Over the last few years, supply and demand trading has become one of the

most popular trading strategies in the Stock trading industry.

People are very much eager to know does supply and demand trading work
or not.

It is a trending trading strategy created in the late ’00s by Sam Seiden, who
came up with the strategy using his experience working in the Chicago
Mercantile Exchange. It focuses on the concept of the ancient laws of supply
and demand.

What is Supply & Demand in Stock?

Supply and Demand trading is the main culprit of price movement. In

trading, it’s nothing but the broader area of support and resistance. Traders
believe that supply and demand zones are the places, where institutional
traders open/close their positions. These are the ideal places for looking for
trade setups or targets.

What are the core differences between Support & Resistance

and Supply & Demand zone?

The big differences between these are:

 support & resistance are drawn with horizontal lines, but supply & demand zones are
drawn with rectangle zones.
 The more the SR flip (Support/Resistance) is being tested, the more it will be stronger.
But the S & D zone (Supply & Demand Zone) is the opposite of it. Supply and
demand zones are gradually being weaker after each testing.
How supply and demand zones are created?

In S & D trading, ‘Selling zone’ is created when a currency pair climbs to an

area of resistance where supply overwhelms demand & prices go down.

‘Buying zone’ is created when a currency pair climbs to an area of support

where demand overwhelms supply & prices go up.
Does supply and demand trading work?

The premise of this strategy is that supply and demand zones form from the
banks and other big players buying and selling activities.
90% of supply and demand traders trade supply and demand zones with the
idea that large institutions, banks, big players place pending orders at these
zones. Because they are not able to get their entire trade placed into the
market.

Therefore, they Place their pending orders to buy or sell at the zone. Then
they wait for the market to come back to the origin zone and the rest of their
orders are triggered to be filled.

But in reality, traders are wrong. They don’t know supply and demand
trading secrets. The large institution, bank, big players always search for
liquidity to filled their rest of orders.

In forex, liquidity means the currency pair’s ability to be bought and sold
without causing a significant change in its exchange rate. Big banks,
institutions place their huge orders when lots of liquidity are existed against
their positions to avoid slippage
Now, you may raise the questions “Does supply and demand trading work?”
or “Is supply and demand trading profitable?” or “Is Supply and demand
trading really a strategy?

The answer is “yes,” supply and demand trading strategies work. It is

profitable to trade with the advanced supply and demand zone.
But you have to remember that the supply & demand concept is more than
an explanation than a strategy. You cannot predict future supply and
demand based on current observable supply and demand.

So, you have to properly understand how supply & demand zones work. You
have to spot quality supply and demand trading zones which are reliable and
potentially profitable to trade. Otherwise, you’ll probably lose money or
won’t be very successful.