Supply & Demand Trading System

Hey Everybody ,

in the last time i found a great thread here on babypips called Maryo Chart .
Its about supply and demand trading .
I followed it to see what is the magic behind his very accurate and verry profitable trades.
The answer was easy its about S&D.

Due to the fact that i do not want to spam his thread with my trading predictions and pictures i opend this thread here to post my trades and thoughts from time to time …

Everybody who wants to discuss ,post and analyse this kind of S&D set ups ( others just call it bouncing zones ) is warmly invited .

If you asking yourself what the hell is a bouncing zone or what is the mystery behind S&D just check up this short summary (Link below)

21pips.com | Forex, the bouncing zones 1

The following week will be my 2nd week trading this system …means i am no expert and i have no experience trading it .
I have spotted some set ups last week but just to watch how they play out.
There was 1 trade i took due to a small sl (EUR/GBP) …what should i say it was a great winner :wink:
But there will be loosers and there will be winners …our goal is to filter the loosers and get an eye for winning trades and strong bouncing zones.

I hope this journey will end up in success …but everything is possible so letz see what 2016 will bring .

So lets get it started!


Trade was executed when price touches the cyan line ( 0,7450)
Violet is SL…the area between cyan and violet line is the “Bouncing Zone”.


approx. +200 Pips

Are you planning to do as Maryo does and post your charts before the move as well as after?

yes and no… iam kind of busy in the week so i try to post things at the evening (but cant promis this)
i will try to post a set up and then how it played out …
and i hope others who want to learn and discuss this kind of set ups will do the same …
last week we started to post in maryos thread but some members were unhappy about the posts because it makes maryos thread very unclear with all this different pictures…so i came to the decision to open up a new thread to this topic …hope this is ok for the babypip comunity…if not just tell me

and sorry for the english …im not a nativ speaker :wink:

I am also interested in supply and demand and have been trying to learn maryos charts so will be following this thread :wink:

Can anyone outline what the main difference is between support and resistance and supply and demand?

Supply and Demand are basic structures of capitalism. If the amount of produce exceeds the demand for it, price should fall to a level that stimulates demand again. If insufficient produce is available to meet demand, price should rise until demand falls or until more is produced.
Support and Resistance are levels at which price has historically struggled to be maintained and has subsequently returned to more acceptable levels, until such time as market forces determine that new price levels are desirable and sustainable.

1 Like

I’m amazed someone gave the right answer so soon. Most “traders” can’t answer that.

1 Like

count me in…Trueman, do you mind talking through your thinking or rationale around how you got to determine your bouncing zone? I am also trying this out and will share as well.

subscribed.

And how can I “see” demand and supply on the charts to draw those lines? I know how to draw support and resistance lines, but how does it work with demand and supply? Or is it basically the same on the chart and just differs in the matters of definition?

First of all thank you @Trueman23 for gettign this thread started and @Kasravi for explaining me and @Trueman23 Maryo’s strategy in brief which led us in the right direction. And last but not the least @Maryo for sharing his wealth of knowledge and graphs on his original thread.

I am no expert in forex so I would strongly recommend everyone to go over detailed lessons on Supply and Demand zones but here is my take on it.

The basics of S&D have already been covered , so skipping that, lets move onto ‘How I identify S&D zones’ and ‘How I trade them’

I only trade these on the 4HR TF because that is all I know.

  • Identifying S&D zone
    When price is reaching a supply zone the sellers are going to flood the market with SELLING orders thereby driving the price in the downward/lower/bearish direction. This movement is very strong and if you are trading on a 4HR TF then you may see downward movement without any breaks on 4-6 or even more candles. Simple Economics.

The exact opposite would happen in the Demand zone. Buyers will flood the market and price will go upwards/higher/bullish direction.

While using Support and Resistance I draw lines but when I am looking at Supply and Demand, I draw ZONES.

There is a possibility that a Resistance line aligns perfectly with the Supply zone and the Support line with the Demand zone, but not all the time. In my limited experience I have also seen more supply and demand zones forming compared to prices hitting Support and Resistance lines.

One other benefit that I notices with Supply and Demand was that the Stop losses were very tight which made me worry less about my trades because even if the price goes against me I am not gonna suffer a lot.

Here is one of the threads I found immense help about S&D zones and how to trade them.
Supply and demand in a nutshell by Alfonso Moreno @ Forex Factory

This thread also has multiple free downloadable templates and indicators that will help you trade a lot better.

Next I will post what my process is for entering a trade on he 4HR TF using S&D!

i will try to set up my “zone” like the instruction in the link from post 1…
there may be some other ways to do it but as a starting point for this system i try to do it like this…
but other ways are welcome …iam glad about every thought and advice …maybe here are some guys around trading S&D for long time and can give some good advice to us .

and thx for this nice definition of Supply & Demand to eddieb and R2

How I enter a trade using S&D

Step 1 - Clear all indicators.

Step 2 - Draw 20EMA and 50EMA. The sole purpose of this is to gauge the trend of the market

Step 3 - Open the 4HR TF and look for rapid price movement atleast worth 100 pips combined on 4 to 6 candles.Once you have identified these, you kind of have any idea where the price is bouncing off from which helps you identify your S&D zones

Step 4 - In order to draw a Supply zone, identify the highest price point where you saw the sudden burst of price moving downwards. Choose the Rectangle tool and start drawing the rectangle from this highpoint to nearest bar shoulder or feet of the current or the adjacent candles.

Step 5 - Pull this rectangle as far as you can to your right

Step 6 - I have hardly put in a a lot of Instant execution orders in this system. Most of my entries have been based on pending orders which went on to get executed. Here is how I put in a pending order in a supply zone: Once I have identified a Supply zone I calculate the price point at the highest and the lowest level on my rectangle and set a SELL Limit order right in the middle of these two points on the rectangle. I don’t remember if I read this entry strategy on some thread or came up with it by myself, but it surely has worked for me.

Step 7 - I generally enter 2 or 3 trades so that I can take some profits at various checkpoints in order to make sure I am atleast making some profits every now and then. Set SL a few pips above the highest point and TP1 at place on the chart where you saw the price facing opposite movement or Big round numbers. TP2, TP3 would have the same logic as TP1 but further away. Move SL to BE once TP1 has been hit in order to lock in $$$.

Here is one of the trades I am in right now which I had set a pending order on 11th jan but only got executed on 18th jan (Today).


I don’t think I am good at explaining stuff unless there are specific questions being asked so feel free to reply here and I will try my best answer them.

If others have suggestions for me in terms of how I can get better at this system, please feel free to share too.

Next up, I will post some of my other pending orders that I have in place. (Either today or tomorrow)

2 Likes

Hiya, how did you draw these levels (for example the cyan line)? Are they supply or demand levels that you spotted more far back in the chart? Shouldn’t we also draw some of the levels that are on the chart you are showing?

ok i try to explain it very easy…
If you take the first pic. count from the right side until you reach the 13 th candle (big green one)
on this candle you can see that in this area are a big amount of buy orders (causes the rapid "big"move)…
there is also a little sidway move in front of this “big” green candle…almost 2-3 small ones…
the cyan line marks the top of this little sideway move …violet marks the low of this sideway(our SL)
all we have to do now is to wait until price reaches our “zone” (the area between cyan and violet ) and triggers our long order …
you can find this areas in every time frame in every currency…

Thanks for the thread Trueman23 and r2theb2thec!

I’ve been studying forex for about a month and a half now. In this time I’ve read through the School of Pipsology twice, completed all the quizzes and read an interesting book called “Trade What You See: How To Profit from Pattern Recognition” by Larry Pesavento and Leslie Jouflas.

I feel that the time is right for me to start working on mastering a trading strategy. The last couple of days I’ve been reading through all the posts on the Maryo Charts thread and it’s really gotten me excited! I feel that the supply and demand strategy is a great way for me to start gaining actual trading experience (moving away from just book knowledge).

I look forward to learning with you guys and discussing trading ideas relating to this powerful strategy!

Talk again soon!

Thanks, that makes it more clear now.

I am not clear about this answer. Are the Support and Resistance levels there because Supply and demand are kicking in on these levels? And are they basically the same? I think eddieb gave the perfect deffinition of it but are they related to each other or completely different?

They are related insofar as Support and Resistance levels are a historical representation of how price behaved in the past following changes in Supply and Demand at that time.
For example, take an imaginary pair, Abc/Xyz.
Of the 2, Abc is the stronger currency and over the last year price has gradually climbed from, lets say 1.0000 to 1.25000.
Price has risen because there is more Demand for Abc. 1.25000 is the Resistance level.
However, each time price reaches 1.2500 it falls back (lack of Demand) until it reaches 1.15000. This has happened 4 times in a few months, so 1.15000 is the Support level.
Then there is a news event, say a rate hike by Abc. This stimulates Demand in that currency and it finally pushes up thru the Resistance level (1.2500) to create new highs.
Hope that makes sense.

[QUOTE=Trueman23;743297]i will try to set up my “zone” like the instruction& in the link from post 1…
there may be some other ways to do it but as a starting point for this system i try to do it like this…
but other ways are welcome …iam glad about every thought and advice …maybe here are some guys around trading S&D for long time and can give some good advice to us .

and thx for this nice definition of Supply & Demand to eddieb and R2[/QUOTE

Sorry to burst your bubble trueman but there is more to maryo’s trading style than just S&D. He works for a firm with many brokers beside him. So they analyze many aspects of a chart from many angles. That is why he is very accurate. They consider heavily the news and follow it closely. And they also use Harmonics as a way to determine S&D zones. That is all I could get out of him with his English there might be more to it than that. If not for all that you can just place S&D indicator on your chart and be done with it. But that doesn’t work.
For pointers. When maryo posts a chart never enter until it hits his entry zone, always place SL where he has placed it and don’t get out of a winning trade just because it is 100+ pips or wtever. Wait for him to post a contrary position or if you are in profit of 300 or more pips by next week consider using trailing stop.
you can make a lot of money with him. But you need at least 50,000. and use no more than 1% per trade. and don’t expect to become a millionaire any time soon.
But I wish you success with this thread, just consider using news and harmonics along with S&D.
tnx

P.S.
never ever get overzealous when you start making lots of money (and u will with this system if u follow it) and get greedy by raising your 1%. I will guarantee you that will be your downfall.

Hi guys and girls I thought I would post what I think might be a supply demand set up. It’s the USD/CAD 4 hr chart I don’t recommend taking this trade as I’ve posted it for feed back to see if I have identified a supply demand zone as I am only just starting to try and learn this system.

I have followed Maryo for a while but I don’t want to rely on someone else to make me profitable.

Sorry also for the quality of the picture I’m just on a break at work so I’ve only got the iPad and I don’t know how to move the chart sideways to fit in my predicted bounce line.

I’m thinking price will retrace to the area between the two red lines and then bounce back up higher.

The red lines are from a consolidation and then a break out so what do you guys think is it a supply demand zone or am I completely off the mark? All feed back is welcome thanks