How to trade supply and demand in forex pdf

Learn how to identify and trade from the major supply and demand Forex trading levels with a free PDF guide download.
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These cookies do not store any personal information. Search for:. Posted on Sep 9th, A zone is by definition a broader area, which attracts bears from all kinds: On the contrary, a demand zone is a broad area of support. I strongly encourage you to read through it if you have not done so, yet! It is a wider region by definition that has more strength than just a single level.

Bear Traps with Supply Zones First of all, what is a bear trap? Bear traps are nothing more or less but a failed second low. In the context of supply and demand, a bear trap is a very useful pattern. Bull Trap with Demand Zones The opposite of a bear trap is a bull trap. Unfortunately, their expectations are not met. Alas- quite the contrary! Indicators with Supply and Demand Zones I am not the type of a trader that uses profusely indicators.

Traders are looking for a confluence between indicators and supply and demand zones. One of the only exceptions is probably the RSI indicator. I personally prefer not to mix supply and demand zones and indicators. The cleaner the chart, the easier to read the signal! Price action trading fits perfectly well supply and demand trading. There is no better confirmation for a supply or demand zone that a price action pattern.

There is an inside bar that formed inside the supply area. As you can see, it influenced the price and led to a large sell-off in DAX. B Demand Zone Example with Price Action As with supply zones, trading price action with demand zones is a great way to enter into a high-probability trade. Here is an example of a demand zone trade with price action. Together with the pin bar, it forms a great reversal point.

Money Management and Supply and Demand Zones Money management and risk management are key aspects of trading with supply and demand zones. There is nothing more important than having the right money management skills. No exceptions! No second chances! Just the right amount of risk per trade.

How To Trade Supply And Demand

In other words, the less often a certain pattern occurs, the higher its reliability could be. The first sell trigger came when price action printed a two-candle bearish engulfing pattern. The second sell-trigger came when price printed another two-candle bearish engulfing pattern.

One way or another, location is less important than the zone itself. The rules for taking this trade were the same as explained above. Here is the daily view: Here is the 4H zoomed-in view: Here is the 4H zoomed-out view: As you can see from the charts above, this could have been one unbelievable trade if you followed those rules. There was almost an identical setup on the daily timeframe.

If we zoom in the 4H chart, we are about to find out: This would have been easily the best trade of the whole ! Although very rare, those types of opportunities are worth waiting for!

How to find supply and demand zones forex [ 100% working ]

Final Words Instead of a conclusion, I would like to remind you to check out my trading strategy, which is based on price action trading and includes elements of supply and demand levels and zones. Visited 59, time, 10 visit today. Confluence Areas in Forex Trading. Once you are able to grasp this concept, you can view trading from a logical lens. Today we will discuss supply and demand trading strategies in Forex. We will learn how to identify supply and demands levels and how to apply the levels within a comprehensive trading strategy.

The supply and demand concept is a core component of economic theory. The Supply and Demand rule states that if the supply of a commodity is high and the demand is low, this generates excess which drives the price down. And conversely, if the supply of a commodity is low and the demand is high, this creates a scarcity, pushing the price higher. The rule is pretty easy to understand and it could be applied to anything, which falls in the group of tradable resources.

Applied to the forex market , if the supply for a currency pair is high and the demand is low, it will drive prices lower. If the supply for a currency pair is low and the demand is high, this will act to drive prices higher. The supply and demand of a currency pair is determined by the players in the Forex market. These are governments, banks, investors, funds, and speculators. Thru their actions in the market, the participants in the Forex market are constantly shifting the supply and demand of currency pairs, causing the price to fluctuate.

If you open a currency trade you are taking part in the supply and demand equation within that market. The supply and demand imbalances in Forex can be seen visually on the price chart.

How To Trade Supply And Demand - Smart Forex Learning

Thus, if traders have a certain bias for a currency pair at a certain level, this can be recognized on the Forex chart by the informed trader. For example, if the currency pair is moving downwards on selling pressure, some traders will position pending buy orders at certain levels below the price.

These people do not believe that the pair will go much lower beyond their buy limit order.

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They place buy orders at this level to purchase the pair on the assumption that the bearish move is likely to stall. If a large group of people do this, or even if a large institution does this, there will be accumulated a big volume of pending orders around this specific level. This means the demand will increase as price reaches this level, which is likely to cause a sharp price increase as price approaches this level. The same is in force in the opposite direction as well. When big volumes are accumulated at a certain level above the price, the supply will increase, which can cause the price to drop sharply upon reaching that supply zone.

As such, traders should be aware of these two important levels within their charts, where prices are likely to rise and fall — the Demand Zone and the Supply Zone. A Demand Zone is a price area below the current price action where there is strong buying interest. Looking at the chart below, we can see that there was a lot of buying interest at the demand zone, most likely caused by a large volume of resting buy orders at this level. For this reason, when the price reaches the demand level, as shown below, the orders get executed and a certain portion of the pending order volume gets absorbed.

Typically, you will notice a sharp price reaction from the Demand Zone, and the sharper the price reaction, the more pending buy orders are resting there. Notice that every interaction with this level results in a price increase. It is important to refer to the Demand levels as an area and not as a single line on the chart.

Supply and Demand Forex – The Highest Accuracy Method | videos

The Supply Zone is the exact opposite of the Demand Zone. A Supply area is located above the price action and it typically contains a relatively big volume of sell orders. When the price action reaches this level, the orders start to get executed. Traders are selling the Forex pair and the price action reverses to the downside. As with the Demand, the Supply zone refers to an area and not a single level.

This time the image shows a supply zone on the chart. Supply and demand zones are really obvious areas where there have been huge volumes of orders taken.