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How to find and trade Supply and Demand zones

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DB1

There seems to be a lot of questions about supply and demand zones, mainly how to find them and
getting them mixed up with support and resistance areas, there are quite a few posts in the forum and
quite a few traders on here use them just on their own and some inconjunction with indicators. on some
charting platforms you can get indicators to show you where they are.

So my objective for this post is to try and show you what i look for to find Supply and Demand zones and
so that you will be able to find them as well and then WHEN you realise how this will help you in your
trading you can research them on your own, there are some far more experienced traders on here that
will go into the reason why they happen, it's all about large unfilled orders

SUPPLY (Sky high), supply zones are found near tops and at the end of upward moves in trends

DEMAND (Down low) demand zones are found near the lows and and at the end of downward moves in
trends

The sky high and down low is just an easy way to remember which is which

So now we have general idea as to where to look for these elusive zones, what are we then going to be
looking for. So for a supply zone we will be looking at the top of a move, ideally we want the price to
move up without to many retracements, it needs to pause, the least amount of candles the better and
then wants to leave that area with a massive downward candle, bigger the better. Great so now what?
Well now we are going to look at the candles before the big one that left that area, we are going to place
a horizontal line on the last pivot high and a horizontal line on the open or close of the pivot candle, which
ever is the lowest and that depends on whether the pivot high candle is bullish (up candle) or bearish
(down candle). Some will use the high and low of the pivot high candle, if the pivot high is also the big
candle moving down then i look to the left of it to find a the open/close of the next candle, there may also
be a few candles in a small range so i would include them, were not bothered about the lows of these
candles so lets have a look at some examples shown below

So Demand zones are the opposite of the Supply zones, look near the lows for a pause and a sudden big
candle heading up, mark the pivot low and the open/close of the paused candle which ever is the highest
or the consolidation of a few candles, were not bothered about the highs of these candles

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The main thing here is to

look through your charts and start looking at the major highs and lows,

look at the amount of candles formed at those areas

How big was the big impulse candle that moved out of that area

place your lines or box around the candle/s before the big impulsive candle

Go forward in time and see what the reaction to that zone was

The S/D zones can be found in the trends as well, look for pull backs small pause and big impulse candle
in the direction of the trend, price will come back to these areas while still maintaining the trend, also
when the trend has changed, you will find reaction off these S/D zones, maybe not as bigger reactions,
because these reactions will be against the primary trend

These happen in every timeframe, the higher the timeframe the more robust the S/D zone is, you can
look through your charts and start finding them.

So how do you trade them? well thats the million dollar question, everyone has their own way, so here
are a couple of ways

1, From the box/lines you have drawn to mark your zone, place 1 trade at the start of the zone, 1 in the
middle 1 at the end of the zone, stop needs to be above the the zone

2, Wait for price to react from the zone it needs to enter the zone and then close out of the zone, once
closed enter your trade with stop on the opposite of the zone (this is the more consevative way, but you
may miss a move due to price spiking into the zone and violently moving away,so if you are placing stops
on the opposite side of the zone, you'd have to have a larger stop and miss some of the move), you could
place a 1/4 of a position at the zone and add to it when it closed outside of the zone

3, Once the price has entered the zone, move down to a lower timeframe and look for divergence, lower
highs/lows or any other reversal pattern or indicator that you use

As far as targets, trading multi lots then you need to be looking at the next S/D zone above or below the
one you entered, as your ultimate target depending on if you went long or short, so you can scale out on
the way up, scale in on the way up or just have trail up to the next S/D zone.

So there you have it, as you look though your charts you will notice that some S/D zones just get blown
right through, if this happens then look to a higher timeframe, there may be a larger S/D zone above
/below.

You can trade these on their own or utilize them in your own trading system, any questions then feel free
to ask, if i can't answer them then i am sure there are some very qualified traders on here that can. This
was for my Silver 1 Beeline post a new topic, i didn't want to just put "I like trading" just to get the 200 XP.
S/D zones are something i have being getting into for a while, i can see the potential in them and
hopefully you will too, you are trading reversals of tops, but there is a reason for the reversal, its
something that can be backtested and something that you can structure trading rules around

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Attachment Size
Attachment Size
EURUSDSBH4.png 102.49 KB
EURUSDSBH4 2.png 116.03 KB
EURUSDSBWeekly.png 149.54 KB
EURUSDSBWeekly 2.png 180.41 KB

Fri, 11/17/2017 - 9:46pm

cousin.john

This sounds just like OTA training

Fri, 11/17/2017 - 11:42pm

DB1

I had to do a quick google to fine out what OTA is (Online Trading Academy) not sure what their
reputation is like, but their courses seem high $$$. It is a very general Supply and Demand topic, i think
most people identify S/D zones in a very similar way but it's quite amazing the very different ways traders
trade the zones. Someone mentioned Sam Seiden videos on here the other week and that's what got me
on to watching some of them and i wish i'd found them a while ago, great place to start learning about
S/D, the part i found interesting from his YouTube videos was the way the price leaves an area, from
what i recall he gives them a rating, with the least amount of time or candles being the highest rating.

Sat, 11/18/2017 - 12:51am

Vik

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That's good information, DBI. Thanks. Check out Sokha in the Hive. he has posted some great info on
S&D

Sat, 11/18/2017 - 3:01am

DB1

Thanks, vic_2, it might have been one of Sokha's posts that had a link to one of Sam Seidens vids, the
good thing about the Bee Hive is the willingness for people to, help, share and explain, one small
comment could be the turning point or that big AHA moment where everything clicks and it all falls into
place, mines more trickling into place rather than falling, lol, but hey i'm not loosing as much as i used to
do.

Sat, 11/18/2017 - 10:20am

Jean-Francois

If you use mt4 on the side - you can use this indicator to find sup/dem.

Attachment Size
II_SupDem.mq4 29 KB
II_SupDem.ex4 36.29 KB

Sat, 11/18/2017 - 12:20pm

kwk58

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Jean-Francois...Could you please email these attachments to me? I think I've found someone who can
convert the code to work on Alveo. Email is kwk58@outlook.com. Thanks for your help.

Sat, 11/18/2017 - 12:30pm

Jean-Francois

kwk58 - do check your inbox my friend....

Sat, 11/18/2017 - 12:51pm

DB1

Thanks Jean-Francois taken with gratitude, i have something similar, however this one i do like the hollow
zone and price for the start of the zone, for some perverse reason i still like to mark my charts up and
then i'll check them with an indicator

Sat, 11/18/2017 - 1:02pm

stefsmum

Thank you - I might now start to understand Sokha a little more!

Sat, 11/18/2017 - 5:13pm

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 rcneefe

TY

Sat, 11/18/2017 - 6:30pm

victor4clouds

Good info

Thanks

Sat, 11/18/2017 - 7:34pm

DB1

https://www.youtube.com/watch?v=uX6TUrTxD7U Sam Seiden: Supply/Demand Basics

This is a good video to watch and it will lead you on to more gems, and he explains it a lot better than i
can at the moment

Sat, 11/18/2017 - 10:42pm

Sokha

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Be careful, don't confuse pivot highs and pivot lows with supply and demand zones.

Here is a EURUSD trade in my retirement account, I just moved a stop loss to break-even after 5 p.m.
EST since the 1st target is very close. If you can be in front of a computer to trade a supply-demand
zone, Might I suggest that you wait for a divergence inside the zone on a refined time frame for a better
fill. Your stop would be smaller since it is 10% daily ATR + spread above a distal line. You can put an
alert, so you don't have to be in front of a computer all the time.

If you are a day trader, pick a session that you like to day trade. For example, I like London opens for my
short-term swing trade strategy. I would draw all the supply and demand levels the night before, and then
either put the alert or only get up when there's a potential setup would trigger during London opens. This
way I am not in front of a computer all the time.

Hope this helps,

Sokha

Mon, 11/27/2017 - 9:34pm

heidi

DB1, thanks for giving such a clear explanation with supporting images, and also the different ways you
can execute these trades. Really helpful.

Sokha, thanks once again for your further insights. I take it you would enter the trade as soon as you saw
the divergence happening. Great tip.

Mon, 11/27/2017 - 9:58pm

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 hakchinoy

DB1, nice analysis and charts. :)

Tue, 11/28/2017 - 12:33pm

kirish15

This was an interesting read. Thanks for clearing up some stuff for me. Didn't even know there was an
indicator on MT4 to show these areas.

Tue, 01/16/2018 - 3:15pm

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