Master Supply & Demand Trading (ULTIMATE In-Depth Guide)

Summary

This video script offers an in-depth guide to mastering the supply and demand trading strategy. It explains the importance of identifying aggressive buying and selling as signals of institutional market movements. The instructor shares techniques for spotting supply and demand zones, using momentum candles and consolidation patterns. They also detail personal strategies, including combining supply and demand analysis with Fibonacci retracement levels for high-confidence trades. The script emphasizes the need for patience and confirmation before entering trades, aiming to align retail traders with the 'big boys' for profitable market movements.

Takeaways

• 📈 Supply and demand in trading refers to aggressive buying and selling, indicating significant market movements driven by large institutions.
• 🏦 Trading with supply and demand allows retail traders to align with the strategies of wealthy investors and institutions, potentially increasing profits.
• 📊 To identify supply and demand zones, look for at least three consecutive momentum candles, indicating strong market sentiment in a particular direction.
• 📉 Supply zones are areas where aggressive selling has occurred, pushing prices down, while demand zones are where aggressive buying has pushed prices up.
• 🔍 Consolidation areas, where prices move sideways, can also indicate supply and demand zones, as prices often retest these levels.
• 📌 Weekly rejections, where prices consistently fail to move beyond a certain level, can help identify strong supply and demand zones.
• 🛑 Entry into trades should be based on price retesting supply and demand zones and showing confirmation of a reversal, rather than just a single touch of the zone.
• 🚀 Using additional technical analysis tools like Fibonacci retracements can provide further confirmation for entering trades, increasing confidence in the strategy.
• 💰 Risk management is crucial, with traders sometimes adjusting their risk percentage based on the strength of the confirmation signals, such as a confluence of Fibonacci levels and supply/demand zones.
• 📚 Continuous learning and understanding of tools like Fibonacci retracements are essential for traders to improve their strategies and profitability.

Q & A

What is the main focus of the course mentioned in the transcript?

The course focuses on teaching the concept of supply and demand in trading, including how to identify and trade supply and demand zones, and the instructor's personal strategies for successful trading.

What does the instructor define as 'supply and demand' in the context of trading?

In the context of trading, 'supply and demand' refers to aggressive selling and buying, indicating the presence of significant market players like big banks and institutions influencing the market direction.

Why does the instructor emphasize not skipping through the video?

The instructor emphasizes not skipping through the video because it is designed to progressively build the viewer's understanding of supply and demand, and to ensure they grasp the strategies necessary for successful trading.

What is the significance of 'momentum candles' in identifying supply and demand zones?

Momentum candles, especially when they appear in a sequence, indicate aggressive buying or selling, which is a sign of the 'big boys' or significant market players entering the market. This is a key indicator for identifying supply and demand zones.

Why should traders pay attention to 'big boys' or market institutions in the market?

Traders should pay attention to 'big boys' or market institutions because they have the financial power to significantly move the market. Trading in the direction of these large players can potentially lead to more profitable trades.

What is the minimum number of momentum candles required to identify a supply or demand zone?

The minimum number of momentum candles required to identify a supply or demand zone is three in a row.

How does the instructor suggest identifying the start of a move for supply and demand zones?

The instructor suggests identifying the start of a move by looking at the previous candle before the current sequence of momentum candles and using the high and low of that previous candle to mark the supply or demand zone.

What is the importance of consolidation in identifying supply and demand zones?

Consolidation, where the price moves sideways, can be used to identify supply and demand zones. Drawing a box around the consolidation area can help predict future price behavior when it interacts with this area.

What does the instructor mean by 'weeks' in the context of supply and demand zones?

'Weeks' in this context refers to 'wicks' or the small tails at the end of a candlestick, indicating price rejection at that level. Multiple long wicks can signify a strong supply or demand zone.

How should traders approach entering a trade after identifying a supply or demand zone?

Traders should wait for the price to retest the identified supply or demand zone and look for confirmation, such as a bullish or bearish signal, before entering a trade to ensure the zone's validity and increase the likelihood of a profitable trade.

What additional technical analysis tool does the instructor mention using alongside supply and demand zones?

The instructor mentions using the Fibonacci retracement tool to provide additional confirmation for trades, especially when the retracement levels align with identified supply and demand zones.

What is the instructor's approach to risk management when multiple confirmations align, such as a Fibonacci retracement level coinciding with a supply or demand zone?

When multiple confirmations align, such as a Fibonacci retracement level coinciding with a supply or demand zone, the instructor is willing to risk more than the usual one percent per trade, possibly up to two percent, due to increased confidence in the trade setup.

Outlines

00:00

📈 Mastering Supply and Demand Trading Basics

This paragraph introduces the concept of supply and demand in trading, emphasizing its importance for identifying aggressive buying and selling in the market. The speaker explains that these market actions indicate the involvement of large players like banks and institutions, which can significantly influence market direction. The paragraph also highlights the significance of 'momentum candles' as indicators of smart money activity and contrasts them with 'small candlesticks' that lack volume and momentum from significant market players. The speaker shares their personal strategy for trading supply and demand, which involves identifying and tracking these zones to make informed trading decisions.

05:00

📊 Techniques for Identifying Supply and Demand Zones

The second paragraph delves into the methods of identifying supply and demand zones in trading charts. It describes the process of spotting 'momentum candles' and using them to establish zones where aggressive buying or selling has occurred. The speaker illustrates how to use a rectangle tool to mark the high and low of a previous candle to create a demand zone, and how to wait for the price to retest this zone before entering a trade. The paragraph also explains the use of consolidation patterns and the presence of 'wicks' on candlesticks to identify these zones, providing examples of how the price behavior can confirm the validity of these zones.

10:03

🚀 Trading Strategies Using Supply and Demand Zones

This paragraph outlines specific strategies for trading using supply and demand zones. It discusses the importance of waiting for price confirmation before entering a trade and provides examples of how to use bullish candlestick patterns, such as 'long wicks' and 'bullish engulfing candlesticks', as signals for entering a buy position. The speaker also explains the process of setting stop-loss and take-profit levels, using the last higher low or the demand zone for the stop-loss, and key resistance areas or previous supply zones for take-profit targets. The paragraph emphasizes the importance of patience and confirmation in trading, rather than reacting impulsively to price movements.

15:04

🔢 Enhancing Trading with Fibonacci Retracement

The final paragraph introduces the use of Fibonacci retracement as a complementary tool to the supply and demand strategy. The speaker explains how to apply Fibonacci levels to identify potential retracement points where the price may reverse, increasing the confidence in trading decisions. The paragraph describes a scenario where the price reaches a Fibonacci level that coincides with a previously identified demand zone, providing a strong confluence for entering a trade. The speaker also discusses adjusting the risk level based on the confidence in the trade setup and provides a brief mention of a tutorial on Fibonacci retracement for further learning.

Keywords

💡Supply and Demand

Supply and demand is a fundamental concept in economics that refers to the relationship between the quantity of a resource that is available and the desire for that resource among consumers. In the context of trading, it represents aggressive buying and selling, indicating significant market movements driven by large entities like banks and institutions. The video emphasizes the importance of identifying these zones to align trading strategies with the actions of 'big boys' in the market.

💡Momentum Candles

Momentum candles are a type of candlestick pattern in technical analysis that indicates strong market movement. They are characterized by large body sizes, reflecting high volume and significant price movement. In the video, the presence of green momentum candles signifies aggressive buying, while red indicates aggressive selling. These are crucial for identifying supply and demand zones.

💡Aggressive Buying and Selling

Aggressive buying and selling refer to the forceful entry of large investors into the market, driving prices up or down. The video suggests that observing these behaviors is key to understanding market dynamics and timing trades accordingly. It is used to identify when the market is being influenced by significant players, which can signal potential profitable trading opportunities.

💡Supply Zones

Supply zones are areas on a price chart where selling pressure is strong enough to push the price down. They are typically identified by a series of lower highs or a cluster of candles with long upper wicks. In the video, the instructor demonstrates how to draw supply zones by marking the high and low of a previous candle and extending it, which can then be used to predict future resistance levels.

💡Demand Zones

Demand zones are areas on a price chart where buying pressure is strong enough to push the price up. They are often characterized by a series of higher lows or a cluster of candles with long lower wicks. The video explains how to identify demand zones by marking the high and low of a previous candle and using them as potential support levels for future trades.

💡Consolidation

Consolidation in trading refers to a period where the price of an asset moves sideways, indicating a balance between buyers and sellers. The video mentions drawing a box around a consolidation area to identify a zone where the price is likely to find resistance or support, which can be used to plan trades.

💡Fibonacci Retracement

Fibonacci retracement is a technical analysis tool used to predict potential support and resistance levels by applying the Fibonacci sequence to an asset's price movement. In the video, the instructor uses Fibonacci retracement to identify key levels where the price might reverse, providing additional confirmation for entering trades.

💡Insider Information

Insider information refers to non-public, material information about a company that could affect its stock price. While the video humorously mentions it, it emphasizes that trading based on such information is illegal. The concept is used to illustrate the importance of aligning with the actions of large, informed traders.

💡Retail Traders

Retail traders are individual investors who trade for their personal accounts, as opposed to institutional investors who trade large sums on behalf of clients or funds. The video highlights the challenges retail traders face in moving the market and the importance of trading with, rather than against, the larger market forces.

💡Confirmation

In trading, confirmation refers to additional signals or indicators that support a trade decision. The video stresses the importance of waiting for confirmation before entering a trade, such as a price retesting a demand or supply zone, or additional technical indicators like Fibonacci levels aligning with the identified zones.

💡Bullish Engulfing Candlestick

A bullish engulfing candlestick is a bullish reversal pattern that occurs when a small bearish candle is followed by a larger bullish candle that 'engulfs' the previous one. In the video, this pattern is used as a confirmation signal that the market is likely to move upwards, indicating a potential entry point for a buy trade.

Highlights

Mastering supply and demand can lead to significant profits in trading.

Aggressive buying and selling indicates the involvement of major market players like banks and institutions.

Momentum candlesticks are key indicators of aggressive market movements.

Small candlesticks do not represent significant market demand or supply.

Trading with the 'big boys' means aligning with the major market players.

Supply is identified by aggressive market downturns, and demand by aggressive upturns.

Retail traders should aim to ride the wave of major market movements rather than trade against them.

Identifying supply and demand zones involves looking for at least three consecutive momentum candles.

The area of origin (AOL) of a market move is crucial for marking supply and demand zones.

Price retesting of demand zones can provide entry points for trades.

Consolidation periods can also indicate potential supply and demand zones.

Areas with multiple long wicks show price rejection and can be potential supply zones.

Waiting for price confirmation is essential before entering a trade in supply and demand zones.

Using technical analysis tools like Fibonacci retracement can add confirmation to supply and demand trading strategies.

Fibonacci retracement levels can align with demand zones for increased trading confidence.

Multiple confirmations from different technical analysis tools can enhance the reliability of supply and demand trades.

Adjusting risk based on the confluence of technical indicators can lead to more confident trades.

The importance of patience in waiting for the right confirmation before entering trades is emphasized.

Observing price behavior at retracement levels and demand zones can lead to profitable trades.

Transcripts

you can Master supply and demand you'll

be able to make so much more money from

Trading these are what I'm going to be

covering in this course but if you want

this course to work for you and you

really want to master supply and demand

please do not skip through the video I'm

gonna start off by teaching you what is

a supply and demand why you should trade

it and then how to draw how to find

supply and demand zones and how to

actually track these zones when should

you enter for the trade last but not

least I'm gonna teach you how I

personally trade supply and demand my

own secret supply and demand strategy

so what is supply and demand supply and

demand is basically aggressive selling

and buying that's it we want to see

aggressive buying and selling because

this tells us that all the big boys like

big Banks and institutions are entering

into the market and pushing the market

in that direction I want you to look at

this candlesticks right here big fat

momentum Candace tells us that there is

a lot of aggressive selling that is a

lot of momentum and volume pushing the

price down on the right side we see

green momentum candles which tell us

that there is a lot of aggressive buying

a lot of buying pressure a lot of

momentum pushing the price up so these

are what you should be looking for when

trading supply and demand this momentum

candles tell us that smart money is in

the market on the other hand if you see

small candlesticks just like this this

is not demand all right this is small

baby buyers we do not want to see small

candles like this because there is no

volume or momentum by the smart money at

all why should you trade supply and

demand let me tell you why I trade

supply and demand because I want to

trade with the big boys who have a lot

of money I want to react to the price

when this big boys enter the markets the

best way to see them entering into the

market is by waiting for supply and

demand Supply is when the market is

going down aggressively and demand is

when the market is going up aggressively

so I want to see this nice momentum

candles that tell me that the big boys

have come out to play remember we are

retail Traders we are Brokers we do not

have enough money to move the market

while these guys are dealing with

millions and billions of dollars let's

say that you have Insider information

and you know that the big boys smart

money billionaire Traders whatever they

call them are buying at this key level

right here so will you end off or buy

you are a dumbass if you said no of

course you would it's literally free

money if insider trading wasn't illegal

because you know that these people have

the money and the power hour to move the

market so obviously you want to ride the

wave with them because the last thing

you want to do is to trade against them

but that is what a lot of retail Traders

do now that you have understood why you

should trade supply and demand let's

talk about how to actually find this

supply and demand zones

[Music]

step is that you want to look for at

least three momentum candles in a row so

you can see right here we have spotted

three green momentum candles in a row it

can be more like can be four or five

green cannons in a row but the minimum

is at least three momentum candles in a

row remember you do not want to see tiny

small little candlesticks just like this

you want momentum candles the big boys

so in this example I will just use these

three green momentum candles right here

so the next step is that you want to

find the AOL where the move started so

this art move right here started from

the previous candle so this is the

previous candle right here so in this

case what you want to do is to take out

your rectangle tool and mark the high

and the low of the previous candle so

just draw like a little box and drag it

all the way up here like this so now the

area between these two lines will become

the demand zone so right now what we

want to do is to wait for price to come

back down to disable and then enter for

a buy but price already did that right

price literally went down to re-test the

demand Zone before shooting back up so

if you enter for a buy here you have

made a load of money just another

example that is literally three momentum

candles in a row right here so we take

our box tool and Rebox the previous

candle the high drag it all the way down

to the low and then drag it to the right

side just like this so this will be your

supply Zone because the last time price

was here it got pushed all the way down

here so this is your supply Zone and we

are waiting for price to come back up to

this area and look at what happened next

so right now price has managed to come

back up to this area and I want you to

observe to see what price does

it literally collapsed you saw that I

hope you saw that it literally went back

up to this Supply area that we have

drawn and collapsed so that's the first

way that you can use to identify your

supply and demand zones

the next way is consolidation you can

see right here price is just going

sideways not going anywhere so what you

can do is that you can draw a box to box

up this entire consolidation and look at

what price does price literally went up

all the way to touch this consolidation

box before heading back down so that is

your second way

the Third Way is to identify an area

with weeks so weeks basically show us

that price is rejecting that area right

so you can see right here there is

multiple long weekenders at this area

here so what you can do is they can draw

a box around this area here and just

drag it all the way right here so you

can see the next time price came back

down to disable price literally should

order the way up there so this was a

very good demand Zone that is also

another Supply area right here you can

see there is multiple long weeks being

formed at this area which show us that

this area is like a very strong area

that price is always rejecting so if you

draw to those the right you can see that

next time price came back all the way up

here it literally collapsed all the way

down to the demand zone now that we have

understood how to identify supply and

demand zones we have to know how to

trade them

so right here I have spotted three green

momentum candles which means that the

demand zone is somewhere right around

here so after I spotted these three

momentum candles I'll be looking at the

previous candle before this up move is

formed which is this red candle right

here so I will take my box too and

literally mark from the high all the way

down to the low and drag it to the right

just like this so this is your demand

zone so right now we are waiting for

price to come back down to this demand

Zone to retest it before entering for

the trade so there are basically two

ways where you can trade this you can

either place a buy order at the demand

zone so that when the price gets down

there your broker will automatically get

you into a buy position or you can

manually enter the trade after you see

what price is doing at that level which

is the one that I like more because

remember no matter how strong the demand

area is that is always a chance that

price is going to break past it so right

now I'll be patiently waiting for price

to come back down to this AOL so we see

what price does and as you can see price

is approaching this area right now and

the second price come back down to this

area and touch this area you should not

enter yet you must wait for confirmation

that is a very important point you have

to wait for price to show you that it is

gonna head back up so right now you saw

that price has came back all the way

down here to this demand Zone and it

gave us a long week doji and also

multiple long week candlesticks which

show us that price is rejecting this

demand Zone and it's gonna shoot back up

what does this candlesticks tell us it

tells us indecision in the market it

tells us that price is rejecting this

AOL but we cannot assume that price is

gonna go back up yet we have to wait for

the next Candlestick or the next few

candlesticks let's look at the next

candlestick

so right here price gave us a big green

bullish engulfing candlesticks these

tell us that you know what the buyers

are back into this Market the big boys

is at this demand Zone loading up their

buy orders and and you really know price

is going to go to the moon now so this

is where I'll enter for a buy position

right here place my stop bus below this

last higher low or if you want to play

it safe you can always place it below

the demand zone for this example I'll

just place my stop loss below the last

higher low right here so for your take

profit I want to place my take profit at

a key resistance aerial or a key Supply

even so I'm going to be looking towards

the left and see where price last stop

at if you look towards the left you will

see that right here price gave us three

red momentum candlesticks so right here

that is a supply zone so how I mark up

my Supply Zone remember is that you want

to look at the previous Candlestick Mark

the high to the low and literally drag

it up just like like this so I'll place

my take profit all the way up at this

Supply area right here and place my stop

bus a little bit tighter somewhere right

around here below this bullish engulfing

Candlestick and this is like one is to

do let's see how this trip plays out

price went up and smashed our Tech

profits I want you to look at what price

did when it came up to this Supply area

that we have drawn here it gave us one

week right here this upper week right

here which show us that they will sell

us at this point of time that was

pushing the price down but the buyers

are way too strong that is exactly why

price continue to go up even further

literally just rinse and repeat this

strategy so after I've closed this trade

let me just remove this and I'll just

keep on drawing my new supply and demand

zones since price has just broken past

this Supply area and invalidated it I'm

just gonna remove this and I can see

there's another like demand Zone

somewhere right around here because

there is multiple weeks being formed

right here which show us that maybe this

is like a little demand AOL so we can

see like right now prices came back all

the way down here and you can see what

price did after it came back all the way

down to this demand event it should back

up at this point of time price has just

confirmed to us that this is a valid

demand Zone because price gave us three

green momentum candlesticks so I can

just like redraw this little demand Zone

because like I want to draw it at this

previous candle you know what I mean so

I'll just like drag it from this

previous candle to Mark the high the low

drag it to the right side just like this

and right now I'm waiting for price to

come back down to this awl and show me

some sort of confirmation before

entering for the trade I almost forgot

to mention to you guys but also draw

like a little Supply area right here

because price gave us multiple long week

rejection at this area so this is like a

little Supply AOL and right now we just

wait and see you can see right now price

has came back all the way down to this

demand Zone and he has broken past it

just like a little bit so do you think

we should end up a cell here this is

what retail Traders are doing retail

Traders will just enter for ourselves

when price break through like a little

support email or whatever and look at

what price did next

you went back up so this was ending up

like a little fake out so at this point

of time this gave us a confirmation that

price is not breaking past this demand

Zone this demand zone is solid and we're

gonna head back up this is the bullish

confirmation that we are waiting for you

can see like the green candlesticks are

getting bigger and bigger so at this

point of time I'll just enter for a buy

somewhere right around here place my

stop loss below this demand Zone take

profit at the supply able that is being

formed right here and look how this

trade payout

okay you can see price when R wire and

right there boys boys boys right there

we just smash our take profit making

this a very nice supply and demand

strategy two wins in the back baby

[Music]

now since you are still watching this

I'm gonna give you a little secret I'm

gonna show you how I personally trade

this supply and demand strategy my own

strategy my own supply and demand

strategy when I am trading I do not just

like to rely on one confirmation I need

multiple confirmation so what I like to

do is that I like to use all the other

technical analysis Tools in my Arsenal

to give me more confirmation for me to

enter for the trade for example this

trade right here the moment price starts

retracing right here just like this

right I will pull out my Fibonacci so I

pull up my Fibonacci reggae from this

swing low all the way up to the swing

high right here and literally just read

get across like this so right now I am

waiting for price to retrace all the way

down to either one of these retracement

levels I've done like a full length

tutorial on Fibonacci retracement and

how you can use this to get high win

rate trades which you can check it out

after this video but basically how these

Fibonacci retracement 2 works is that

I'm waiting for price to come back down

to any of these retracement levels this

38.2 50 61.8 and the 78.6 and then I see

some sort of Confirmation and I will

enter for a buy and I'll take profit at

the negative 27 the extension level

right here so basically the moment I

start seeing price retracing I'll just

pull out my Fibonacci retracement and

I'm waiting for price to come back down

to either one of my retracement levels

so we still wait and see you can see

price is like heading back down

and it came down all the way down to

this 61.8 level before it starts

retracing right here at this point of

time I'm not going to be entering

because I know that most of the time

when you are using Fibonacci you cannot

be entering when price just bounced off

one time you need to wait for price to

come back down to re-test this same AOL

which makes it like a more solid able

before getting into the trade now this

is where the real fun begins this is

where the magic happens you can see

right here this is the 61.8 retrace 111

but at the same time it is also our

demand Zone it's also a demand zone

right here we have just discussed that

this is our demand zone right so I'm not

gonna explain it again obviously so

right now we are waiting for price to

come back down to this demand zone or

this 61.8 level

and give us some sort of confidence for

us to enter for a buy somewhere right

around here you can see this is

literally like the additional Confluence

that you need my Fibonacci retracement

level lines up with my demand zone so in

this case what I will do is that instead

of risking my usual one percent per

trade I would risk even more I will risk

maybe two percent on this trade because

right now I am more confident in myself

so right now I'm still waiting for price

to come back down to this AOL before

entering for the trade so we see prices

came back down to this AOL and you can

see price is just showing us that like

it's going to reverse and hit back up at

this point of time I will have entered

for my buy position right here once

again place my stop loss below this 61.8

retracement level or demand Zone

whatever and then place my take profit

at the negative 27 extension level you

can see just now I place it at the

supply zone right but now I'm gonna be

placing it at the negative 27 extension

level because I trust the Fibonacci it

will do the thing it does so we wait

and you can see price is like going up

okay okay and right here we have just

smashed our take profit guys it's really

really just as simple as that you have

to understand how to use Fibonacci

retracement if you still don't

understand how to use Fibonacci you are

doing yourself a huge this service which

is why I want you to check out this

video next where I literally give you

like a complete course just like this on

the Fibonacci retracement to help you

become profitable click on this video to

find out more and remember you are just

one trade away