Hello,
I have a question after reading many of the articles on your website and your book on how large institutions operate in the Forex market.
A brief background on me: I have read much on supply/demand recently since it instantly caught my attention when I stumbled upon the FF post online. I have also watched most of Sam Seiden’s (free) webinars. I have been considering the OTA courses but have my doubts. I went to one of their seminars just last Thursday and when I asked one of their presenters a question, it was pretty much glossed over.
My main doubts over the commonly talked about theory is the fact that pending un-filled orders cannot move price (as you point out), and that orders surely don’t remain on the table for months/years (again, as you point out).
Anyway, my question to you is regarding time spent at a ‘zone’. You say that more basing is better. Most supply/demand theories say less basing (i.e. less time spent at a zone) is better. My thinking is that the less time price spent at a zone, the less chance there will have been for the big banks to place their required trades, and therefore the higher the likelihood that price will return there. The more basing, the higher the chance that the bank’s required orders will have been completely filled.
Would you mind explaining your thinking further?
Thanks in advance for your time and your website.
Kind regards,
My Response:
First off, let me just say… It’s probably best not to take the OTA courses.
Much of their supply and demand theory doesn’t make sense, and the cost of their course doesn’t justify the knowledge they offer on supply and demand trading.
Moving on to your question…
You must first understand the market doesn’t always return to all supply and demand zones because the banks were unable to get all of their trades placed into the market initially.
In fact, a significant number of zones form due to the banks placing trades.
The market returns to these zones mainly because the banks want to fill the remainder of their trades at the same price.
The key factor is not whether the zone has a base or not, but rather how quickly the market returns to the zone. If the banks have outstanding orders to fill, the market will return to the zone swiftly, regardless of its structure.
I would advise focusing more on taking trades from rally-base-drop / drop-base-rally supply and demand zones.
These types of zones work best in all market conditions because they form from the banks either placing trades, taking profits, or closing trades—all actions that the banks might want to repeat if the market revisits the zone.
I hope this helps,
PAN.