Ollio's Gold - Supply and Demand

Market Trend vs Market Cycle

Which method is better, trend following or market cycle trading?

The concept of market cycles is uniquely defined within Supply & Demand trading methods only. Most traders know and agree that fluctuations in market Supply & Demand are what causes the financial markets to alternate between Long and Short market cycles. A Long Market Cycle being one which reflects periods of increasing Demand for an instrument while a Short Market Cycle reflects periods of increasing Supply for an instrument.

Since Long and Short market cycles are the result of fluctuations in market Supply & Demand, it follows that if Supply & Demand can be accurately and reliably measured, one can also reliably determine and reasonably predict the corresponding market cycles.

Because market cycles can be clearly defined, it is possible to detect changes in market cycles (i.e. Market Cycle Reversals) at a very early stage meaning either before they occur or as they occur.

The ability to detect changes in market cycles at a very early stage is the main reason market cycle trading tends to be more profitable, generally speaking, than trend following.

Most Frequently Asked Question

Why is it that I have been learning to trade Supply & Demand for many years yet I have never been taught how to identify and trade market cycles?

First let me say that, as surprising as it may seem, this is probably the single most common question I am being asked by traders who have been trading so-called Supply & Demand methods for many years!

At first glance, this may seem to be a very surprising question coming from experienced Supply & Demand traders however it really isn't surprising at all!

The answer is simple, most conventional Supply & Demand methods are unable to accurately and reliably calculate the true levels of market Supply & Demand. In fact, a significant number of Supply & Demand methods currently being taught attempt to visually identify and determine market levels of Supply & Demand directly from the charts.

Such methods are unable to rigorously define market cycles. Consequently, their proponents are left unable to teach traders how to trade market cycles.

True Supply & Demand traders trade market cycles only.

Supply & Demand trading is all about trading market cycles.

Market cycles dictate how you should interpret and trade your Supply & Demand zones. Supply & Demand zones per se should never be traded independently of their market cycle.

The chart below is an example of how the FIA is able to detect and predict Market Cycle Reversals (in this case, the end of a Long and beginning of a new Short market cycle) ...

The FIA Trading Plan

It is a well known fact that most traders enter the market without a well thought out trading plan. Most traders choose not to prepare a trading plan because of the amount of effort involved in preparing one.

Traders who choose to enter the market without one increase their chances of incurring significant loses due to a lack of planning and strategy.

With the FIA, traders do not need to spend countless hours preparing a trading plan.

The FIA trading plan is always clear and simple:

(1) in a Short Market Cycle, traders need only "Sell the Highs". Optionally, only when appropriate, traders may choose to hedge their Short trades instead of using a Stop Loss. In a SMC, traders should always consider using a Stop Loss on their Long trades.

(2) in a Long Market Cycle, traders need only "Buy the Lows". Optionally, only when appropriate, traders may choose to hedge their Long trades instead of using a Stop Loss. In a LMC, traders should always consider using a Stop Loss on their Short trades.

(3) Take Profit: traders can set their take profit levels based on the key technical levels indicated by the Highs and Lows or they can wait for Market Cycle Reversals to take their profits.

Market Cycle Reversal - beginning of a new Short Market Cycle

On the Day chart below, traders can see yet another example of the FIA's early detection capability in terms of Market Cycle Reversals.

Although I have not indicated it on the chart, the reversal on the Day was observed after it had been first detected on the 8 Hour.

In other words, the reversal first occurred on the 8 Hour timeframe followed by the Day.

According to the FIA, the Short Market Cycle began on 4/19/2017 on the 8 Hour while the Day followed on 4/23/2017.

On the chart below, traders can see that the market has now reached the target levels calculated and indicated by the FIA on 4/24/2017 as per my previous post.

This is yet another example which demonstrates the FIA's telling ability to predict market direction and target levels.

Hello guys,

Just wish to share a trade I took recently. Has anyone latch unto this high RR trade?




Let me know if you have any question?

Cheers!

Hi FxHarvester,

Your supply zones are incorrect on all timeframes!

It is the most common mistake made by the vast majority of traders who use so called mainstream Supply & Demand methods taught and promoted on many threads here on Forex Factory and elsewhere ...

(see www.forexfactory.com/panoramia or at www.set-and-forget.com Supply and Demand Trading Community where your charts originated from).

As a direct result, your analysis is not scalable and will only serve to produce poor results because of the significantly high margin of error inherent to your analysis.

Traders that use Supply & Demand methods which offer a high margin of error must compensate by using very small position sizes as evidenced in your post above (i.e. your very small position size of 0.32 lots can only result in a very small profit).

In other words, poor quality Supply & Demand analysis forces amateur traders to play defensive and lower their risk by entering the market with very small (i.e. tiny tiny tiny) position sizes which inevitably translate into equally low profits for traders.

Furthermore, note that you have exited your trade at the wrong time which resulted in substantially lower profits! Poor Supply & Demand analysis methods also cause traders to exit their trades prematurely. This is yet another defensive behavior which always leads to suboptimal profits.

Lowering risk by using small position sizes and exiting the market prematurely are two defensive behaviors that, when combined over time, will have a negative compounding effect highly detrimental to a trader's overall performance and profitability.

Both of these unwanted behaviors are a direct result of using a poorly designed Supply & Demand analysis method which requires traders to compensate for the inefficiencies and inaccuracies of their underlying method.

Cheers,


Jack

Hi FxHarvester,

The chart below illustrates the 3 main points I made in my previous post ...

(1) poorly designed Supply & Demand analysis method,

(2) incorrect Supply & Demand zones,

(3) premature exit.

Poorly designed Supply & Demand methods provide traders with significantly higher risk entries along with significantly lower profits.

Cheers,


Jack

Frequently Asked Questions

Is Gold the only instrument one can trade with the Financial Instrument Analyzer (FIA)?

No, the FIA can be used to analyze any timeframe for any financial instrument available in the financial markets including any of the following:

(i) Bonds,

(ii) Commodities,

(iii) Cryptocurrencies,

(iv) Currencies,

(v) ETFs (Exchange Traded Funds),

(vi) Stock Indices, and

(vii) Individual Shares.

Gold is the only instrument used on this thread to introduce traders to the features of the FIA.

What is the average R:R on trades?

Although at it's core the FIA method is based on Supply & Demand, to achieve optimal results (i.e. optimal R:R), FIA traders are taught to keep their trades opened throughout complete market cycles. Since both the duration and amplitude of market cycles vary for each individual timeframe, R:R varies accordingly.

Using the FIA, Supply & Demand zones are merely used as entries/exits within Short and Long Market Cycles. More conventional methods typically lack the concept of market cycles and as a result, traders fail to achieve optimal profits because such methods focus strictly on trading only individual supply and demand zones.

Furthermore, the FIA is uniquely designed to accurately establish risk based on the volatility of the instrument for each individual timeframe.

That being said, most traders will choose to use the FIA to suit their own preference, trading style and objectives.

How often are trades presented? Do you only ever use the Daily chart to spot and execute trades?

The frequency of trades will depend on the timeframes being used. Generally speaking, the higher timeframes will generate less entries/exits than corresponding lower timeframes.

Also note that timeframes lower than 8 Hour are not available to retail traders. On average, the FIA generates anywhere between 20-30 signals/month on an 8 Hour timeframe which is usually more than enough for retail traders to turn in significant profits!

How does the FIA compare to other so-called Supply & Demand methods in terms of profitability?

That's an excellent question!

Anyone who has taken the time to carefully study and review my thread would have quickly realized that the FIA's key features constitute a significant edge over the vast majority of other more traditional so-called Supply & Demand methods (and any other method for that matter).

FIA charts are easy to read and easy enough for anyone to understand (or almost - )!

Perhaps the most important and noteworthy feature is the FIA's ability to actively monitor and track even the most subtle changes in market levels of Supply & Demand throughout Long & Short Market Cycles for each individual timeframe!

This unique feature means traders may be given multiple opportunities to enter the market from the beginning to the end of each market cycle. Each one of these opportunities to enter the market provides traders the ability to scale up their trades to achieve even greater profits!

In fact, when possible and appropriate, I personally scale my trades using a linear scaling algorithm (a conservative approach) to take full advantage of this key feature offered by the FIA to maximize my profits. Note that other, more agressive, scaling approaches could also be used by traders based on their individual trading style and objectives.

Because of this key feature alone, in many instances depending on the duration and amplitude of the market cycle, when properly executed, trading with the FIA could be as much as 1-30 and perhaps even more times more profitable than trading with traditional so-called Supply & Demand methods.

Finally, last but not least, the FIA enables traders to recognize and take full advantage of hedging opportunities which could be used to further increase a trader's profitability!

What do the monthly subscription fees cover?

The monthly subscription fees include all of the following:

(i) licensing fees,

(ii) maintenance and upgrade fees,

(iii) technical support fees,

(iv) hosting fees,

(v) live support (4 skype calls during the first month, 2 skype calls per month thereafter - scheduled duration for each call is 15 min.),

(vi) unlimited email support.

Also, monthly subscription fees will vary based on the number of timeframes and instruments used.

All fees are exclusively related to the FIA software only. We DO NOT offer financial services or financial advice of any kind be it account management, portfolio management, risk management, money management, trade management or other.

Below are the FIA charts for the 8 Hour and Day timeframes dated 06/01/2017.

Here's how traders should read and interpret the FIA charts posted above:

8 Hour:

(0) Low 00:00, 5/31/2017 - signals the end of a Short Market Cycle (SMC) and the beginning of a new Long Market Cycle (LMC),

(1) Establish Low 8:00, 5/31/2017 - signals the market will attempt to establish a new Low on this timeframe.

Day:

(0) Low 5/30/2017 - signals the end of a Short Market Cycle (SMC) and the beginning of a new Long Market Cycle (LMC),

(1) Establish High 5/31/2017 - signals the market will attempt to establish a new High on this timeframe.

The 8 Hour and Day timeframes are both in a Long Market Cycle. Therefore, in this market traders should prepare to go long.

Furthermore, the FIA warns traders that the market will first attempt to establish a new Low as per the 8 Hour BEFORE the market attempts to establish a new High as per the Day.

In other words, the FIA establishes a clear chronological order which suggests that traders ought to wait for the market to make a new low on the 8 Hour before going long on the Day.

What was the entry? At what level do I take my profit?

Trading market cycles using the FIA.

The charts below illustrate the FIA's ability to easily identify changes in market cycles on the 8 Hour and Day timeframes.

The first set of charts is a snapshot dated 06/01/2017 which shows the end of a Short Market Cycle and the beginning of a new Long Market Cycle on both the 8 Hour and Day timeframes.

While the second set of charts is a snapshot of the same two timeframes dated 06/08/2017, taken seven days later, which shows the end of the Long Market Cycle which began as per the previous charts and the beginning of a new Short Market Cycle.

With the FIA, traders know exactly when market cycles begin and when they end!

Which means traders know when to ENTER the market and when to EXIT.

Entering at the beginning of a market cycle and exiting at the end of the corresponding cycle (i.e. beginning of a new market cycle in opposite direction) is the optimal way to trade using the FIA.

Traders who have been paying attention and for the few of you who may have taken a short trade at the very beginning of the Short Market Cycle as indicated in my previous post, those traders now stand in profit by almost 4000 pips (based on Gold prices at 1247 at time of print) in 11 days!!!

Traders who have access to the FIA could have made significantly more by scaling in with multiple short entries as per intermediate High and Low signals generated by the FIA.

Furthermore, traders who would have entered the market at the beginning of the Long Market Cycle indicated on the first chart and exited the market at the beginning of the Short Market Cycle as per the second chart, would have made in excess of 2000 additional pips!

So far, we have a running total of approx. 6000 pips of solid profit for trades taken in both Long and Short Market Cycles since June 1, 2017 (19 days)!

In other words, traders using the FIA could have made 6000$ USD profit for each lot - assuming only 2 trades (1 Long + 1 Short), or

1 lot x 6000 pips (1 Long 2000 pips + 1 Short 4000 pips) = 6000$ USD

10 lots x 6000 pips = 60 000$ USD

100 lots x 6000 pips = 600 000$ USD

in 19 days!