Well, this is something that took me 4 months to get so I can't really teach this in a comment... You have to go through a process to learn this but maybe I can point you in the right direction. The most basic explanation of supply/demand is that the market is WEAK when it's rallying and STRONG when its crashing. The losers buy at the top because they think the market is strong, the news is good, everyone wants to buy... this is high demand, but it very quickly turns into no demand and tons of supply because the professionals who bought near the bottom needs all these losers in order to unload their massive positions - someone must buy! A clear sign of this is when the market blows straight up 90 degrees at the top... And once that happens, the market drops because there is nobody left to buy - hence no demand...
This is called distribution. At the bottom, when everyone has panic sold, accumulation begins. Once the professionals have accumulated pretty much all of the floating stock supply, there is no supply so the market will go up on the laws of supply and demand... and the whole thing starts again... every day, in every timeframe, at every moment.
There are various tools out there to gauge this so I can't tell you what to use but the information is in the Volume (how much, and is the volume bearish or bullish) and the spread of the bar (what happened on that volume). I trade Volume Spread Analysis, I don't give a pennys worth to trading fundamentals or TA (stochastics, MACD, etc, other ways of trying to predict future price from past price)... Not because they never work - but they merely distract me - every form of therapy works some of the time for some people! But the market often does the opposite of what TA tells you... just like the news... yet strangely enough tons of traders still rely on it!
I have one execution platform (I trade CFD's through CMC) and one analysis platform (TradeGuider). I learned most of this from the works of Tom Williams who was a syndicate trader in the early days. Read his book "Master the Markets" and your eyes will open. VSA is based on Richard Wyckoffs work from around 90 years ago. The same rules still work. Today 90% of traders lose 90% of their capital in 90 days because they don't understand they are up against professionals and you can't win if you don't become one and surf behind the smart money - if you're in front of them, they will simply eat you for lunch because they can easily predict how you think and react to them.
Another funky tool is BookMap that shows the orderflow in a very intriguing way. There are many tools that will show you the order flow, (pretty much any DOM will show you the order flow - as that IS the order flow)... I can see it change in the chart now without a single indicator (I only use 100 and 200 EMA anyway - nothing else, to me, all the TA is just distractions from what matters...)... but that takes practice.
Jason Alan Jankovsky wrote a good book called time compression trading too...
Last edited by itradeit; September 5th, 2014 at 04:36 AM.
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About the spreadsheet... I realized that it helps a lot to get good at google spreadsheet. I use it mainly for risk managment (R multiples) and for compounding calculations and expectancy calculation, so I know I have a good system. I recommend to create your own spreadsheet - you will learn building a solid trading system that way.
The advantage is that at one point you will know that your SYSTEM works marvelous but you don't... then you have to fix your emotions... becasue I learned that's how the pro's really take your money... you can have the best system in the world but if they can still wrap you around their finger with shakeouts and if you still are a prey to your own subconscious mess with greed and fear of loss, you'll still drawdown...
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The symbol for FXCM's DAX instrument is GER30. However, I notice that your forum profile mentions that you live in New York (like me). US regulations allow us FXCM to offer forex to American residents, but not CFDs like GER30. Non-US residents can trade CFDs for stock indices, metals and energy through FXCM's international entities in the UK, Japan, Hong Kong and Australia.
PS: Are you from Trinidad? I'm a huge fan of Brian Lara and was at the Kensington Oval to see his final World Cup match in Barbados.
If you have questions about our services at FXCM please send me a Private Message.
I have question about stop loss order (stop market order) and trading FDAX - 10 contracts.
My question is it possible that I have only 2 tick slippage if my stop loss target is hit during the day session (9 to 17.30).
I have plan to trade FDAX futures 10 contracts via CQGIC trading platform.
EDIT: I read your question a bit wrong, here is a correction...
You should try this out in sim mode, but one point in the dax is 4 ticks I think, and the dax is very volatile! When it drops really fast, it can drop 10 points in a second... If some professional syndicate or market maker robots makes a rapid whipsaw move for stop hunting purposes, it can go 20 points up and down in half a second, and there will be a little slippage. These moves are rare how ever... but the slippage can then be a few points, usually not more than 5 at worst... normally you get filled immediately, I trade CFD's on DAX and I'm always executed within milliseconds in 97% of the cases or so.
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