5 Years of Sam Seiden Supply and Demand

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  • Day Trading Rules
    1. Only enter trades when price is at a support (demand) or resistance (supply) level, no matter what time of day or night.
    2. Two types of entries: Breakouts and first pullbacks (see below).
    3. Each day, identify one demand and supply level in each market, using a larger intra-day time frame. Always know where the market is in the larger picture with regard to supply and demand.
    4. Only trade opportunities that offer at least a 3:1 profit zone to the first target.
    5. Pre-plan and pre-set: Entry, Stop, Target/s.
    6. Don't get fooled by: News, Lagging indicators, Subjective information. Remember, any and all influences on price are reflected in price… Price is all we need.
  • A market is always in one of three states
    1. It can be in a state where demand exceeds supply which means there is competition to buy and that leads to higher prices. 
    2. It can be in a state where supply exceeds demand which means there is competition to sell and this leads to declining prices. 
    3. It can be in a state of equilibrium. At equilibrium, there is no competition to buy or sell because the market is at a price where everyone can buy or sell as much as they want. However, as the market moves away from equilibrium, competition increases which forces price back to equilibrium. In other words, competition eliminates itself by forcing market prices back to equilibrium. At equilibrium, there is little to no trading opportunity.
  • We look at weekly and daily charts each week to identify larger time frame demand and supply level for three reasons
    1. To know where existing trends are likely to end and new ones begin. We want to be first in line, at the right time, when the risk/reward is ideal 
    2. To know what side of the market carries the greatest odds for an active trader
    3. To identify longer term swing trading positions a. Such as the Pound Dollar short from May of this year.
  • Laws of Price Movement
    1. Price movement, in any free market, is a function of an ongoing supply and demand relationship within that market.
    2. Any and all influences on price are reflected in price.
    3. The origin of motion/change in price is an equation where one of two competing forces (buyers and sellers) becomes zero at a specific price.

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