Master Supply & Demand Trading (ULTIMATE In-Depth Guide)
Summary
TLDRThis 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
📈 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.
📊 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.
🚀 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.
🔢 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.
Mindmap
Keywords
💡Supply and Demand
💡Momentum Candles
💡Aggressive Buying and Selling
💡Supply Zones
💡Demand Zones
💡Consolidation
💡Fibonacci Retracement
💡Insider Information
💡Retail Traders
💡Confirmation
💡Bullish Engulfing Candlestick
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
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