How to trade Forex using supply and demand levels and imbalances. Technical analysis strategy. Part 2
This webinar is composed of 2 parts.
I believe today's webinar was a very interesting and important webinar, for me personally it's one the best if not the best one. We talked about many things, including how quantum mechanics can be related to trading. It may sound silly to you but the infinitesimal world is closely related to trading and all fields in life, more than we may be think of.
The summary of the webinar below may seem long but we talked about all that, I just wanted to summarize all we discussed today.
We made detailed topdown analysis on some pairs, analyzed the facts why some trades were taken, always following the rules and a bit of "logic" and "common sense".
Topics we covered in today's 2 hours webinar:
- Top down analysis of USDPLN, AUDUSD and NZDUSD, monthly down to D1 and H4 timeframes
- Tradable versus non tradable zones. A zone can be a zone but it won't be tradable if only one of the rules governing the creation of levels is not there, like the 2:1 imbalance at the origin of the move
- A new imbalance will be validated once the an opposing zone is removed. In fight the winner will be the one that beats its opponent, same applies in supply and demand. If a demand level cannot remove its opposing supply zone, it won't be a strong level, it won't be confirmed as a level... UNLESS, there is no opposing level to be removed and good profit margin. We saw a few examples of this on USDPLN and AUDUSD.
- Flip zones can used as areas of confluence together with supply and demand zones, the same way the 20 EMA is used Waiting for new zones to be created. We don't trade flip zones, only on confirmation or if there are great levels at them
- Price tends to move between supply and demand zones attracted by an invisible magnetism of those zones. No diddle in the middle
- Backtesting. I've always encouraged and I always will, that we need to test any rules that we want to trade because before we become full time traders we need to gain confidence and master those rules, it's the only way. Nick was present at the webinar and gave me permission to show those results
- Success ratio and trading results are affected by emotions. First of all you need to deal with your emotions, then consistency will come. The duality of light as a wave and a particle at the same is a "clear" example of how results are affected by observation. We need to walk away from our computers, set and forget our trades. The market, the universe will do whatever it has to do, you are no longer in control once you're in a trade, so why worrying about it?
- Buy after a strong and un-paused drop in price and sell after a strong and un-paused rally in price. It may sound scary, in fact it is However, you must buy when price is dropping with ERC bearish candles and sell with bullish ERC candles into a supply zone. Do not buy after a strong rally, you would be doing exactly the opposite thing!
- Gambling versus trading. In gambling you insert a coin in a slot machine expecting a winning pattern to appear, whereas in trading you see the pattern first and THEN you insert the coin. Think about it, when gambling you get 20 losses in a row, 40 losses in a row? Do you stop gambling? No you don't. You don't have the odds on your side, the slot machine does In trading, you locate a high odds pattern/entry and then you insert your coin. After a few losses in a row a few bad weeks, you feel discouraged and you will think of switching to another strategy. That's not a good choice!
-Any strategy with a correct money management and emotions control will work. This is related to gambling. No set of rules? No trading plan? No confidence? The truth is that no matter which strategy you want to trade, it will not work. Master your strategy, trust the odds provided by your rules and take all valid setups. Remember you have the odds on your side, whereas in gambling you don't
- Trading is an emotional game. You are your own enemy, you have to fight against yourself, not easy! This is one of the main reasons traders fail
- Belief, patience and hard work is the perfect recipe to rally in your learning curve
- Instant gratification does not work in trading, learn to be patient and wait for the right patterns to emerge
- The reasons why I trade swing and position. It gives me no headaches, lot of free time and relax. Also a M15 level needs 1H or 1 and 1/2 hour to be created, a H4 level needs 1 day, a D1 level probably a week. I don't have 50 new levels a day on M15, I would be in front of the screen all day long, so I prefer to trade 50is instruments pairs, almost half of them only on D1 levels, or I would be a slave of my own trading
More information at http://www.set-and-forget.com