With a strong stream of email questions coming in lately, I thought it would be a good idea to answer some of the popular ones for you here in Lessons from the Pros. I hope this is helpful for you. 

Sam,

I really like your simplistic approach to trading, makes a lot of sense keeping it simple. I have one question, when you are looking for levels on index charts, do you include any that may have formed in the afterhours time frame?

Thanks,

Joe 

Sam – Thanks for the email and good question. Yes, it's a good idea to include afterhour's supply and demand levels in your analysis. Having said that, you will find that most of the key afterhour's levels also line up with key day session levels, which is fine. It is important to consider these levels in the S&P futures market when trading stocks. Often, what appears to be a good supply or demand level on a smaller time frame stock chart is really NOT a good level because overnight, price in the S&P futures has moved well beyond that level. The only way you would know to ignore that faulty level is by analyzing the afterhours S&P futures chart. No matter what time a level is created, if the market is open, supply and demand are at work. As I always say though, make sure your definition of supply and demand is correct. In otherwords, not every level is a level we would want to take a trade at. The supply or demand level needs to meet our minimum standards to even be considered a level. Part of that filtering process can be found in last week's article entitled: The Check List. Hope that was helpful.

Sam,

Thanks for all the knowledge! You've really helped me a lot! My question is: I live in America, so I trade the American market. I was wondering, if I were to move to another country, does the concept & rules of "supply and demand" apply to all markets? (eg: Asian markets NIKKEI, HANG SENG, CHINA, etc.) Looking very forward to your response!

Sam – Thanks for the email and good question. The answer is a solid YES. The concept of supply and demand applies everywhere. Whether it's "supply and demand," "motion into mass," and so on, it's all the same underlying equation. This equation is responsible for how and why things move. Whether we are talking about determining where price is going to stop rising and begin to fall, or predicting when an earthquake is going to happen, we are still talking about competing forces that can be measured. Sorry for getting a little off topic but yes, whatever market you are trading, the concepts of supply and demand apply equally. Remember, behind all these markets around the world and different asset classes are just people pushing the buttons. 

Sam,

I have taken the Online Trading Academy Power Trading Class and the Options Trading Class. I went to the ProActive Investor workshop yesterday in Denver and signed up for that class.

Till I saw your webinar talk on supply/demand levels, I thought that support/resistance levels were pretty much the same thing. Tony De Santis, my Education Advisor, helped disabuse me of that notion. What are the rules for finding supply/demand levels? Where can I find them?

Thank you,

John 

Sam – Thanks for the email and good question. I am glad the Education Counselor was able to help you. Let me take a moment and try and take that to another level for you. I use the terms supply and demand instead of resistance and support. Sometimes I think people have the perception that I am just using those to sound fancy and different, but this is not the case. I stay away from the terms support and resistance because I know that most people have very different definitions of support and resistance. To one person, it may be a pivot high or low, to another it may be a Fibonacci retracement level, another person may use Elliot Wave, or maybe an up or down sloping moving average as support and resistance. So, instead of reinforcing something that may not be accurate or correct, I choose to stay away from the conventional terms of support and resistance and instead, I call it what it really is, demand and supply. As far as your question on the "rules" for finding supply and demand levels, there are a few ways you can get those rules. 

1. Go back and read the archived Lessons from the Pros. Specifically, search for my articles that have something related to supply and demand in the title. There are books' worth of this information in those articles. This is a free resource.

2. Go to our home page, click on "Free Resources" at the top, then click on "Recordings" and scroll down and you will find plenty of recordings that teach the concept and some of the rules. This is a free resource.

3. Join the Extended Learning Track (XLT) program. This is not a free resource. This is a paid service where we teach the concepts and rules of supply and demand and also execute the strategy in the live market 3 or 4 times a week. Of course, I can only cover so much in the free resources. Going over too much of our strategy in the free resources would not be fair to our XLT members.

On that last point, this is a weekly struggle for me with writing these articles. If I go over too much proprietary detail in the articles, XLT members get mad and I totally understand that. If I go over too little, people that read the articles, but are not an Online Trading Academy member, are unhappy. I try and do my best to facilitate both groups, but it's never perfect. Hope this was helpful.