Absolutely it works. However, there are a few things to remember.
- It takes experience to be able to identify really good supply and demand zones.
- You really need patience as the best supply and demand zones don’t come along that often, especially on higher time frames.
- You need to understand the relationship between different time frames
- You still need the basic attributes of a successful trader such as proper risk management, position sizing
- Your exit strategy is just as important as your entry and knowing the higher time frame picture can help with this.
- to fully benefit, you need to get in as early as possible into the trend and be prepared to ride out the pull backs on the way to your target.
The main issues newbies experience (including myself) are
- not being strict enough when identifying good supply and demand zones
- trying to spot tops and bottoms instead of just waiting to enter on a retracement
For the first, its easier if you really understand what is going on in the markets in terms of order flow and how supply and demand form
For the second of these, you’re better off determining the trend on your primary time frame (assuming its clearly identifiable) and then always entering on a pull back to supply or demand ensuring that there is sufficient room for a profit margin up to higher time frame supply and demand. For the entry, a smaller time frame supply or demand zone may be best used if the trend is strong - otherwise the retracement may never trigger your entry. If price is ranging (i.e. no trend) then supply and demand zones on your primary time frame become more relevant.
I can pretty much time my entries to perfection these days, but am only just getting totally comfortable with some of the other factors such as knowing when to take profits, fully understanding the relationship between different time frames and learning not to try and spot tops or bottoms. Hopefully 2014 will be the year it all comes together!