HOW BANKS TRADE FOREX ? By :- Mohamed Himas.

SWS - Community
WHAT IS SUPPLY AND DEMAND
WHAT IS SUPPLY AND DEMAND ?
• According to R.Wyckoff, the law of supply and demand determines the price direction. Supply and Demand does not only
exist in trading - it's a major principle in economics and business.

• Simply, if the demand is higher than supply, the price will rise, and when supply is greater than demand, the price will fall. if
there is balance between supply and demand, the price will consolidate at one place.

• Supply and demand is mainly controlled by big financial institutions. We, as retail traders, do not have enough buying power
to move price. what our aim is to identify when and where the big guys are buying /selling and try to follow them.
• An important detail to note is that the banks cannot place their positions all at once. they break them down to small chunks,
which is usually done within a consolidation. A lot of manipulation takes place in such areas.
• - furthermore, sometimes they cannot launch all of their orders at the same place, so they let the market move away and then
come back to launch new orders.
HOW TO SPOT SUPPLY AND DEMAND ?
• Rule #1 :- A move from a price level/zone should be sharp and fast. This ;eaves a footprint which means that the
banks launched their orders from that price.

• Usually, before the move you will have an accumulation or consolidation and a stop hunt. (Examples in next slide)
• A S&D zone could be wither a single candle or a series of consolidating candles.(depending on the Time Frame)

• Rule #2 :- it has to cause a break of structure. A creation of a new HH/LL is always preferred when identifying a
supply and demand zone. That confirms a potential for higher or lower prices.

• Rule #3:- It needs to have a big sell before buy or Buy before a sell. This created the ,manipulation, which usually stops out
traders and fuels the move.

TIPS :-
➢ Look for fresh S&D Zones. If you are a day trader, you have new S&D zones created multiple times during the day! You just have to
use the Lower Time Frames.

➢ S&D zones on the Higher Time Frames (1Hr & Above) work the best. If you spot it right, you are guaranteed at least a reaction.

➢ Avoid Trading S&D zones that have already been tapped into. The orders were taken already, so if the market returns, it will most
likely to break.

➢ Always understand the underlying trend. You might have an amazing supply zone, but if the market has changed structure and
coming from a strong demand, the supply will most likely just be a reaction point.
SEE YOU IN LESSON 3