I am new to trading, i am actually using a demo account and would like to practice using this system, any advice on where I can get it or any one who’s an expert with a blog/video/book etc ?.
Here’s an interesting article I ran into concerning supply and demand.
However, it’s best just to learn how to read the price action on the charts. Trying to ascertain whether there is a high demand for a particular currency is a waste of time. It really doesn’t matter as long as you have the information from the candlesticks.
Take this chart of the USDCHF, for example:
As you can see from the chart, there was more “demand” for USD than there was for Swiss Franc during the latter part of the US session today.
How do we know this? Because of the parabolic buy climax where the USD was getting bought at a higher rate than the franc.
Conversely, we know that the dollar was being sold off during the subsequent Asian session because of all the red candles on the right of the chart. Simple right?
The theory of supply and demand has two main premises for the trader:
- When the price is low, the demand is high
- When the price is high, the demand is low
Unfortunately, this is a dangerous theory, especially for beginners who are looking for that “secret trick” to succeed in the markets. I assure you, there is none.
You can easily get caught up in selling reversals during strong trends simply because you think price is “overbought” or “oversold.” These are dangerous assumptions since the market dictates these conditions, not some lagging “supply and demand” indicator.
Sure, demand for a particular currency will eventually wane, and the market will find an equilibrium once again, but at what level will that be? The answer is nobody knows.
So, for these reasons, it’s best to learn how to read the candlestick charts and rely on the information you see in front of you. Don’t worry about supply and demand since there is no way to predict it.
In my experience, using supply and demand in scalping involves identifying key levels where price has previously reacted strongly. I focus on areas with clear imbalances, looking for rapid price movements. When scalping, I prioritize short-term trends and enter/exit quickly, using these supply/demand zones as points of reference. It’s essential to stay nimble and adapt to market conditions.