A trade's chance of success improves when it is followed on a short-term. Multiple timeframe analysis is paramount when trading any strategy, supply and demand is not an exception. We can use a 2 timeframes or 3 timeframes combination for our entries. I will personally use a 2 timeframes combination, because it is more stress free and it allows for more free time, which prevents me from watching the charts like a zombie. This is the chart where we should draw and pick our levels up, where we will set our limit orders.

If the H4 level is too wide, we can drill it down by using either a fix number of pips for instance a 40 pips on EURUSD for H4 charts or a third timeframe to fine tune our entry. I will not zoom in and look for levels on lower timeframes above or below that area because it's the H4 area that interests me, if the level itself is on H4 then I have to base my decisions on this timeframe, the one I use for my entries as defined here.

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I never use this third timeframe, will never go lower than H1 to locate fine tune my entries, but maybe you will feel comfortable adding it. NOTE: H1 timeframe can also be used for swing trading as long as you use this chart to drill down your entry at a higher timeframe supply demand area. It all depends on your style of trading.

H4 levels will give you more time. Hide the timeframe buttons you are not going to use on Metatrader's top toolbar, only be aware of those you choose, that's all. You will see that in short you will start improving because your mind will not have to take into account so many timeframes and information.

Forex Factory - Supply and Demand in A Nutshell by Alfonso Moreno

So concentrate on at least 2 timeframes, choose the combo you like the most. You MUST have very strict rules or you will be lost in a loop, and your equity will not grow. And that can be solved by having very strict set of rules and following them. The key to be consistent is by being consistent. Each timeframe can have a different trend. Let me define my idea of a trend.

Remember it's just my idea of a trend, it makes sense to me so I'm using it. Does it make sense to you? Use it then. Since we are primarily working with supply and demand imbalances, making a higher higher or a lower low does not necessarily mean we continue on the existing trend. If previous supply is not taken out, I won't validate the origin of a higher high as demand 2. If previous demand is not taken out, I won't validate the origin of a lower low as supply. You can use trendlines these can help to assess trend if you have the right rules. I am not using any lagging indicator to assess the trend, since the only non-lagging indicator I know of is Price itself.

I'm doing something much much simpler than that.

Forex Factory - Supply and Demand in A Nutshell by Alfonso Moreno | Demand | Supply And Demand

Ask yourself this question: what type of trading are we doing? Aren't you trading the supply and demand imbalances you see on a price chart? We want to trade at those areas where the institutions left a trace, where smart money is lurking to hunt you. Remember, buy low in and sell high. Just look at your D1 or your WK chart and see what is going on with the SD areas in control and decide which direction to trade. Once you know what direction you want to go, locate lower timeframe SD areas with a strong departure, little time at the level, fresh zones, and a minimum of profit margin 3 times or more the risk in pips of the zone you've taken.

What tells you if a downtrend or an uptrend has started to change or even consider there might be a reversal? Since we're doing SD trading, once you supply or demand in control is taken out, it will be showing weakness in that currency pair's timeframe.

We will consider a trend at any given timeframe has ended IF the trendline that connected the last 2 obvious valleys uptrend or peaks downtrend has been broken. We need to make sure that price has arrived or is very close to a higher timeframe area, ELSE we'll have to make for a brand new direction to the opposite side Do not trade the break of a trendline just because it's just been broken, we need to assess location in the curve. The greater the imbalance, the greater the move. A strong move in price away from a level indicates that not all orders were filled.

For example, at the origin of a demand level, there are not enough sell orders to fulfil the total amount of buy orders.

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This is why price moves away in such a strong fashion. When price returns to these levels, the novice traders those who don't know about supply and demand are selling into an area where institutions professionals have their buy orders. Institutions and professionals buy to the novices, then there are no more sell orders so price must rise again. The opposite holds true for supply levels. In both cases, the novice traders provide the liquidity the institutions need to get their orders out in the market.

The best opportunities are where we can buy at the cheapest price possible and sell and the most expensive price possible. This is the same in any market. Supply and demand levels on a price chart show all these levels, you just have to learn how to draw them. Open a price chart, you will see a multitude of supply and demand levels on every timeframe. That doesn't mean we are interested in trading all of them. Certain levels are more likely to hold than others, you need to have a rules based mechanical methodology as well as making a top down multiple timeframe analysis before you choose the levels you want to trade.

These are some common factors to consider when choosing levels to trade from are listed below:. Strength of the move departure. This is the way in which price left the level. Ideally quickly with large ERC candles 2. The big picture. Choose to trade with the higher time frame's trend.

Know where you are in the Daily and higher timeframes, never go against them 4. Number of pull-backs or retests.

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Has it been tested more than once? Fresh levels are best for trending markets, the fresher the level the higher the probabilities 5. Time spent at the level. The less time prices spends at a level, the better. This indicates a greater supply and demand imbalance 6.

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Arrival to the newly created level. Basing before a level is not a good sign. Opposing levels near your entry level subtract profit margin from your area.

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Look for a smooth rally or drop into your entry level. But you don't want to spend the whole day staring at the charts, you have to trust your levels and analysis 7.