12/18/2020 How to Trade with Supply and Demand Zone - Trading with Smart Money

Price Action
How to Trade with Supply and Demand Zone
 How to Study Candlestick
 Candlestick Analysis 
Back to: Trading with Smart Money
 Price Action Analysis
 Advanced Price Action
Analysis How to Trade with Supply and Demand Zone
 Thrust Pullback and
Measuring Move Analysis In this article, I am going to discuss How to Trade with Supply and Demand Zone in detail. Please read our previous
 How to Trade with Smart article where we discussed How to Trade with Sideways Price Action Area. As part of this article, we are going to

Money discuss the following pointers which are related to Supply and Demand Zone Trading.

 How to Trade with Supply

1. Structure of the market
and Demand Zone
2. What is the supply-demand zone?
 How to Day Trade with Trend
3. How to find supply and demand zone?
 Multiple Time Frame Analysis 4. Different types of zone
 Head and Shoulder Pattern 5. How to measure the strength of the zone?
 How to Trade with Support 6. When did the supply and demand zone break?
and Resistance 7. How to trade with the supply and demand zone?
8. Odd enhancer for trading with supply and demand zone
 Advanced Candlestick
Analysis STRUCTURE OF MARKET
 Trendline Trading Strategy
 WRB Trading Strategy The price goes through the following phases

Day Trading Strategies 1. ACCUMULATION

 VWAP Trading Strategy 2. REACCUMULATION
 How to Day Trade with the 5 3. UPTREND
4. DISTRIBUTION
simple Gap trading strategy 
5. REDISTRIBUTION
 Intraday Open High Low
6. DOWNTREND
Strategy
 PIN BAR Trading Strategy
 Trading with Sideways Price
Action Area
 Pullback Trading Strategy
 Intraday Breakout Trading
Strategy

Risk Management
 3 Techniques for Risk
Management in Trading

Stock Selection & Live Scanner

 How to make own Day
Trading Scanner
 How to Select Stocks for
Intraday Trading

Intraday Trading Course 2020 ACCUMULATION smart money is removed the floating supply of stock by buying, this process is called accumulation
 Intraday Trading Course
 Multiple Timeframe Analysis TREND UP smart money aggressively moving price up
for Intraday Trading 
 VWAP Trading DISTRIBUTION SM will take advantage of the higher prices obtained in the rally to take profits by beginning to sell the
stock back to the uninformed traders/investors
 Opening Range Trading
Strategy
LAWS OF SUPPLY AND DEMAND
 Opening Range Breakout

Volume Price Action Analysis All financial markets work on the universal law of Supply and Demand.

 Stock Volume Analysis in

Law of Demand– The higher the price of an item, the fewer the demand (buyers don’t want to buy at a higher price)
Trading
and lower the price, higher the demand (buyers want to buy at a low price)
 Volume Price Action Analysis

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12/18/2020 How to Trade with Supply and Demand Zone - Trading with Smart Money

 Volume Spread Analysis in Law of Supply-the higher the price, the higher the supply (sellers want to sell at a higher price) and lower the price,
Trading lower the supply(sellers don’t want to supply at a lower price

 Candlestick Pattern Analysis

 Finding Entry Opportunity What are Supply and Demand Zones
using Volume Spread
Supply-demand nothing but the border area of support or resistance
Analysis
 Spring and Upthrust Trading Let analyze NIFTY 50 STOCK
Strategy
 VSA Trading Strategy

Option Chain Analysis

 Option Chain Analysis

Indicator 
 RSI Trading Strategy

BTST 
 BTST Trading Strategy

TECHNICAL ANALYSIS
MASTERCLASS
 Technical Analysis
 Market Structure 
 Understanding Market
Structure through Swing  In the chart above you can see a demand zone (broad support level) and a supply zone (broad area of resistance).

 Supply and Demand Trading

What we want to find at the price zones where supply overwhelms demand and where demand overwhelms supply.

The former is known as SUPPLY ZONES. When the market bumps into SUPPLY ZONES, the price will drop.
Then, you can make money by shorting the market.
The latter is market DEMAND ZONE. With the support of demand, the price will rise. Then, you can profit in a
long position.
IF the supply zone is broken it becomes demand zone, pullback test from demand zone you can go long

How to Find Supply and Demand Zones

Two steps in order to identify the supply and demand zones.

1. Look at the chart and try to spot successive large successive candles. It is important that price moves a lot
2. Establish the base (usually sideways price action area) from which price started the quick move

Different Types of Supply and Demand Formations

There are different supply and demand zone patterns. Some of the more popular ones are shown below:

TREND CONTINUOUS BASE

1. RALLY BASE RALLY(RBR)

2. DOWN BASE DOWN (DBD)

TREND REVERSAL BASE

1. RALLY BASE DROP (RBD)

2. DOWN BASE RALLY (DBR)

And

FLIP ZONE

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12/18/2020 How to Trade with Supply and Demand Zone - Trading with Smart Money

NOW PUTTING ALL THIS TO NIFTY 50CHART

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12/18/2020 How to Trade with Supply and Demand Zone - Trading with Smart Money

STRENGTH OF SUPPLY AND DEMAND ZONE

How did price leave the level? STRENGTH OF THE MOVE

The Logic: The stronger the price moves away from a zone, the more out-of-balance supply and demand are at that
zone. A heavy order is placed by smart money

How much time did the price spend at the zone? TIME AT LEVEL

The Logic: The less time price spends at a zone, the more out-of-balance supply and demand are at the price level.
Smart money aggressively entering

At price levels with supply and demand zone more out of balance, the price will spend the least amount of time at the
level

How far did the price move away from the zone before returning back to the zone?

The Logic: The farther price moves away from a zone before returning to that zone, the greater the reward to risk and
probability.

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12/18/2020 How to Trade with Supply and Demand Zone - Trading with Smart Money

When price comes back to that supply level for our short entry, we have a good idea where the buyers are (the
demand) and just as importantly, where they are not.

How many times is the price approaching the zone? FRESHNESS OF BASE

First-time stock retrace to the base is the strongest to enter

When Supply/Demand breaks

After a zone is tested many times or during a strong move, Supply and Demand levels eventually break. Due to the
remaining orders being triggered and gradually removed, or an overwhelming amount of orders in the opposite direction
breaking the level.

Price action

If the price stays near or at these zones & doesn’t fall much then there is a high probability that they will break
the zone
Strong move to the zone may break the zone
low volume test confirm the zone

HOW TO ENTER DEMAND AND SUPPLY USING PRICE ACTION

1. Find SD zone on HTF(HIGHER TIME FRAME) then wait for price come to at this level
2. See any acceptance or rejection from this zone on trading time frame(TTF)
3. Any reversal price action signal on TTF
4. Entry in the direction of the dominant trend

Suppose context downtrend, price rally to the supply zone on TTF, then any bearish reversal PA signal for an
entry short
Also, notice the volume on these reversals. low volume test is a good sign & they are highly probable trades.

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12/18/2020 How to Trade with Supply and Demand Zone - Trading with Smart Money

TIPS for day trading previous day high and previous day low is the supply and demand zone. look price action around
there for acceptance or rejection of these zones

Let’s do an example

Find the supply and demand zone in a higher time frame

IN hourly time frame we find the zone

Big picture shows

1. whether trend up or down – determines which side we want to be on

2. Where the big picture support and demand levels?

We don’t want to long below the supply zone

WHEN PRICE APPROACHING TO DEMAND ZONE

WE WANT TO SEE SIGN OF STRENGTH PRICE ACTION FOR CONFIRMATION OF ZONE

1. MOMENTUM LOSS(DECREASING CANDLE RANGE AND BODY

2. LOWER WICK
3. MIX OF BIOTH RED AND GREEN CANDLE

Entry on the trading time frame

ENTRY SIGNAL CANDLE

Candlesticks AT Supply and Demand

1. PIN BAR
2. ENGULFING
3. OUTSIDE CANDLE

Odds Enhancers example

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12/18/2020 How to Trade with Supply and Demand Zone - Trading with Smart Money

1. Trade with the trend

2. If INDEX AND SECTOR SHOWS POSITIVE THEN GO LONG FROM DEMAND ZONE

In the next article, I am going to discuss How to Day Trade with the Trend in detail. Here, in this article, I try to explain
How to Trade with Supply and Demand Zone in detail. Please join my Telegram Channel to learn more and clear
your doubts. https://t.me/tradingwithsmartmoney.

← Previous Lesson Next Lesson →

How to Trade with Smart Money How to Day Trade with Trend

5 thoughts on “How to Trade with Supply and Demand Zone”

ARNOLD
MARCH 14, 2020 AT 10:42 PM

i am beginner wants to learn forex

Reply

COLLIN GONYE
APRIL 6, 2020 AT 7:20 PM

Good stuff, enjoying your everything you explained I can visibly see it on my charts.

Reply

JJKING
APRIL 7, 2020 AT 5:15 PM

Great! This is straight to the point without beating about the bush. Thank for making my day.

Reply

SANDEEP
MAY 16, 2020 AT 4:34 PM

thanks make this demand supply zone article

Reply

SHANTU
JULY 12, 2020 AT 4:26 AM

Extremely useful discussion on S/D zones. Very knowledgeable.

Reply

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12/18/2020 How to Trade with Supply and Demand Zone - Trading with Smart Money

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