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…
My Response:
Hey there,
Glad to hear my explanations helped clear things up a bit! It’s always rewarding to know I’m making a difference in someone’s trading journey.
Now, about those zones…
The reason they keep working is simple: banks are still using them! They’re either adding to their positions or taking some profits off the table.
I call these “buy” and “sell” zones.
Any supply or demand zone could turn into a buy or sell zone, but some are just more likely candidates. If a zone formed where significant buying or selling went down, chances are high it’ll become a spot for future price action.
Of course, it’s not always easy to figure out exactly what the banks were doing when the zone formed. But if there was a lot of volume and a big move, it’s a safe bet they were up to something significant. That’s why I always consider those zones to have a higher chance of being revisited.
Speaking of Sam Seiden, I remember him talking about the “time away from the zone” factor a few years back.
He considered it one of his key “odds enhancers.”
Things might have changed since then, but it definitely stuck with me.
I’ll try to keep things a bit more balanced going forward. I’ve pretty much said my piece on Sam Seiden’s methods anyway.
It was great chatting with you too!
All the best, PAN