Supply and Demand Strategy

FIRST, ABOUT THE THEORY.

Trading based on key levels or zones is very common and for most traders, it's a well-known method. Supply and demand is a trading strategy, but more than that, it’s a theory on how the Forex market works. The strategy tells us how and why things happen in the market, which we automatically accept as being true by using the strategy – we wouldn’t trade it if we didn’t think it works. The theory is summed up as: The banks cause zones to form by placing trades, taking profits, and closing trades. They then make price returns to these zones to get their remaining trades placed or to take the rest of their profits off. This causes upswing and downswings to form and creates the price action we see on our charts. We must thank Sam Seiden for creating the supply and demand method. (google for "Sam Seiden") Not only did he create a Superior method of trading than what was available at the time i.e (price action at support and resistance) he also gave traders a strategy which if understood correctly can generate a significant amount of profits from the market. The main premise of supply and demand trading is when the market makes a sharp move up or down the large institutions i.e banks/hedge funds are not able to get their entire trade placed into the market, therefore they leave pending orders to buy or sell at the zone with the expectation the market will return to the zone and the rest of their trading position will be filled. Older zones should be combined with higher timeframe zones (nested). On its own, it's better if you only place trades in zones that have been created recently.