Hello,
I’ve been reading your blog, and they are quite interesting. I have a couple questions/observations, though.
My first question is in regards to reactions to supply and demand zones after they have been violated. One of the single most annoying and irritating experiences I have in relation to Forex trading is getting stopped out right before the zone starts working, and the trade ends up working out without me. Why does this happen? Why do zones end up working after they have been violated?
I’m guessing this is because the zone was in an area where banks were taking profit rather than putting on new trades, but how do you know this in real time?
Post-processing after the fact doesn’t help determine whether to take action at the time when a decision to place a trade or not must happen. The root of the question is how to know whether there will be a reaction, or a continued break out. How do you know in real-time whether the zone is due to banks putting on trades, or taking profit?
When drawing supply and demand, what if there is no opposing candle to the zone type? For example, if you have a supply zone with no bullish candle before the drop, does that mean it’s not a supply zone?
In a number of your posts, you mention time away from a zone is taught by many as giving it strength, and the repeated mentions of Sam Seiden suggests he is the one who teaches that. He does not. He does measure his profit zone by the move away, and that could be interpreted as a strength gauge, but I have never heard him say that time away from a zone gives it strength.
I really appreciate the posts you’ve provided and the additional clarity it provides into some market mechanics. I’m working on adopting them to my trading.
Cheers…
Response:
I appreciate your email, and I’m glad I’ve helped clarify some aspects of supply and demand trading for you.
Why Some Zones Keep Working: The Buy/Sell Zone Phenomenon
To address your question about zones being touched multiple times, it’s important to understand that some zones continue to function because bank traders use them to either place more trades or take more profits. These are the zones I often refer to as “buy” and “sell” zones.
Any supply or demand zone has the potential to become a buy or sell zone. However, certain zones are more likely to evolve in this way, depending on their location in the market.
Identifying High-Potential Zones:
Zones formed where we know substantial buy or sell orders entered the market have a higher chance of becoming buy or sell zones. This is because their formation resulted from banks placing a significant number of trades or taking considerable profits.
While it’s challenging to determine the exact action that led to the zone’s formation, we operate under the assumption that any zone with substantial order flow has a better chance of developing into a buy or sell zone.
Sam Seiden’s Approach: Time Away from the Zone
As far as I understand, Sam Seiden considers the market’s duration away from the zone as one of his ‘odds enhancers’. I recall a video where he discussed how he assesses the probability of a trade’s success, and one factor was the time the market had been away from the zone.
Things may have changed since then, but I distinctly remember ‘time away from the zone’ being a key factor he considered before entering a trade.
Constructive Criticism:
Thank you for your suggestion regarding toning down the critiques.
I’ll keep that in mind.
I don’t have much more to say about Sam Seiden anyway, so there likely won’t be any more articles or comments critiquing him.
Best regards,
PAN.