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Supply & demand zones: What went wrong on this trade?!
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Supply & demand zones: What went wrong on this trade?!

  #1 (permalink)
Trading Apprentice
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Supply & demand zones: What went wrong on this trade?!

Hello traders

I am getting my feet wet with trading the ES using supply & demand zones. And I got punished badly yesterday... Please advise: why didn't the supply zone in the attached screenshot hold, but price instead passed right through it? Because at the point of entry it seemed like a super trade coming my way... The chart is on 240min.

Thanks for your help!

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  #3 (permalink)
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Croni View Post
Hello traders

I am getting my feet wet with trading the ES using supply & demand zones. And I got punished badly yesterday... Please advise: why didn't the supply zone in the attached screenshot hold, but price instead passed right through it? Because at the point of entry it seemed like a super trade coming my way... The chart is on 240min.

Thanks for your help!

...

when it shoot up like that, it's probl news related.

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  #4 (permalink)
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cory View Post
when it shoot up like that, it's probl news related.

Is there a way to manage the "threat" of news events?

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Croni View Post
Is there a way to manage the "threat" of news events?

Yes, there is a way...just stay at the sidelines at least 5 minutes before the event and 10 minutes after...

In order to avoid being sucked into some spikes caused by an upcoming news event, have an appropriate calendar at hand or use e.g. the jtEconNews indicator, which is available in the download section.

http://www.forexfactory.com/calendar.php

"If you don't design your own life plan, chances are you'll fall into someone else's plan. And guess what they have planned for you? Not much." - Jim Rohn

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Supply and demand zones don't always hold, even in the absence of news. You just have to plan for it and prepare to lose money on some, maybe even most, trades. This is why proper money management and position sizing are so crucial.

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"punished badly"

Just looking at your 240 minute chart, we don't have enough information to determine "what went wrong".

What was your stop loss on the trade ?

What is the probability of a "supply zone" as you define it failing to hold as in this case ?

If the supply zone had held, what was your expected profit target ?

How do you know where to get into the trade once price enters the supply zone ? Top, middle, bottom , somewhere else in the zone ?

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that is not correct supply zone, the area you entered is in the middle of nowhere, the edge should be at the top or bottom of zone, the danger area is the reaction low before the high, which is the zone bottom I drew, but when price returned to that danger area, we saw a strong demand bar breaking that area, we know demand resumed and overcame supply, no short trade should be taken before we see new supply appears.

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Yes agree with supermht.
Looks like a pocket fill and continuation to me also.The squeeze was on here for sure.

I learnt a lesson doing this on CL a few years ago trying to sell down a market that was ripping.Never again.

My rule is if price is rising I'm a buyer with momentum.If price is falling I'm a seller.
Only after an obvious shift will I get involved.
Price is never to high to buy.And just when you think it can't go any higher it absolutely will and leave you wondering why you were selling against sentiment in the first place.
I gave up predicting turns and focused on trading current price movement with momentum.

rgds

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My opinion on your trade is that it was correctly envisioned but it did not work due to strong demand in line with higher time frame in the context of the sentiment created by the retail sales report. But the area was spot on and could have worked in the absence of the strong sentiment. This is just a trade and your reasons to take it have nothing to do with the final outcome. The trick is to be consistent in your approach.

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