the key so we have to watch that but i personally would walk away from this one. The blue box / the origin of the move is my real play here. Its significant 1 time frame above and 1 time frame below, and is the daily low area that has shown support for several days, only doji tails were created in that region. BTW this is just my opinion, I am in no way here to change how or why you take trades. Please do not change your trade based on this.
Free image hosting for your screenshots + free screen capture tool
Hey pip,
The place where price really exploded from was where I marked the demand zone, so logically I would think that there is an imbalance in supply and demand at that level, especially since it stalled at that level as well and then we saw the big price movement. Also, that is the level where resistance would have flip flopped and should now act as support. The level below is not lined up with the prior resistance so with reference to this strategy, it shouldn’t be as strong as a level because you wouldn’t be getting both the supply & demand traders as well as the support & resistance traders on your side. As always, I have no idea if this trade will work out in my favor haha but I’m just trying to stack the odds in my favor in a logical way.
Anyone please feel fee to comment and please let me know if I am missing something. Any feedback is appreciated! 
Bronz
Hi MeiHua,
You bring up some good points and when I was typing out my response to Mr. Pip I hadn’t seen your post. It could be the case that why price stalled a few bars at this higher level is that there isn’t even demand at that level and it was just price trying to push through that resistance level. I guess I am assuming that there is significant supply and demand traders on the one hour time zone. Levels that would show up on the 4 hr and daily time zone would not look as ideal on the one hour zone though since price looks to be stalling too long. I do agree though that supply and demand is more significant as it is identified on higher time frames, so maybe my definitions are messed up on 1 hr time frame for supply and demand and I should be paying more attention the longer more drawn out levels because they will also be shown on the higher time frames. Considering what you’ve said, this trade then would be capturing the support resistance traders on trading on the 1 hr to daily time frames and just the supply and demand traders on the 1 hr and lower time frames. So in essence this would be more of a resistance turns support trade than a combination of both SR and supply and demand.
Nonetheless, I feel obligated to take this trade as I posted it on the thread as a possible setup and I will count the win or loss on my trading log that i post here. This is a learning process and I am here to lean as much as possible. I recently have been having not as good results as I’d like back testing, so I am looking for help and I do appreciate all feedback provided.
P.s. I watched the video you posted on your thread earlier today and you have given me some good things to think about in trading the extremes. I never had been successful in trading extreme highs and lows but I like how you measure that level by the way how price breaks previous highs or lows in a smooth stride. I do see that price bounces off the extremes often and I am missing out some possible good trades.
Thanks,
Bronz
Haha well I’m definitely not feeling too good about this one now, but i am here to find help and i appreciate the feedback.You saying wait for PA because it is in the middle of a range and would be a “swap” trade? For swap trades we should always wait for PA?
Thanks,
Bronz
Yes it will be a swap (or a rally-base-rally like MeiHua said)… you can be very agressive and trade that area with a tight SL, but I don’t see any reason to rush… if that level holds the odds are that at least the last swing high will be tested
I personally believe in multiple time frame analysis. These levels must be significant 1 TF above and narrowed down 1 TF below my trading TF, AT MINIMUM. If your only staring at the your trading chart then your going to get in trouble, cause your deliberate avoiding information that is available. I am not to discourage you from taking any trades as I said just an opinion. You know I dont even know if anyone ever watched that video, but now I do. That’s super cool Thanks.
Hey All,
Been doing someone back testing and refining the method a bit. I’m starting to realize that the most successful way to trade in this kind of way is less so based on supply and demand and more so based on support and resistance lines. Especially since most of the trades that I try to take are not at the extremes of a range. As fellow fx-men MeiHua and Yunny1 have been referencing, some of the best places to trade supply and demand is at the extremes of a range in which show significance on multiple higher time frames (hence why they weren’t too fond of of my USDCAD trade, was in the middle of a range and not significant above the 1 hr time frame) I’ve having some very good back testing results when relying on using more support and resistance lines. What I’ve been doing is finding a support or resistance line that is very obvious that it is significant or it is very obvious that price respects that level. Once I have identified this level, I will wait for it to break and close outside of that level. Then make sure that the next one or two candles close outside that level and then open a trade on the first revisit of the support or resistance line. If a support line was broken then I will short at the first revisit of the line . If a resistance line was broken then I will go long on the next revisit of the line . This is basically playing the role reversals of support turning resistance and resistance turning support. I will post some charts to help explain as soon as I can. No Internet yet on the computer at the new place but I think some charts would definitely help in explaining what I mean.
Feel free to comment!
Bronz
So basically its the same as before, except that you are leaving out Supply and Demand altogether?
That’s quite a drastic change.
I am glad you are using back testing and analysis based on data to make choices. Most people switch entry techniques because they have been losing and no real foundation for the change. But at least you came up with concrete numbers to justify the change, my question is this. How much additional edge does this change give you?
Hi Pip,
I agree it is a bit of a change but I wouldn’t be mentioning it if I didn’t think it was for the better. The change isn’t as drastic as you would think though since some of the same trades would be taken under either way of thinking. Have you had much success implementing it in the ways I have forementioned?
Bronz
The idea was not to discourage you to take those trades… some set ups are better than others… plus the higher the time frame also the higher your odds… Of course always stick to whatever makes you money 
This is a set up I am watching…
Hi Bronz
So far so good.
I’ve gone the opposite way to you though, I’m concentrating more on S/D than on S/R.
There’s a lot of work to be done, but I"m looking forward to it. I have been able to pick out some good levels, some triggered nicely, others I was afraid to pull the trigger, but I can see it working. I’m still refining my own rules, but so far I like what I have seen.
I’ll keep you updated, and I’ll definitely be following along.
Hi MeiHua,
It’s pretty much the difference between night and day for me. I have 124 trades that I could pull data from with my prior entry technique and got 41% accuracy ( I have tested it more than that but this was only recent trades that I could pull the data) with a total of 422 pips using 6 different pairs going back 180days on a 1 hr chart.
For this newer technique, I have taken 33 trades with 26 wins giving me 78.7% accuracy and 425 pips. This data is with one pair going back a full 180 days on 1 hr chart, a second pair going back about 40 days, a separate pair going back 20 days.
So, I’m trying not to get too excited yet since my data isn’t that large yet but I am definitely likeing the results I have gotten so far.
I think one of the reasons why my first entry technique was not producing as much is because I was only using one time frame in defining the supply and demand zones in my back testing. The way I backtest I can’t really switch between timeframes so make more difficult to get data using multiple timeframes for supply and demand trades unless I just use a larger timeframe in general like 4 hr or daily. I might consider that, but for now I’m going to keep testing this newer technique.
Bronz
I use forex tester 2 software because it allows you to use multiple time frames seamlessly. I know its commercial software and expensive, but i thought it was a helpful tool. 124 trades is a good amount of trades for a data set, you have about +/-9% standard error according to my estimations. 33 trades obviously is far far larger standard error. the thing i would be most concerned about is 180 days, its all 1 type of market, you need at least 5 years if not 10 of data to have each type of market environment. I my personal standards are at least 7 years of data and 500 trades.
I know my standards are high but they are that way for a reason. Your method may be very good in the current environment but when the market phase/environment shifts your forward profit efficiency will degrade and it may become a loser. ( I am not saying it will but this is very common for systems tested on short time frames). I am very glad you are doing the homework, key in my opinion. I am just pressing you to do it more thoroughly, remember eventually your going to be putting real money on the line, how much money will be saved by thorough homework?
If i had to choose between these 2 data sets, i would choose the 124 trade tested one only because the standard error is less and the net difference of earnings is only 3 pips. So i can accept that i have a worse win rate but in the end i only lose 3 pips but my standard error would still give me profit in the long run, but on the 33 trade system that may not be the case. I am not defending Supply Demand, I am just stating this based purely on numbers, it could be any system there. To be perfectly honest, this is EXACTLY the process i go through to refine my trading system. Not only are you finding tweaks that make the trading system more profitable, but the more you do it the more the system becomes crafted to your own personality. Very good work.
