Our focus should be identifying the best and high probability supply and demand zone and trading to get an ultra-high-risk reward ratio. Trading with the trend is a good approach, but the attribute of these four supply and demand patterns is that these patterns form mainly during the trend continuation or reversal. However, you can look at the higher timeframe to identify whether the overall market is trending or ranging. You don’t need to analyse the trend of trading these four supply and demand patterns. However, the drop base rally and rally base drop pattern form during the trend reversal. The rally base rally and drop base drop pattern form during the trend continuation. Because these terms already form during a strong trend continuation or trend reversal. However, you don’t need to look at the trend while trading the rally, drop, drop, or rally base drop. Trading with the trend is the first approach toward successful trading. The supply and demand zones give a very tight stop loss level and help to leverage the profit. If spread and order execution Is not an issue for you, you can also use it for scalping trading. I will not suggest trading it for scalping because of the fast market and higher spread rates of brokers. So to get such ultra-high-risk reward trades, you should trade on the lower timeframes, like 15M to 1H. This is the main reason I like this trading method. In this method, you sometimes get trades with 1:30 or 1:40 risk-reward trades. I like the supply and demand zones trading the most because it allows me to leverage the profit potential by picking the ultra-high-risk reward trades. Rule 4: Use supply and demand trading in Intraday and Swing Trading I recommend not trading a zone after 2 to 3 price swings. Some traders will also remove pending buy orders, so the probability of a bounce is lower on the second price pullback. However, only 20 to 30% of pending buy orders remain on the second pullback. When the price returns to the zone, it will fill almost 70 to 80% of the pending buy orders and make a bullish trend. That’s why we will not use a zone after the first price touch.įor example, let’s assume there are 100 pending buy orders at the demand zone. But the probability of this process is lower. It is also possible that prices may bounce from the supply and demand zones more than once. Once the price fills the orders from the zone, it becomes invalid for future price pullbacks. So it would be best if you only traded the zone on the first price pullback. After the zone formation, the price returns to the zone to fill the institutional orders. Rule 1: Trade the fresh supply and demand zones onlyįresh supply and demand zones are those zones that are untouched. These five most important rules will also help you trade supply and demand zones. In this article, I will teach five rules of trading supply and demand that I have learned from years of experience. You must master the supply and demand trading concepts. It works not only in forex but also in cryptocurrency, stocks, indices and other financial markets. It is valid for all types of markets in the world. Supply and demand is the most basic concept of trading.
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