Sam Seiden-Understanding The Exact Process Behind The Movement In Price

[joshdance 10]

he always told us to call things as they are-supply and demand.Sup/res can mean fib.ret. MA,pivot point or whatever.

 

I've never heard anybody call a fib retracement, MA, or pivot point "support" or "resistance." A moving average is a measure of value--it's the mean price over the last X bars, whether that be closing price, typical price, or whatever. A pivot point, if you mean a pivot calculated using something like (H+L+C)/3 or any other formula, is again a measure of value. Nowhere is there implied that there's some type of support or resistance associated with either of those.

 

We're really just parsing words--"support" means buyers bought and "supported" price. There was enough demand at that level to cause prices to rise from there. It's just terminology, and Sam does a very good job at making "supply and demand" sound unique, but it's all different terms for the same thing. I actually like the terms supply and demand better, but to say that they are fundamentally different from support and resistance is a mistake, IMO. If you disagree I'd like to know exactly how they are different.

[VTK 10]

I've never heard anybody call a fib retracement, MA, or pivot point "support" or "resistance." A moving average is a measure of value--it's the mean price over the last X bars, whether that be closing price, typical price, or whatever. A pivot point, if you mean a pivot calculated using something like (H+L+C)/3 or any other formula, is again a measure of value. Nowhere is there implied that there's some type of support or resistance associated with either of those.

 

We're really just parsing words--"support" means buyers bought and "supported" price. There was enough demand at that level to cause prices to rise from there. It's just terminology, and Sam does a very good job at making "supply and demand" sound unique, but it's all different terms for the same thing. I actually like the terms supply and demand better, but to say that they are fundamentally different from support and resistance is a mistake, IMO. If you disagree I'd like to know exactly how they are different.

 

Hey Josh...

A fib. trader would pick something like 61.8% retracement,wrap some rules around it and trade it as he/she would assume that price found sup/res.I have heard many times people saying price found sup/res at MA.

If you look at the chart you will see that MA alone gave sup/res only once, but it failed miserably most of the time.But when it was in confluence with S/D level it worked fine.Note that in this example it's same with 61.8.

Both fib and MA could be understood as sup/res but more often than not they work fine when they are in confluence with S/D levels.

So for me one is illusion other is reality.If you look just at terminology it's same thing i agree with you but technically it could be understood differently so i like to call those levels for what they are representing-supply and demand imbalances.

Best,

VTK

 

P.S.

Sorry for messy chart!

 

[Peterthemonkey 10]

Though I agree with most of what you said VTK, I disagree slightly here. Orders are filled of course, but new orders can be placed. Potential buyers may in fact see a level holding and become more convinced that it will continue to hold, and put more orders in, so that the price level becomes more solid. More visits to a price area really only objectively indicate one thing--interest in that area. The future probability of an area to either hold or break could be statistically measured, and I would give some weight to this, but conceptually, it's a toss-up.

 

All levels will eventually be broken, yes, but the argument that a level which is touched once, which is not as important, is more likely to hold than a level that has proven multiple times to be important, is not a sound argument, unless it is backed up with some data. Visually on my chart I see many "peaks" which are simply ignored the next time they are visited. Yet, I see many bases, or proven areas, which continue to provide that support. Visual testing as this is pretty useless, but I would like to see some actual statistical data that would give weight to the concept.

 

Based on the videos I've seen, Sam approaches this issue from the perspective of having worked on the pits handling order flow.

 

As an example:

When there is a large, possibly institutional order to buy at a certain price level, prices will eventually rally up from this level due to orders imbalance, provided they overwhelm opposing orders. When prices subsequently retrace back to the level where the large order is sitting, the remaining number of unfilled orders will be less than before. On a subsequent cycle, even fewer.

 

Of course, this doesn't account for the "then and now" evolving circumstances as you noted. My take on this is that we can't possibly account for every price move, but we can specialize in a few.

[doubletop11 10]

Of course, this doesn't account for the "then and now" evolving circumstances as you noted. My take on this is that we can't possibly account for every price move, but we can specialize in a few.

 

That is very true! No system can account for everything. But zones theory can account for 90% + from my personal experience.

[joshdance 10]

A fib. trader would pick something like 61.8% retracement,wrap some rules around it and trade it as he/she would assume that price found sup/res.I have heard many times people saying price found sup/res at MA.

 

By the way VTK, I enjoy having this discussion, please don't think I'm being argumentative or picking an argument here ;-)

 

What you seem to be missing is this--while demand being greater than supply is the underlying reason for prices rising, WHY was demand higher? In other words, why did buyers want to buy there? Was it because of a news report? Was it because enough buyers saw the same fib retracement level, or had the same MA on their chart? Was it because of a previous price level that had held before? Was it because enough big traders got together in a secret room and decided to move the market? Did an algo go nuts and buy more than it was supposed to? We have no idea, and never will, WHY demand was greater.

 

All we know is that the resulting movement in price indicates that demand was greater. But saying that "price rose because demand was greater" does not describe WHY traders bought at that level. Perhaps some bought because they looked left and saw prior support, but perhaps many who bought do not even use charts to trade, and are trading off of a news item. Or perhaps enough traders liked the 200MA and used it. Neither you nor I can say that an EMA, or that a fib level, or any other measure where traders place value, was or was not the CAUSE for the demand. Keep in mind that you're identifying PRIOR supply and demand, and this may or may not affect current supply or demand, at that same price.

 

Support and resistance levels (or call them supply and demand levels) only "work" for one reason--traders pay attention to them. Prior supply and demand at a price is only significant if enough traders TODAY put significance on that price and want to buy or sell it. Simple as that. S/R, or S/D, is not magic, and is no different than a pivot, EMA, phase of the moon, or news item--it only works because people pay attention to it.

[insideday 10]

Marplex has posted a nice indicator and video for S/R zones. Program 16 | Potential Horizontal and Vertical Turning Lines

 

It counts how often a zigzag extreme occurred at the same levels and then plots the highest values.

[Nvesta81 10]

But I want to create my own program. Now I'm so sad.

 

My day job is software development so I understand the inclination to want to program all things and be challenged etc. However, I must say that when it comes to pattern recognition and identifying "zones" in the market -- is something us humans are very good at and can do with very little effort as opposed to programming all the steps for a computer program to do it. (time is money)

 

I think your time would be better spent studying the market in general than programming something like this. You can identify these zones and draw them out on a chart in as little as 2 minutes, whereas programming something similar might take you weeks/months...

 

Is it really worth your time? I also wouldn't pay a dime to someone who programmed something like this when I can spot the patterns myself for free and while doing so might learn something about the chart I'm looking at... :missy:

[VTK 10]

Is it really worth your time? I also wouldn't pay a dime to someone who programmed something like this when I can spot the patterns myself for free and while doing so might learn something about the chart I'm looking at... :missy:

 

Great attitude mate!

Also i would add that it's quite easy to spot those S/D levels just by looking for strong rallies or drops.

 

By the way VTK, I enjoy having this discussion, please don't think I'm being argumentative or picking an argument here ;-)

 

No worries mate.I can sense hostility.That's why i was so direct with Gabe..

 

 

We have no idea, and never will, WHY demand was greater.

 

I agree with you and to tell you the truth i don't care for exact reason as long as i can find S/D patterns on chart.

 

Support and resistance levels (or call them supply and demand levels) only "work" for one reason--traders pay attention to them. Prior supply and demand at a price is only significant if enough traders TODAY put significance on that price and want to buy or sell it.

 

I am taught to think in terms of order flow.So how it usually looked on CME for Sam-is transfered into mine way of thinking about S/D.He worked on a desk where he was getting orders by phone from big institutions.And for example he had really big stack of orders to buy Yen between 81.15 and 81

Let's say that price was falling for some time and it was at 81.50.As it was getting closer to 81.15 phones would start to ring and people were excited and wanted to sell after drop in price.Those were generally retail/novice traders.As soon as price came to 81.15-81 area of demand buy orders were filled and when last sell order was filled price would go higher usually leaving unfilled buy orders at area of demand.So when price came next time to same area of demand it met unfilled buy orders and if there were enough of them it rose again from the level.

I am not countering you here or anything.Just wanna show you way i see whole stuff.Basically i told and explained my self in previous posts and there is not much more to say.I'm fine with different views of others as mine edge is in thinking differently than majority.

Just to put picture to words here is long on USDCAD that hit limit last night.

Best,cheers!

 

[VTK 10]

Here is how USDCAD trade ended up.Risk/reward 1:7

 

 

Cheers!

[JohnHL 10]

Just received an e-mail announcing a Sam Seiden webcast tomorrow (Saturday).

Here is the link for registration:

 

Webcasts Details

 

Apologies to those who already know this.

Regards

John

[Derutrade 10]

Hi guys,

 

This is my first post on this forum. I watched sam's webinars and decided that it might well be a method I'd like to employ, so I did a little googling to find more info and ended up here.

I'm in the demo trading phase of my trading career, hoping to get to a stage where I'm able to make a little profit instead of dragging my virtual account a further into the mud with every trade I make.

 

I've read through this thread and taken a look at the charts posted by Gabe. One of them in particular raised some questions with me. Gabe was wondering why the areas marked as 'not demand' are not used to take trades. Purely using what I have on the chart and lacking higher timeframe supply or demand levels, I've drawn in the areas where I could see myself entering a trade:

 

 

Areas in red are levels where I would've entered a trade and lost, and green is good, naturally! So we're looking at one really good trade and two fairly small losses.

I'm aware that there is no way to eliminate losing trades, but I'm still curious if those two losses are badly placed trades.

As such, my question to anyone familiar with sam's method, would you have avoided those two losing two demand levels? If so, why?

[doubletop11 10]

Hi guys,

 

 

As such, my question to anyone familiar with sam's method, would you have avoided those two losing two demand levels? If so, why?

Hey Derutrade,

 

The way that I see and trade it is to always look for timeframes of confluence. the 5 min timeframe alone is not enough to hold price. but when we have a 30,15, 5min time frame in confluence and maybe a 377 tick zone or something small to really give you a nice tight stop. That's how you can really "bring home the bacon!" When you have so many time frames in confluence it's what I consider a trend reversal trade. So you are really excepting for price to bounce and give you a good trade! Many zone traders tend to start out as reversal traders which is good and bad. Smaller stops, good RR, but everything seems like a reversal at the beginning.

 

The other way to approach it is to use the zones for trend following. This is where I use the 5min as my highest timeframe with my 377tick and perhaps another small time frames to get me in a trend move. On the ES, watch these trades closely and move your stop up to BE +1 after 10 ticks or so. You want to lock in and at least pay for your trade so that way it's a "free trade" so that no matter what happens you make money and your brain stops stressing out!

 

Another suggestion: Please consider watching the Euro(6E,EC) and the NQ or YM. The ES is the choppiest. Unless you really know what's going on you will get chopped out. Looking at the 5min chart on the ES causes me to see zones everywhere and can really lead to overtrading the zones quickly.

 

Hope this helps to get you profitable from the get go. You can also join a group of zone traders on skype. Let me know if you want in.

 

Here's a little simple video that will hopefully help you a little bit. Yes, trading is completely a probability game! You have to take every setup that matches your rules. Trading will always be hard though. Simple rules help.

 

http://apazones.com/wp-content/uploads/TLQA.mp4

[Derutrade 10]

Hey Derutrade,

 

The way that I see and trade it is to always look for timeframes of confluence. the 5 min timeframe alone is not enough to hold price. but when we have a 30,15, 5min time frame in confluence and maybe a 377 tick zone or something small to really give you a nice tight stop. That's how you can really "bring home the bacon!" When you have so many time frames in confluence it's what I consider a trend reversal trade. So you are really excepting for price to bounce and give you a good trade! Many zone traders tend to start out as reversal traders which is good and bad. Smaller stops, good RR, but everything seems like a reversal at the beginning.

 

The other way to approach it is to use the zones for trend following. This is where I use the 5min as my highest timeframe with my 377tick and perhaps another small time frames to get me in a trend move. On the ES, watch these trades closely and move your stop up to BE +1 after 10 ticks or so. You want to lock in and at least pay for your trade so that way it's a "free trade" so that no matter what happens you make money and your brain stops stressing out!

 

Another suggestion: Please consider watching the Euro(6E,EC) and the NQ or YM. The ES is the choppiest. Unless you really know what's going on you will get chopped out. Looking at the 5min chart on the ES causes me to see zones everywhere and can really lead to overtrading the zones quickly.

 

Hope this helps to get you profitable from the get go. You can also join a group of zone traders on skype. Let me know if you want in.

 

Here's a little simple video that will hopefully help you a little bit. Yes, trading is completely a probability game! You have to take every setup that matches your rules. Trading will always be hard though. Simple rules help.

 

http://apazones.com/wp-content/uploads/TLQA.mp4

 

Thanks for the explanation, the video definitely helped. Every so often I find myself running into tips or advice I've already known about for some time but magically forget whenever I'm looking through the charts. Multi timeframe analysis is one of those things, but your video might have been the last push I needed to actually start using it.

 

I think I'd be interested in the skype group as well, although I'm a skype noob and not entirely sure what to expect there.

[VTK 10]

The way that I see and trade it is to always look for timeframes of confluence.

 

Derutrader,douletop is right.Sam picked lowest level as it was drop-base-rally on higher timeframe like 60 or 30.

Also when going for extremes,one side will be exhausted and profit margin will be much nicer.Think of it as you are stretching rubber band.More you stretch it more it will snap back eventually.

[Romant 10]

Hello. English is not my native language, so sorry if something is hardly to understand or written incorrectly. I started trading about 4-5 monts ago and I've seen Seiden's webinar for the first time about 2 months ago, really liked his understanding of market. When I tried to trade with his strategy, it went really well. The profit was about 100% in two weeks, but then something has gone wrong. In the last week of September (when it was huge down-trending market), I began to lose and since then had NO profitable week. I tried to understand where were my mistakes,but couldn't. I'd be pleasant if someone could answer some questions from me on Seiden's strategy. May be your answers will be pleasant for somebody else.

 

First of all, is the trend really important for trading with S\D zones? Or it doesn't matter, market will return on the correctly defined S\D zones?

If you've got a stop-loss, you'll take the trade in the opposite side or will be waitng for the next zone to trade the same way?

P.S. Could someone post an order of analysing a probable trade? (ex.: 1.Look for the Daily S\D zones. 2. Swith to 1H and search for smaller S\D zones... )It'll be very good for newbies like me. Thank you very much!

[doubletop11 10]

First of all, is the trend really important for trading with S\D zones? Or it doesn't matter, market will return on the correctly defined S\D zones?

If you've got a stop-loss, you'll take the trade in the opposite side or will be waitng for the next zone to trade the same way?

P.S. Could someone post an order of analysing a probable trade? (ex.: 1.Look for the Daily S\D zones. 2. Swith to 1H and search for smaller S\D zones... )It'll be very good for newbies like me. Thank you very much!

 

I will post some videos for you and you are more then welcome to come hang out with all of us Zone traders in the APA Zones community!

[Romant 10]

I will post some videos for you and you are more then welcome to come hang out with all of us Zone traders in the APA Zones community!

 

Oh, it will be really great! Thank you very much.

 

P.S. As we know, Sam in his webinars and articles explaines much, but not everithing, so it will be very helpful for me(and not for me only, I'm sure) if you could explain the details.

[edmccall1 10]

i think there are many things traders aren't focusing on IMHO. I think rally, base drops should be at swing highs and lows and not in the middle of the moves. So one might have to drop down to a smaller time frame to see it. Also probabilities at greater the first time back to these zone. Also incorporate the Odd enchancers into the scenario into the picture....Remember the win/loss ratio isn't a high percentage for S&D as told to me......but the important part is that it defines and minimizes your stop/loss.

 

I use S&D in conjuction w/ other stuff....the more of the other stuff I can get to align I feel the greater of the probability of the trade going in my favor. It's all a calculated risk.

 

Methodology is just one part....don't forget management and mind set. (3M's)

 

Once in a trade I’m an observer of my rules. I try not to judge them. I let them work for me and have confidence in them. A stop is part of my plan along w/ management and profits.

[Romant 10]

i think there are many things traders aren't focusing on IMHO. I think rally, base drops should be at swing highs and lows and not in the middle of the moves. So one might have to drop down to a smaller time frame to see it.

 

You know, the strategy, we are talking about could be understood in different ways. For ex., Sam Seiden in his webinars sometimes marks the S\D zones in the middle of the moves.But I fully agree with you and consider, that the real "turn-around" zones are at highs and lows. In the middle of the moves price pulls back very rarely.

[VTK 10]

I think rally, base drops should be at swing highs and lows and not in the middle of the moves.

 

Yup,it's like rubber band.More stretched price is greater the odds that it will turn around.Usually i don't do anything when price is "in the middle",right between two key areas of S/D.

 

 

Remember the win/loss ratio isn't a high percentage for S&D as told to me......

 

Wouldn't agree at all!

It's quite individual meaning that personal experience,understanding,approach...will determine ones W/L ratio.And after all W/L figure is not important.Profit factor is important.

[doubletop11 10]

Here's the basic idea that I use when looking at trends, as well as if I'm going to do a trend reversal trade or a trend following trade.

Knowing which one to use is extremely important. I know a lot of zone traders tend to be just reversal traders. So hopefully these videos help with that a little.

 

[ame=http://www.youtube.com/watch?v=m2cAXvUB4p0]APA Zones Basic Zone Assessment - YouTube[/ame]

[ame=http://www.youtube.com/watch?v=lhvXzMGbuwU]APA Zones Assessment 2 - YouTube[/ame]

[joshdance 10]

Thanks for the videos -- you should download and use camstudio, it allows you to record videos longer than 5 minutes unlike screencast which cut you off.

[doubletop11 10]

thanks Joshdance I will look into that. Haven't heard of that program before!

[VTK 10]

Here is something that i find most interesting.It's like price is anticipating an event.

Have noticed same thing when US got downgraded,S&P was at big picture supply,trading lower for couple of days and than the news came out.

 

http://www.sierrachart.com/userimages/upload_2/1320229393226.png

[joshdance 10]

Here is something that i find most interesting.It's like price is anticipating an event.

Have noticed same thing when US got downgraded,S&P was at big picture supply,trading lower for couple of days and than the news came out.

 

http://www.sierrachart.com/userimages/upload_2/1320229393226.png

 

Next time you should post the supply level in advance.