Sam Seiden: Identifying High Probability Turning Points

okay so for those that have been here for a while and I see some of those names those names as well um just bear with us some of this might be some review but we'll take it nice and slow so let me give you a like 30 second high-level explanation of how I of how I kind of look at things right sounds should be fine for everybody so I come from the trading side of the business from the from the from the institutional trading side of business starting my career on the floor of the Chicago Mercantile Exchange I've never had a much exposure or I mean I I when it comes to technical analysis and fundamental analysis and you know all the conventional technical and fundamental analysis and all that stuff while I know all that stuff I I've never really paid too much attention to it as far as using it and there's reasons for that kind of real quickly you know if you think about any conventional technical analysis chart pattern or strategy they're all breakout entries all the strategies and all the price patterns and pictures have you buying after a rally in price and that selling after a breakdown in price sure most people have heard the terms head and shoulders top right well if you follow the rules of the conventional technical analysis then you'll know that the head and shoulders top for example as you shorty after a pretty significant drop in price right just like a triangle breakout to the upside for example or a double bottom if you're following the rules of the textbooks right all the technical analysis books out there you're buying after a pretty big rally in price and into a breakout okay I've never had an interest in doing that because that stuff's never made sense to me also haven't come across people that have been successful doing that stuff so even if even though it's in all the books and everything else doesn't mean it's necessarily right for you okay so the reason I say that is because when you think of strategies that have you buying after a rally and price breakouts and things like that think about it these are markets that we're trading here these forex market these markets are like this like all the other markets that out there we're looking at Forex charts right now but but we would we could be looking at the chart of your favorite food at the grocery store and we would handle it the same way right let me ask you this if you have a favorite food at the grocery store and imagine you know think about what that is something you buy every week that you must have maybe it's ice cream or something right now imagine that now next week you go to the store and that your favorite ice cream is now on sale half-price ok that's on sale half-price what are you going to do you're probably going to buy extra and throw in your freezer right ok right so again how we buy and sell things in every other part of our life or most of us are pretty much you know 4 smart shoppers we're looking for deals we're looking for ways to buy things low at cheap prices and when we sell things we want to sell at high prices right ok if you think about conventional technical and fundamental analysis that school of thought has you doing the exact opposite ok so I'm here today to show you a way to do much better than that all right when I started again starting on the institutional side you know you get a first-hand look at how to do it the other way right in other words instead of using conventional technical and fundamental analysis and buying at retail prices and selling a hotel prices that's what consistent losing traders do right the consistently profitable market speculator right many of the institutions out there what they do on a daily basis is buy it wholesale prices and sell it retail prices okay right I see some people typing in words for comma the word confirmation you have to be careful with that word that word is an account killer that will kill your account if you don't use it the right way okay if you're waiting to see a period of buying before you're interested in buying that's not as confirmation in my opinion okay so let's take a look the for those who are with us last session let me blow up this daily chart of the u.s. dollar okay so let me let me blow that up for you here sorry about that I didn't realize didn't have the mic on okay so the last time we were in session here at FX 3 weeks we took a look at the US dollar here's a daily chart and we have this supply level up here we have this level planned out up here since then prices have hit that level in turn at the same time we plan out a nice long position in the Euro okay so nice job to those who took that trade and understood it but let me blow this up and share it with you can everybody see that chart okay all right here we go you know Windrunner that's a great question and I'll be completely honest with you when Ron I used to be paranoid of stuff like that you know if you've ever read any of my stuff you'll see in the early days many years ago I wrote very little and I didn't say a whole lot when I was writing over the years I've become a lot more loose and free with the information and again it's not that this is like some rocket science secret magic algorithm it's very it's all very simple actually but but the reason why I'm not worried about what you're writing there is because I've learned over the years you can have this stuff to people on a silver platter and still most people will not do it because it because they're just not so different they follow conventional and fundamental analysis and fearing group reading all that that always has them buying high and selling low right anyway let's move on here so the best thing that I can do for you the best lesson that I can kind of give you today is market timing how to time the turning points in the market right cause the ability to identify market turning points before they happen here's a live example of one that we planned out last time that worked out it's working out pretty well let me show you exactly how we did it all right we're going to fold yes right here now when I started my career on the floor the Chicago Mercantile Exchange okay I saw three things everyday and three things only price is moving people trading and orders coming into the market alright now when you when you see that when you can you learn the markets from that perspective not any books or any charts or anything else you see that this whole thing is fairly simple it's simply an order flow game right it's all the movement of price is simply a function of its ongoing supply and demand equation okay and because again taking taking orders from institutional base money managers hedge funds that was my job for a while okay I take these orders and then I would you know when I'd organize these orders bring to price putting the buy orders to my laps and the sell orders to my right remember each stack was according to price so if I want you know where let's say in a given day I wanted to know where the market was likely to stop falling and begin to turn higher I simply looked out it to my left and find the largest tackle by orders below current price I want to know where the mark was going to stop rallying and begin certain lower I simply look off into my life to my right or just to my right and find a large attack by a sell orders bunker price that was real demand and real supply in the market okay now again I that was that was my first impression with this with this industry and all that and the good news here is that all that was done in the beginning at least in the early days that was all in the Forex futures and the biggest market I watched for a long time with the Japanese yen this is way before the euro you know we still I used to work the deutsche mark and buddy member the deutsche mark things like ancient history now probably dating myself even saying that but yeah okay alex is asking a great question here do you still have access to order books no Alex uh but but I don't think you need that I think you'd be wasting your time with that and I'm going to share with you um dad and Gillian dicey we were saying we don't have a novelty unfortunately of seeing the orders you do okay we're going to show you right now all right and Steve yeah we're going to we're going to get to that let's talk about that right now let's jump in okay all right so I would argue okay now here's here's the downside to seeing all the orders let's say you're a big bank let's say you're a big bank let's do you're an institution you're seeing a lot of orders but you're only seeing your orders okay you're not seeing everybody else's orders out there where's the one place that we can really see everybody's willing demand and willing supply there's only one place it's the price chart okay so let's take a look now let's focus on this yellow area the goal here is going to be to quantify a supply and demand in this level okay I'm going to give it to you the same way we give to you last time although before prices got there only this time we explained it a lot deeper okay so how can we know first of all how do we know that supply exceeds demand here well first of all okay uh Ginetta that's the beauty of this you'll see false orders here we're not looking at an order so we're not looking at bids and offers right I don't look at that those aren't real okay alright so prices drop from this level right here okay when prices are trading in that yellow area I don't know whether they're going to drop or whether they're going to rally right know uh you know nobody really does okay and I don't care I'm not trying to predict this drop in price right here that's the whole point make sure you understand that I'm not trying to predict this drop in price instead let me just grab this again there we go instead we want to let prices fall away from the level okay I want to let prices drop away or rally from this level but the fact that they drop from this level okay that tells us subjectively that supply exceeds demand at the level remember the only reason why prices drop as they do from this level is because supply exceeds demand here okay don't worry about the news or anything else and all that stuff and after the fact so prices drop that's we can wrap two lines around this level okay based on a very specific set of rules we want to carry that level for one of nowhere to real cellars are when that exact excel odors is trade for that I was talking about earlier okay no that's that's part of it but but here's the thing how do we know how out of balance supply and demand is here maybe behind the scenes there's small unbalanced or maybe there's a big imbalance how do we know we don't see the orders okay okay how do we how do we how do we know well there's a lot of things we can look at that help us and help give us that information first of all number one how prices left this level okay let me just break that right on the screen for you here so you'll have it okay there you go alright so how did prices leave the level what we're focused on there okay so what we're focused on here is looking at this part right here there was a strong drop in price understand the prices can move away from this level in one of three ways it can be a gradual drop in price away from the level it can be stronger drop in price like this away from the level or price can gap away from the level out of those three choices which one represents the strongest supply and demand in balance probably the gap right okay exactly yeah good job so we don't have a gap here but we have the next best thing it's a strong moving price away from the level that suggests supplying to me and rod beyond constraint so the moral the story is there the stronger price leave the level more on a balanced supply and demand likely is at the level okay so now let's let's add another one remember you can see all this stuff on the chart it's all here the big thing is if you know what you're looking for okay time how much time but hoping okay everybody can see what I'm writing on the screen here so how much time did price spend at the level when it was there are there like 10 15 candles in this cluster of trading or are there maybe you know maybe I don't know three to six or seven candles inch or something like that right so number two really goes hand-in-hand with number one the fact that price did not spend a lot of time here tick charts would be the same job any any any type of chart you're going to look at the same way okay so the fact that price did not spend a lot of time here suggests supply and demand are out of balance in a big way now again that looks completely against what all the textbooks say also the textbooks will say look for a look for a you know price level with lots of congestion lots of activity heavy volume right how many times we hear climactic volume and all that stuff how many how many times you see people you know they're they're just when it comes to the forex market they think there's a big disadvantage because they don't see volume right they all want to see heavy heavy volume and so on right anyway if you think about it the opposite is really true and don't take my word for it just think it's simple logic through it I think you'll get it if supply and demand it if if supply demand it is out of balance in a big way right if there's a if there's a big supply demand imbalance oh yeah exactly Jake I see I think if I'm reading it right yeah so so think about it and go ahead and answer this if you want to and don't worry I'm going to keep trying to go back think about a door out of five now supply and demand is at a price level okay it's time going to spend a lot it is priced into spend a lot of time there or a short period of time there okay yeah of course any any timeframe yes short period of time there okay therefore if price is going to spend a little amount of time there that point wait to you cancel center spree and very low volume okay so be careful about believing everything you read right so given the price to not spend all that much time here and you have a strong wait a level that suggests okay that suggests pretty big supply and demand and balance at the origin of that drop right so let's say believe me I wish I could say that I had some some you know high-level kind of algorithm that was big secret oh that's just that's not the case right I did I can probably package it up and sell it to the highest bidder out there or some big institution but that's just that's just not the case this isn't rocket science but this is all this is is just you know showing people what they do on a daily basis when they buy buy and sell things and every other part of their life this is what it looks like on a price chart if you're doing it the right way all right so let's let's take a look at another one here here we go again just like anything else in life if you're going to buy and sell things you need a profit margin right okay so let's let's go with profit margin here for number three let me recapture and then once we get through this the plan was to go start looking some other charts and plan some other things out okay so profit margin so what we're looking at there is there's a couple things let's look over to the right here and let's take a look at this this area right here okay let me put a circle on here and I'll grab the chart again there you go so as price is returning back to the level for a short entry right here in US dollar or buying the euro you know whatever your whatever you're going to do okay we want to know where the nearest opposing demand level is when we're looking at this supply okay right so when the price is rallying up for a short entry here where is the nearest demand level okay so we we look at that rally in price well there's a couple areas here notice we have a little our little drop base rally demand there that doesn't look like a big deal but we have a much more significant area down here with a level sitting just below it kind of right here so ultimately so ultimately while we are in a little bit of an area right here you know I wouldn't be that surprised and prices came back down to the low 80s at some point here in the future right okay so profit margin and the last one I'll share with you there's a few more but absolute take over everything in this short period of time and also to uh you know for those uh we have the trading room the XLT program and Online Trading Academy and if we went over a hundred percent of the strategy in uh you know the free webinars and free articles of the people in the program would send me a mail and probably uh bombs or something so we don't want that well give you plenty here to get you going in the right direction so take a look look at the number four right how far did prices leave the level before returning back up to the level right okay how far their prices leave the level here before returning back up to the level okay now then this one is going to mainly focus on probability it helps with profit margins let's talk about probability let's associate this one with probability the farther price moves away from this level before we're turning back to this level the better the higher the probability of the trade right are the opportunity okay the reason is because remember what the one they haven't talked about we've talked about how to quantify the supply level right the opposite would just be demand but there's a part two to this it's understanding who is on the other side of your trade okay if you have ever come across any consistently profitable trader okay you'll find out you'll realize that a big fo'get one of the biggest focuses is and what they're really good at is the ability to find a novice market speculators to know exactly what a novice market speculator looks like think about it if you if you ever been in a anybody here ever had a career in sales or or something in retail anybody you ever sold anything for a living or you kind of been in a kind of the retail business yeah probably a few people right so who do you make the most money from right when you're selling something what's the one thing uh you know when you're selling something to someone what's what's one thing you don't want them to really know right what so what's the one thing you don't want your your clients to know or be good at when you're trying to sell them something cost is definitely a big thing right it's well yeah so I guess I'm kind of saying the same thing you don't want them to know right you don't want them to know the real value of what you're selling them right I know this sounds so bad when you talk like this but but it's the real world let's just let's deal with it you're going to make your most money sell it from selling something to someone who has no idea what the real value of that product is worth right okay or your cost or yeah profit margin or anything like that okay you know if there's one thing that a car dealer always says to you at some point now you know we're not making any Creon's sale right give it to you cost we're actually losing money on this deal right so many times you hear that when you're buying a car sure right anyway I think you get the point there okay the goal of the person telling you something is to convince you that it's worth more than you paid for it okay all right so what I'm getting at here is we want to be able to identify those people on a price chart okay and the good news is it's very easy to do that okay it's not that difficult to do that because the consistent the consistent losing trader the novice market speculator who doesn't know how to quantify the real value of something always makes two mistakes so the two mistakes detection systems losing trader makes the novice market speculator you want on the other side of you trade they make two mistakes stake number one they buy after a period of vine okay right look at that they're buying after this big rally in price so that that number four thing we were talking about not only is the buyer who's buying here buying after rally and price they're buying after a youth rally in price not a smart thing to do you would never do that in any other part of your life and be successful at it right once you never walk into a grocery store and when you find that you know no matter how good it that ice cream is let's say it's two dollars a box for them for the container of ice cream no matter how good it is you're never going to walk up to the checkout counter and say oh the face cream is so good you know I don't only two dollars but I want to pay five dollars for it right you're never going to do that so don't do it here mistake number two the buyers right here now we're focused on these buyers specifically you're buying apps they're buying after mailing price and they're buying right into a price level where supply exceeds demand the laws of supply demand guarantee that you will lose taking that action therefore we want to be the seller to the buyer here like we were with the US dollar okay right and if we're wrong we're placing protective stop just above the area to ensure a small loss okay so quantifying the supply level rally base drop that's the picture that represents where the real sellers are in this market number two identifying the two mistakes that the consistent losing trader or novice Market speculator makes and then just take any other side of that trade okay then of course to take the reason why we went over we'll call these odds and answers these three or four odds and answers we went over there's a big important reason why we go over those and it's this what what the odds and the answers do okay two things they allow us to see through these candles and understand the order flow that's going on behind the scene that's really responsible for the creation of the can right okay now the so but the other foot for the important things of depth that they help us do is now let's say we find 10 levels on a chart okay what happens is you know once you run through these odds enhancers and apply that's the different supply and demand or support resistance level you see on a chart okay today heaven is out of every 10 levels you find probably only two or three are going to meet your minimum criteria and the other seven or eight you're not even going to pay attention to you're going to ignore them okay all right so Downey's bringing up a great point here let's talk about that for just a second okay okay DICE's but is this good to go against the up big uptrend okay now two things is that some people will say once in a while sometimes I'll say you know what but it looks like it looks like you're just trying to pick top and bottom and my answer that has of course exactly we want to do we want to find a low price and a high price right we're not going to get every top and bottom a depth goal isn't it that's how you attain the low-risk high-reward at high probability entry the second thing conventional technical analysis let's talk about trends someone just brought up trends because here if you look at the shore we planned out last time in the dollar it looks like we're breaking like the golden rule of trends right we're selling in an uptrend okay well here's here's the thing and that that comes from the conventional technical analysis school of thought all right what I'm getting at is first of all when does every uptrend end and downtrend begin it happens at a supply level where does every downtrend and and uptrend begin happens at a demand level okay now let's think about this though so conventional trend analysis that the way that everybody looks at trend okay is they all look at most people look for they follow what the book say and they look for higher highs and higher lows okay okay Jose there's there's plenty of plenty of levels that come up in plenty of different markets uh and plenty of time frames okay all right this is just a big-picture chart we were looking at but look at plenty more okay so let's talk about that so higher highs higher lows now according to the book how many higher highs and higher lows you need before you have an uptrend how many to do the book say anybody when it comes to identifying a trend someone's saying - uh I think most of the books need three yeah right three a lot of people are saying three okay so yeah so most of the books say you know everybody looks for that same picture three higher highs and three higher lows and once you have that picture on the chart okay to form an uptrend okay to spine - so whatever it is anyway it's either two or three I guess depending on the book so once we have two or three higher highs and two or three higher lows what are you supposed to do what are you supposed to start doing what's what's the rule then yeah you're supposed to buy right but don't buy before that right okay you're supposed to be fine but let me ask you this what has a group of traders always already done before you if you're waiting for that picture they've bought right okay lot of buying has to happen to create that picture but here's kind of it here's kind of the main thing why is it why is it all white that the people that have bought to create those higher highs and higher lows why does it always have to be somebody else why can't it be wouldn't you like to be a part of that invitation that goes out to the masses that says hey it's a you know we have higher highs and higher lows no he died you know come on and jump in wouldn't it be nice to be in the position already okay right so um anyway all right so anyway I think he gets a point there okay so um let's move on all right let's take a look at a different market and I'll try to keep reading back and addressing anything which goes up there so at the same time the US dollar was hitting that supply level we can see and I'll capture the chart again down at the bottom so ash let's assume that you're the you know I see what you're saying there and I know you're kind of half joking yeah serious right but but if if if we all would agree with you that you're not a bank we're small fishes right small fish okay if we agree to your comment there then then I would that would cause me to want to be in the trend early even more because the longer we wait to buy into a movement going up already the higher the risk and lower the reward you get the point okay all right okay all right so let's take a look so yeah so this euro chart right here let me just grab it and let's see yes at the same time the US dollar was hitting supply the Euro came down right out into these just the opposite picture of a dollar drop little base and strong rally right okay and we've since uh been bouncing out of that okay okay yeah and Ginetta the the truth is I don't even know that it matters that we know which group is doing what I mean the charge is - what's the difference like you know who you know what I mean like we just want to know where the where the real buyers and sellers are and uh anyway okay so Paul dancing about poultra pans as you see up here on the hourly chart what one of this one kind of the the coin strategies that when we use an online trading enemy I forget I don't know exactly where it's got its name it kind of started in the options XLT program and they call it the all-star entry and what that is is with the Bollinger Bands up here okay all that is is the same concept that we just talked about with the supply and demand levels but we're adding gold your pants that have so if price is piercing an upper or lower Bollinger Bands and hitting a supplier demand level with with a significant profit margin associated with it and that just becomes a kind of a higher odds trade all right there we go so we could take a look at the another mark another example of that if you want to type in a market I'll look at it while you're doing that this is one we've been going over quite a long time in in fx3 see Ozzy right I think we've had this level pegged we've had this level in the FX street for about a year in the Aussie dollar we can take a look at a different one though and that wasn't working out fairly well let's see so Jen Aida you were first let's take a look yes alright so let's take a look at a British Pound and let me regrab screen here okay there we go and jinae you choose and we look in larger timeframe or smaller time print what do we what do we what are we going to plan here one hour we want to look at the one hour no problem okay all right let's take a look let's blow up this one-hour chart here now one thing we always want to do that we'll do very quickly here with with anything we look yeah we always want a little start with a larger time okay also the larger time frame and see where we're at alright so right now we're pretty far down on the supply-demand curve if we look at this big monthly chart here right and we've just come off this drop base rally demand level right again this is the picture that represents where the where the buyers are right okay so coastal demand in the bigger picture but let's take a look okay so we want to plan out a tree given that information in the larger time frame okay we see we've rally quite a bit off of that level and now we're open to this area for a second time so I'm going to put a horizontal line in here and let me scroll up and let's see what we have over here to the left that we're coming into okay we get rid of this other line up here that's a supply little bit pretty far away okay so if you can see this if you can see the chart here okay when I scroll up we see that there the where we're at now is kind of in line with these two these two pivot highs here so I'm going to go just just above that and you know what for the purposes of scrolling if it's okay let me let me go back in let me just check let me change this to like a 180 minutes we want to scroll so much I don't want to confuse everybody all the information we need will be here there we go refresh the screen for you so looking at current price now let's just let's just keep it real simple here before we go look for any other levels looking at current price 149 76 okay and then looking left right and up and then looking at current price and looking last and down from from this point right here where's the path of least resistance I'm saying like right now is it is it up or is it down what would you say to that okay so it's probably 50 50 up or down okay well one thing we have to be careful of is you know price is into this kind of little supply area right here right okay now we've been here before so I wouldn't consider this a strong level by any means all right and when we looked when we look down and to the left we see we have this area right here below right so supply demand there's maybe a little speed bump up demand right in here okay but if we're taking the extremes the drop base rally that we that we associate with demand and rally base drop that we associate with supply here's our levels so some might argue that the that's the path of least resistance is lower but let's put a horizontal line here let's see what we have to the left because a level where right now I would not consider that a very fresh level let's scroll left okay and what we do we see we come into these tops here which we're not interested in remember price has been here a number of times so the high a short is probably not there but when we get into this area up here okay here's our best level in the chart which is right here but this that's pretty far away but prefer that I would really be watching kind of this area in here okay remember this is a start now follow my logic here okay all y'all recession yes so this is the start of a drop in price right here and watch when I scroll right you'll see that since price left that level it has not been back there yet so I'll place can certainly fall where it's at now okay the higher odds short may be right up in here about 150 right around 151 just a little bit before 151 okay and you know given that it's the British Pound okay you know that's not all that far but again because of when we look directly to the left let me just draw this in precisely for you so you'll have it give me just a second I'm drawing this in and then I'll refresh the chart for you there you go so remember given where prices at right now you know the path of least resistance okay looks to be lower the only caveat here is this is not the first time into this level so we like taking the first pull back into levels that that's ideal that's high probability okay the nearest fresh level on the upside is just under 151 okay so that's kind of how we would look at the British Pound now looking at the clock and know that we don't have that much time left I wanted to share with you the Swiss okay especially in the bigger picture okay this thing's in it in a downtrend and I know all that but when we look at we look at the bigger picture of the Swiss we see that we're kind of coming in to d2 to little areas where we might be interested buyers in the Swiss let's take a look okay we have two little level sitting right on top of each other and let me share this with you okay little bit low this is a term type trade but it doesn't have to just be it doesn't have to just be longer term it can be you know once you get down into either those lower those yellow areas you know if I were a day trader I'd be training to the long side of those areas I were a swing trader I've been looking at trade to the long side of those areas okay good Jose you know I would depth you know it's its market makers and retail traders right okay right the banks base you have their orders in the right areas right the bank with you well you know how do you how do you think though how do you think the spread is determined right now it's a it's a computer that's determining the spread when you buy sell into the forex market right for different brokers but how do you think it's determined it's all determined by the order flow they take care about any news or anything else you ever wonder why the spread gets wide at a real supply demand level right you ever try to buy at a real demand level good demand level the spot works Mark and all of a sudden spread gets really wide right why do you think that is okay because they're not if you're going to try to stick the broker with a loss they're going to make you pay for that it's going to cost you something right okay yeah so off Wiki up what time frames I can tell you most all of my short-term training gauge reading is done either in the Euro futures the yen futures or the S&P futures that's just about that's like 99 percent of my day trading done one of those three markets okay all right for longer-term stuff I include plenty of other markets okay let me try to read back here just remember the thing you have to add to this when you're doing short-term training kind of say that last question there is the added work for short-term trading is you have to know where you're at in the bigger picture right if you're if you see a nice buy set up at a demand level on a five-minute chart in the euro for example you have to go to the larger time frame make sure you know where you're at what if on the daily chart at that point you're right up against larger time frame supply well that step by set up and the D and you know in the v miniature is probably not going to work okay right I would go up a couple time frames alright okay let me do one other thing here hang on just a sec there we go alright so what I did was I just typed my email address in there okay right there it is it's s sidon at training academy comm you should have that in there there is to Alex you have to be careful of those let's drop a strop and rally base rally because those are always going to be found in the middle of loops so be careful with those that's why no we train we want to trade out at the extremes okay so that's why the pattern of drop base rally rally base drop that forces you out at the extremes you can do the other but you have to be very careful okay because uh those are going to be found in the middle of moves okay alright okay yet if of course if you ever want to take this stuff a lot deeper we do have a you know the programs that Online Trading Academy that's where that's where I do all my stuff within the class and in the live trading rooms in the XOC so hopefully that was helpful this is all meant for your benefit and you know you can send me email if you have any other questions I'm pretty caught up on emails alright have a great day everybody

Channel: FXStreet

Views: 35,044

Rating: 4.921875 out of 5

Keywords: Forex

Id: jv34Hk26h6M

Length: 43min 18sec (2598 seconds)

Published: Wed Jan 13 2016