Lessons from the Pros

Featured Article

The Key Question for Traders and Investors

Where will price turn, where will price move to?

The question above is the most important question to the trader and investor in any market. You can be the top fundamental analyst in the world and know your data inside and out but it all comes down to where price will turn and where price will go. To answer this question requires a simple focus on one thing and one thing only, buy and sell orders (demand and supply). Most people focus on the market turning and timing portion first and foremost but that is only half the focus. The focus of today’s piece is to help you predict where price will move to and we will do that by looking at a trading opportunity offered in the Mastermind Community last week.

DAX Futures 11/7/14 Daily Market Overview Income Trade – Profit: $1,365.00


The key is to know how to identify where banks are buying and selling. Specifically, what the picture of demand (unfilled buy orders) and supply (unfilled sell orders) looks like on a price chart. The trading opportunity was found by using the Daily Market Overview in the Mastermind Community. The trade was to sell short the DAX at a fresh supply zone as noted on the Daily Market Overview and the yellow box on the chart. Once price falls away from that yellow shaded area, the price pattern and odds enhancers tell us banks are selling the DAX in that area and that not all their orders are filled. In short, we have a fresh supply zone. Whether we take the trade or not depends on one more important factor, where is demand. Once supply is established, we need to know where banks are buying, where significant demand is. The circled areas on the chart are pivot points which is where conventional technical analysis “support” is. Meaning, most people expect price to stop falling and turn higher at those pivot lows (circled areas). At Online Trading Academy, our rules and logic tell us those pivot lows are not demand and we expect price to fall right through those levels. The picture on the chart in those area’s does not represent unfilled buy orders and remember what I said above, this is all about the buy and sell orders, nothing else. There is a reason you don’t see many people making any money from conventional technical analysis trading books.

So, the simple reason I sold short was because there was fresh supply and no significant demand below. In other words, we had a ceiling and the floor was much lower. All this can be clearly seen in the charts if you know what you are looking for and have a razor sharp focus on orders. The blue area is the entry point for the trade, selling short to a buyer who was buying after a rally in price and at a price level where supply clearly exceeded demand. This short term income trade worked out for a $1,365.00 profit during the morning trading session. Whether you are trading for short term income or long term wealth, whether you are buying or selling, nothing in this piece changes. By focusing on where the significant buy and sell orders are in the market, you will answer the two most important questions.

  • Where are prices going to turn? Price will turn at fresh supply and demand levels.
  • Where are prices going to move to? Price will move through levels where there is a lack of supply and demand.

Price in any and all markets simply moves to and from supply and demand levels. Understand this simple concept and unlock a life time of low risk, high reward, and high probability trading opportunity. For more on this concept, read some of my prior articles or join us at a trading workshop.

Hope this was helpful, have a great day.

Sam Seiden – sseiden@tradingacademy.com

DISCLAIMER This newsletter is written for educational purposes only. By no means do any of its contents recommend, advocate or urge the buying, selling or holding of any financial instrument whatsoever. Trading and Investing involves high levels of risk. The author expresses personal opinions and will not assume any responsibility whatsoever for the actions of the reader. The author may or may not have positions in Financial Instruments discussed in this newsletter. Future results can be dramatically different from the opinions expressed herein. Past performance does not guarantee future results. Reprints allowed for private reading only, for all else, please obtain permission.

Join over 170,000 Lessons from the Pros readers. Get new articles delivered to your inbox weekly.