Anybody Discuss Supply and Demand Strategy???

[Adamus]

It's just raw swing highs and swing lows on a higher timeframe. I trade 3min chart, but create the swing highs/lows & the lines based on them on the 60min chart.

I'm playing with P&F charts in NinjaTrader, but so far I can't get them to display nicely. It's forcing the columns into regular time intervals, and I can't see any setting to tell it not to.

 

[bredin]

I hated every P&F indicator out there. It why I just wrote one that uses the MT4 chart structure (It a heavily modified renko indi), and drew the nice lines with a modified sweetspots indi. It also keeps the timestamps nicely 😉

anyway with this I havent looked at any timed charts lower then weekly in a few months now.

Im thinking youre using H1 because it gives moves that are large enough to trade?

P&F takes all those non-momo (small bodied) candles and throws them away: it automatically shows you the swing highs/lows.

G.

 

[leerees]

In P&F a new column is only drawn when a large enough reversal has happened. With this in mind it should be seen that every close is either support or resistance to some degree. From there you can see the swing extremes and the local S/R.

They give an idea of direction in the same way as usual: we're looking for resistance to become support (or vise versa), or resistance to hold. I am looking to exploit rejection from these events.
(please excuse some notation for what follows)

The general pattern is
Extreme (Daily or higher)
R->S
Retrace to S
Go Long.

The breakout itself cannot be trusted, since after this there is almost always a retrace as the breakout guys move their stops to 0 and have their trades taken off them 🙂 (getting 'zeroed') or a 'false break' aims to take the breakouts guys at their stops.

Anyway, by removing time and concentrating on price S/D areas and S/R lines immediately stick out.
So we can go short just inside R and bail just on the other side, while targeting S that is many times further away than our stop... Its almost impossible to trade at low R:R

Sometimes I think this way of trading is too easy and that soon everyone will do it. Then I remember that most people believe in complexity and will try to 'improve' it by adding something useless to it in a vain attempt to 'make it better.' Like all those people who spend their life looking for the shortcut instead of just getting the job done in the first place 😉 In trading they're the easy ones to spot.

Anyway Adamus, a question for you:
Which part of the timed candles assists you in seeing S/D?

G.

Raw Supply and Demand trading (sam seiden) doesn't seem to work for me anymore, I find price seems to bounce just outside of the s / d zone nowdays.

Bredin, maybe you could share your indicators and we could give yours a go?

 

[Adamus]

I've heard of Sam Seiden from a few places but when I went looking for him on google, I couldn't find his website - just loads of resources scattered around. Where's the best place to read / view his stuff?

@leerees what instrument do you trade?

Here's a chart of the Euro/USD on 60min bars, with the question about Friday's high. Why was it where it was? Was it significant? Using simple 2-bar-either-side swing highs and lows to identify S/R, for me the high just comes out of nowhere.

Also 1.3020 came out of nowhere as well - at 11:30 and 15:00.

 

[bredin]

Adamus, the real question is why wouldnt you expect a high there?

G.

 

[bredin]

Raw Supply and Demand trading (sam seiden) doesn't seem to work for me anymore, I find price seems to bounce just outside of the s / d zone nowdays.

So, the question is did price close over, or fail to close over, a line you believe to be S/R?

With this in mind does it matter where price actually bounces from?

Wick in the direction of loss, body in the direction of profit.

Bredin, maybe you could share your indicators and we could give yours a go?

The indis are available at my site. My P&F indicator is USD$25.

G.

 

[Adamus]

Adamus, the real question is why wouldnt you expect a high there?

G.

Because I expect it higher at the swing high - which I drew on the chart. Using swing highs and swing lows only though seems to miss some levels - or areas perhaps.

The other one was 1.3020.

Of course it could all be just irrational, but I thought there might be something I'm missing.

 

[bredin]

Because I expect it higher at the swing high - which I drew on the chart. Using swing highs and swing lows only though seems to miss some levels - or areas perhaps.

The other one was 1.3020.

Of course it could all be just irrational, but I thought there might be something I'm missing.

What made you think price would go that far (to set the high at the top of the chart) in one day?

G.

 

[Adamus]

What made you think price would go that far (to set the high at the top of the chart) in one day?

G.

Because a steady trend won't stop until it hits an S/R level, with perhaps a few pull-backs on the way. Generally speaking S/R levels from swing highs and swing lows work well like that, for me, but perfect it is not. So I'm looking for additional - or better - ways of identifying the S/R levels.

 

[bredin]

Because a steady trend won't stop until it hits an S/R level, with perhaps a few pull-backs on the way. Generally speaking S/R levels from swing highs and swing lows work well like that, for me, but perfect it is not. So I'm looking for additional - or better - ways of identifying the S/R levels.

There is no such thing as trend.
Trend is an abstract construction, not a market fundamental.

Come to that, Support and Resistance are also abstract constructions, which describe places on the chart where the order stack is in imbalance.

Swing H/Ls occur at these imbalances. So do consolidations, which just show a period of time where the order stack is resolved.

The two reversal patterns are V and U, the only difference is one has a period of consolidation, the other does not.

The size of the imbalance is shown (in part) by the speed that price leaves the price area.

The issue is not even whether a price level is S/R in your mind, but only how you plan to deal with price closing relative to that line.

G.

 

[7thSignalTrader]

How does anyone know where Supply and Demand are located............. in the International Currency Markets?

If Forex, were an exchange with Time & Sales data, including both Pre and Post market trading data and a Central Clearing function; then I might see how one would be able to mathematically describe both Supply and Demand.

But, how can such a thing be done, when all the Retail Trading Platforms in use, derive their own pools of liquidity, their own pricing engine algorithms and quite frankly, their way of delivering Bid/Ask to their respective customers?

Your Supply could very well be someone else's Demand and vice-versa, depending on where you house your Retail account.

Instead of trying to figure out where price will with stop, pivot and reverse directions (which requires not just one algorithm, but a minimum of three with high correlation, no doubt!) why not spend the time, energy and effort, figuring out why price must continue on its present course?

But, be very careful. Because the Trend Theory, is also highly overrated as well. The most advantageous place for any Day Trader to be, is right smack in the middle of the Pivot Theory and the Trend Theory. Why? Because that is the place where price behavior contains the highest predictive natural attributes.

In fact, these attributes are always present in any market - just not in every time frame at the same time. 😉

The last 16 words directly above, must have worth at least a million dollars to someone with the ears to hear. :smart:

Stop hunting for Supply & Demand and start hunting for the appropriate Rolling Time Frames that you can always trade with a high probability for having multiple locations where you can exit with profit and with minimal draw.

The best place to look for these Rolling Time Frames? Answer: At the start of every new bar. As Time expands within a bar of data, so too does Price. Thus, the correlation between Price and Time, reveal a whole lot about Direction. What you think may be a region of Supply (as just one example), might actually be a conduit for more Demand.

That's why Time, will always be a better indication of Pivot. Why? Because, Time cannot mask itself, like Supply and Demand are able to.

Nice and neat.

 

[Adamus]

There is no such thing as trend.
Trend is an abstract construction, not a market fundamental.

Come to that, Support and Resistance are also abstract constructions, which describe places on the chart where the order stack is in imbalance.

Swing H/Ls occur at these imbalances. So do consolidations, which just show a period of time where the order stack is resolved.

The two reversal patterns are V and U, the only difference is one has a period of consolidation, the other does not.

The size of the imbalance is shown (in part) by the speed that price leaves the price area.

The issue is not even whether a price level is S/R in your mind, but only how you plan to deal with price closing relative to that line.

G.

Good post, although I mean "trend" as in something that is more likely than not to continue in the same direction, at least to the next S/R level.

 

[bredin]

I have become convinced that Supply and Demand are fractal in nature. this fracticality is caused by the differences of opinions between long and short term traders regarding expected price (and stuff like that).
It would also appear that this fractal nature of the S/D curves confuses a lot of people into thinking that it cannot be determined with any accuracy.

Expected Price (Pe) shifts around a bit due to economic fundamentals like NX and economic policies and in the short term by minor stuff like news events.

In the long term price will revert back to Pe on the chart (not drawn was long term supply, which is essentially fixed), but in the short term Pe moves around a bit, and that shifts demand and/or supply.
In the short term price often 'overshoots' Pe and hits an imbalance in the other direction.

It would pay to get your head around some basic macroeconomic theories, particularly those surrounding money supply.

As long as one remembers that trucks run over bunnies one should stay out of trouble.

G.

 

[nunrgguy]

Wow. Never realised signal bender was Joe until now 😆