Forex and Stocks “Supply – Demand” Zones Trading Strategy

Best Supply and Demand Zones Trading Strategies. By the time you finish this tutorial, you’ll know exactly when to enter high probability trade using the Best Supply & Demand Zones Price Action Trading Strategy.

Putting this theory into practise, the idea is to find the place on the chart where demand overcame supply (for long trades) or where supply overcame demand (for short trades).

Let’s go through the process for correctly identifying supply and demand zones.

• STEP 1: Identify current market price

First, you need to spot the current price on the chart. Then, look at the left side of the chart and find a big strong lineup of candles either moving up or down. Typically, supply zones show upward movements, and demand zones show downward movements.

• STEP 2: Look left on the chart

Now, focus on the left area of the chart to find ERCs. You can identify these candles by their long bodies with little to no wicks. Remember that if any candle has an equal size of wicks and body, it is not an ERC. This is how ERCs look on a price chart:

• STEP 3: Look for big green or big red candles
• STEP 4: Find the origin of the big candles

Finally, you need to identify the origin of the price movement on the chart. As in this chart, the price rallied up with small-sized candles, paused for some time, and then dropped downward by two ERCs. This is the origin we need to form the base of the supply zone. This base will help us draw the zone.

• STEP 5: Mark the zone around this ‘origin’

 

Range Trading Strategy – If your supply and demand zones are well-identified, you can opt for a range trading strategy. Most traders use stochastic indicators to identify overbought and oversold market trends. Since rang trading is a non-directional trade (trend-wise), you can easily identify long and short entries in the  market easily.

 

• Download “ForexWOT-StochasticSnD” (Zip/RAR File).
• Copy mq4 and ex4 files to your Metatrader Directory …/experts/indicators/
• Copy the “ForexWOT-StochasticSnD.tpl” file (template) to your Metatrader Directory …/templates /
• Start or restart your Metatrader Client.
• Select Chart and Timeframe where you want to test your forex system.
• Right-click on your trading chart and hover on “Template”.
• Move right to select “ForexWOT-StochasticSnD” trading system and strategy.
• You will see the “ForexWOT-StochasticSnD” is available on your Chart.

 

Here are the steps to using this  Stochastic Oscillator and Supply-Demand trading system and strategy:

•  Plot a “supply-and-demand-zones” indicator to determine the overall price zones.
• Add the 14-period Stochastic Oscillator indicator.

 

• Use stochastic indicators to identify oversold market trends.
• Price on the demand zone. A demand zone is the price area at which the traders usually buy. This means the demand zone has many buyers available due to many buying orders at that level.

 

• Use stochastic indicators to identify overbought market trends.
• Price on the supply zone. A supply zone is the price area at which the traders usually sell. This means the supply zone has many sellers available due to many selling orders at that level.

 

Identifying supply and demand zones is essential to know about the market imbalances and changing trends. Therefore, traders need to fully understand the concept of supply and demand before opting for this strategy.