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Supply and Demand Trading

Updated: Mar 6


SUPPLY AND DEMAND TRADING CONCEPT FROM RETAIL TRADERS` PERSPECTIVE


Retail traders define or understand S&D as observable zones or areas on a forex chart, where price has approached several times previous. The main issue is S&D based on retail trading is based on zones or an area not a specific price level while institutional trading define S&D as a specific price level to either sell(supply) or buy(demand).


SUPPLY AND DEMAND TRADING CONCEPT FROM INSTITUTIONAL TRADERS’ PERSPECTIVE:


When we are looking for supply or demand zones in a market we are simply looking for a specific price level where the institutional traders have left their orders{this could be in a form of any pending orders in the market}.the big pockets/smart money traders are the one with large funds to move the market in whatever direction they want with the aid of artificial intelligence there's less human involvement in our days.


the market you are trading in today is not the same as the 90’s just look at your seasonal tendencies you will see for yourself . In our days there's price algorithm delivery which does the same thing always and if it wasn’t so I wouldn’t be wasting my time trading forex cause it will be like gambling for me but enough with price algorithm delivery for the sake of it being beyond the scope of our free material. All you need to know is that the market is highly manipulated but all this has limitations since it has been done by humans.


Retail traders are simply exposed to apex predators in the market looking devour and take as much money as they can from them so the best to do is stick with me on this to enlighten you and give you few tactics.

ELEMENTS TO A TRADE SETUP WITH SUPPLY AND DEMAND:


1.Identify the trend [down/up trend]

2.In an uptrend look for demand zones only

3.In a down trend look for supply zones only

4.Look for price imbalance

5.Note how price approach and how price react when it reach your supply or demand zone

1.Identify the trend[up trend or down trend]


The main reason is that in an uptrend price will take out previous highs, therefore, it's more reliable to look for demand instead of supply levels. in a downtrend look for supply levels as the price will be taking out previous lows.

2.IN UPTREND LOOK FOR DEMAND ZONES BECAUSE


the market seeks liquidity on previous highs based on order flow taking out previous high. This mean in an uptrend the market takes out previous highs and in doing so this mean supply levels will fail therefore avoid looking for supply levels in an uptrend instead look for demand levels


3.IN A DOWN TREND LOOK FOR SUPPLY ZONES


because price will seek liquidity on previous lows based on order flow taking out previous lows. This mean in a downtrend price most likely take out previous low therefore avoid looking for demand levels instead go for supply levels. This will assist you reduce unnecessary loss.


4.PRICE IMBALANCE IS AN AREA WHERE THERES LESS TRADING ACTIVITY IT CAN BE USED WITH YOUR SUPPLY AND DEMAND

your duty is to back test we are showing you few examples here. notice how price react after closing price imbalance.


5.Note how price approach and how price react when it reach your supply or demand zone:

Price should move away quickly instead of consolidating because supply and demand concept is simply looking for potential areas where institutional traders have left their pending orders ,so when price gets to our supply or demand zones we expect to see institutional sponsorship by observing price quickly approaching and move away from your supply and demand zone. If price consolidates close the trade because its clear indication that smart money or institutional traders are not behind your trading idea therefore price might violate your supply or demand.


This is one of the reasons why most of our entries are zero float entries refer to this video on our YouTube channel for more on supply and demand:


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