Moe

Lishes FX
A guide to
Institutional Trading
The approach to trading Supply and Demand
What is demand and supply?

• Demand=Buy (last sell to buy candle)

• Supply =Sell ( last buy to sell candle)

Yes , it’s not simple as it is as there are factors to consider. I will guide you
through this later on in this module.
An increased Area of Demand refers to an increased area with Buying pressure,
and
An increased Area of Supply refers to an increased area with Selling pressure.
 The two types of zones

Demand and Supply are divided into two zones:

Even though demand and supply are one of the same thing, they are divided into two categories
depending on whether they form as a result of a continuation or as a result of a reversal.

Continuation Zone
These type of zone form, when price moves in one direction, consolidates or pauses, then
continues in the same direction.

Break of Entry Supply

structure
Break of Entry
Demand
structure

Broke the High’s Broke the low’s

Explaining the continuation zone for an up-trend, the price goes up (Rally),
consolidates(ranges) and breaks structure(break the high’s) to the upside (rally), creating an area
of demand with an imbalance, price comes back down and mitigates(breaks even) into the area of
demand and filling all the imbalances, this will cause price to shoot back up. At the point of
mitigation will be your entry, and you will pick up a nice risk:reward ratio.

Opposite with a down-trend, price comes down (drop), consolidates(ranges) and breaks
structure(break the low’s) to the downside(drop), creating an area of supply with an imbalance,
price comes back up and mitigates(breaks even) into the area of supply and filling all the
imbalances, this will cause price to shoot back down. At the point of mitigation will be your entry,
and you will pick up a nice risk:reward ratio.

NB!! THIS CAN BE FOUND ON ANY TIME FRAME

SEE NEXT SLIDE FOR ILLUSTRATION

 Reversal Zone

Reversal zonemis the same as trading order blocks(demand or supply). It forms when prices
reverses direction and then sets off a new swing

Supply
Entry
Break of
structure
Break of Entry
structure
Demand
These zones form when one major swing changes to the other, from banks buying or selling
large quantities of the currency .

Reversal zones seem to be the most profitable out of the two types of zones.

These reversal zones are formed by the banks and other big traders placing huge buy and sell
positions.
How to correctly locate and draw demand and supply zones
(Understanding discount and premium pricing)

How and where do you draw your zones?

When marking out demand and supply, do not mark out the entire consolidated area but look for an
indecision candle stick or Doji candle stick. An indecision candle is a candle stick where both sellers
and buyers both come into power, leaving a candle with mainly wicks and a small body. Usually the
body will be in the centre of this candle. This is how it looks like:
 Equilibrium, discount and premium pricing

When identifying Multiple zones, you go with the zone that is within the discounted/Premium
levels.

Equilibrium is the midpoint of a price range or the midpoint of a swing. It is the level at which an
asset is neither cheap or expensive, therefore we would not want to execute a trade at this level.

We want to buying in at cheaper rates which is below equilibrium and sell at premium rate which
is above equilibrium.

These levels can be easily identifiable using Fibonacci tool.

The levels we interested in are 62%, 70.5% and 79%.

For long entries, your Fibonacci has to be drawn from the swing low to the swing high.

LOOK AT NEXT SLIDE FOR ILLUSTRATION.

 That’s it for this strategy, just back test it, works all the time.

Remember, Practice makes perfect and go and get your wins.

ALL THE BEST

REGARDS,
Moe lishes