The difficult bit is identifying the fresh zones and being patient. It’s easy to end up forcing a zone because you just want to trade now.
One thing I am still not sure of is why previous supply an demand zones still work at a later date. Either orders are still stuck at that levels for days,weeks and months waiting for price to return. or the big boys are jumping back in with new orders when price returns to those zones. Regardless of the details, this is what happens and there is no denying it.
Real word example
Look at the area I have circled. You might wonder why price turned at that point when looking at the 4hr chart. There doesnt appear to be any supply there. There will probably 95% of the time be visible supply or demand. I looked on the 15 min time frame and there you see it… a supply zone. That supply zone on the 15 min chart caused price to turn. This is the kicker. This is why charts looks messy and hard to read and why trading supply and demand is more difficult than it should be. There are supply and demand zones everywhere. Visible on some time frames but not others. So when you might be in a trade and price turns against you for apparently no reason. Take a look on other time frames and you will find the supply or demand zone responcible. Get you head around this way of trading and you will be successfull soon enough.
How long price spends at the zone. Less time the better.
How price leaves the zone ( Shoots away fast is good. Moves away slow is bad)
How long until price comes back to the zone
Any Pivot high or low does not count as supply or demand
Level in level (LOL) are higher probability. This means a supply zone within a supply zone or demand zone within a demand zone.
How far price moves away from the zone. Should be at least 3 times the zone size to be valid.
Is there an opposing zone close by which will hinder any chances for a decent move.
You don’t want to see any large wicks in the zone.
Also the zone should be fresh. This means price has not attempted to break that level before. Each time price comes back to a zone the zone becomes weaker and will eventually break. We only want to take the fresh zones for the highest probability. Always look left to find this out.
There you go
There are supply and demand zones everywhere. Visible on some time frames but not others. So when you might be in a trade and price turns against you for apparently no reason. Take a look on other time frames and you will find the supply or demand zone responcible.
Blockquote
Hi Epidot, I stumbled upon your analysis I quoted here.
Because it’s so difficult to assess whether the zone will hold or not, or at worst though the zone will hold a little bit longer it will however hunt your stop loss before moving as per our predicted direction. The sad part, however, it’s leaving the zone without us on board.
Most of the time then not, I identified a very strong fresh zone and set the trade and forget -putting 3:1 RR, only to find out the next day (1) it followed the direction I intended, however did not reach TP, and reverse (2) it hits my SL, and (3) bounce off, without me – to the initial direction I have predicted.
What a painful stories of trading Supply & Demand. I’ve been using this strategy for over two years now — not been successful.
Everyone says about use ATR bla bla bla, I even put 2X ATR mostly – but the wick is just horrendous, plus the broker spreads.
There is no way to get 3:1 RR consistently using the Supp&Demand thing. Maybe 2 out of 10 trades? and that’s even very rare during the trending market.
Appreciate your view - hope to chat more.
note: I still use S&D for my core strategy, working on some tweaks - if anyone interested to work together and combine with other TA, I need experts in Fibonacci and Price Action. So we can open a new project here in Babypips, educating ourselves.
