TheForexScalper
SUPPLY AND DEMAND
TRADING SUPPLY
AND DEMAND.
PDF
Trading Supply and Demand
in Forex.
I start this PDF with the basics of forex trading.
There are some things you need to know before
you start trading with Forex.
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What is Forex?
The foreign exchange market ”also known as forex or
the FX market ” is the world’s most traded market,
with turnover of $5.3 trillion per day.
To put this into perspective, the U.S. stock market
trades around $226 billion a day; quite a large sum,
but only a fraction of what forex trades.
Forex is traded 24 hours a day, 5 days a week across
by banks, institutions and individual traders
worldwide.
Unlike other financial markets, there is no centralized
marketplace for forex, currencies trade over the
counter in whatever market is open at that time.
How FX Trading Works?
Trading forex involves the buying of one currency
and simultaneous selling of another. In forex, traders
attempt to profit by buying and selling currencies by
actively speculating on the direction currencies are
likely to take in the future.
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Major Currency Pairs
Forex is the most widely traded market in the world,
with more than $5.3 trillion* being bought and sold
every single day.
Traders will speculate on the future direction of
currencies by taking either a long or short position,
depending on whether you think the currency’s
value will go up or down.
Typically referred to as “The Majors”, these seven
currency pairs make up almost 80%
of total daily trading volume*.
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Minor Currency Pairs
While the major currency pairs make up the majority of
the market, you shouldn’t ignore the minors – also
referred to as Cross Currency Pairs.
The minor currency pairs account for all the other
combination of major markets such as; EUR/GBP,
EUR/CHF and GBP/JPY .
With so many options available, you’re probably asking
yourself – which currencies should I trade?
A good rule of thumb for traders
new to the market is to focus on one or two currency
pairs. Generally, traders will choose to trade the
EUR/USD or USD/JPY because there is so much
information and resources available about the
underlying economies.
Not surprisingly, these two pairs make up
much of global daily volume.
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Forex Charts Explained.
There are three different Forex charts of use when
trading at the Forex Market.
Let me introduce you to them: Line charts, bar charts,
and candlestick charts.
We have a strong preference for the candlestick charts
because they give us the most information.
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Line Forex Charts
So a chart with just one line the shows us
the movement of the quote.
Line charts are easy to read and show us the trend in
the Forex charts.
Also good at using to see the Support and Resistance
levels.
Although the line chart gives us information about the
history of the pairs price, it’s hard to see the individual
prices.
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Bar Forex charts
The Bar charts show us individual prices for a certain
time period.
Every bar has it’s own information and will so give
you a more accurate view of your positions.
The bar has an open, high, low and closing point.
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Candlestick Forex charts
Most traders use the candlestick chart because they
tell us a lot of clear information.
Especially the Price Action is really recognizable.
Don’t get confused, the candlestick shows
us the same information
as the bar charts, however, it’s easier to read.
Candlesticks give good information about the highs
and lows at a certain timeframe.
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Japanese Candlestick Trading
Back in the day when Godzilla was still
a cute little lizard, the Japanese created their own old
school version of technical analysis to trade rice.
That’s right, rice.
A Westerner by the name of Steve Nison “discovered”
this secret technique called “Japanese candlesticks,”
learning it from a fellow Japanese broker.
Steve researched, studied, lived, breathed, ate
candlesticks, and began to write about it.
Slowly, this secret technique grew in popularity in the
90’s.
To make a long story short, without Steve Nison,
candlestick charts might have
remained a buried secret.
Steve Nison is Mr. Candlestick.
Now that we know a little more about
Forex and trading itself,
let's take a closer look at trading with Supply and
Demand.
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What is Supply and Demand Forex?
What exactly is supply and demand Forex?
Supply is actually the amount that is available and
demand is the amount that is requested.
If you think about Supply and Demand,
it is actually very simple.
Just imagine that you sell bananas from your own farm
on a local market.
And you do not necessarily
have to sell all your bananas.
Because you can eat them just
as easily as anyone who buys them from you.
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If bananas reach only 1 dollar per bag,
you may be willing to sell 4 or 5 bags.
But if the price rises,
you decide to make more available.
Up to 10 dollars per bag.
At that moment you are more than willing to sell every
last banana you have.
Just because you can easily take
all the money you have made
and buy something else to eat.
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How do you draw Supply and Demand Forex?
Supply and Demand Trading describes 2
types of zone entry's that are
'Sell at Supply Zones' and 'Buy at Demand Zones'.
There are 3 rules in trading Supply and Demand forex.
1. Always look to the left.
2. Sell at Supply Zone.
3. Buy at Demand Zone.
Below is an example of Drop Base Drop.
Drop Base Drop is a type of supply
zone for a setup for a sell.
The bullish Candle (BASE) that tries to withstand prices
on
the base produces good buying and selling areas here.
So price will return at the spot and continue with the
DROP price direction.
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I often draw my supply and demand zones on an
undecided candle.
Mostly this works well for me and my supply and
demand forex zones are fairly accurate.
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Above is an example of Rally Base Rally.
Rally Base Rally is a type of demand
zone for a buy setup.
The bearish Candle (The Base) that tries to withstand
prices on
the base produces good buying and selling areas here.
So when price return at the base the price is in balance
and continue with the RALLY price direction.
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Of course there are many more ways to trade with
supply and demand.
Everything about this in my book.
Below are a few important points that should not be
forgotten:
Important that you must know to trade Supply And
Demand
Rally= Buyer exceed Seller
Drop= Seller exceed Buyer
Base= Seller and buyer are equal to each other.
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Where to enter into a Supply and Demand trade?
A good entry point is very important when trading.
If you step in at the wrong time, you can unnecessarily
lose a lot of money, which ultimately would not have
been necessary at all.
In this chapter I will therefore give you some tips
on how you can recognize a good
entry point in supply and demand forex trading.
If you practice this properly you will automatically see
the correct entry points for every trade.
Very often I get the question where people should get
into a trade and it doesn't have to be difficult just train
your eyes!
Let's take a look at the following chart.
Here you can see the EUR / USD chart.
Here is the price not yet where I could see a possible
entry.
But I did explain how I look at it! Just be patient now.
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In the following example you
also see a few nice entry points.
On Supply and Demand Forex Trading, I would
personally only use the first and second touch.
Then you see that the price bounces off
the Supply zone next candle
would be my entry point in this case.
My stop loss will always be some pips above the zone..
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And here is a final example about a Demand zone.
Do you also see those beautiful entries as I see
them?
Of course you can't immediately take every
rejection, there are some other rules that you
should definitely pay attention to.
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Oh and I did not state my stop loss here,
but if you have paid attention, you now know where I
would put my stop loss in this trade.
Yes you already know?
Yes, of course, slightly under the zone!
Do you want to know everything about the trading of
Supply and Demand and everything you need to pay
attention to?
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Then you should definitely follow the Supply and
Demand course at the member zone,
where I will explain all the secrets to you very well!
And don't forget to send in your
homework, so that I can follow if you are on the right
track!
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How to spot Fake outs Forex
A Fakeout (Fake Breakout) is a form of manipulation to
trap breakout traders.
If a breakout trader sees that there is a
big breakout that breaks through
a strong resistance or support,
he thinks it will continue to break into the end of the
world.
However, the price makes the reverse
and then it comes back to the
stop loss of the breakout trader.
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Fake Out Forex
Back in the days when I just started trading, I always
reacted immediately to a breakout.
Then I lost continuously because
the breakout turned out to be a fake-out.
But how do you react to a breakout?
The key is to have patience and
to wait for the signals.
Often there will be a retest before
a real break takes place.
Do you already see that the price reacts
to the Supply or Demand bias
as the example below you can almost
be sure that it is a fake-out.
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The Fakeout must have some
resistance/support wicks.
It will always FakeOut to the base
supply and demand above the
resistance wicks or under the support wicks.
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Wait for the Signals to recognize a possible Fake Out
There are many more signals to which
you can recognize a possible fake-out.
I can not go into this blog too deeply in this subject,
but it is important that you learn to read the market.
You have to be able to feel the market and recognize
changes in behavior, for example.
That is why it is always smart to start with 2 or 3 pairs
that you can optimally analyze.
Get to know the pair and get to know their movements.
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Even I stupidly enough step into a fake-out still
sometimes. But do you know why? Patience!!!!! trading
requires a lot of patience.
Only then can you get the most mistakes out of your
trading style and you will get more take profits than
stop-losses!
Just start learning to read the market just like a very
good book.
Get to know it inside and out.
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We have now come to the end of the free PDF.
Where I have already told you some important things
about trading Supply and Demand.
This is only a small part of what you will learn in the
course or from the book.
The course consists of 17 beautiful
modules that in turn comprise dozens of lessons.
So have you become curious about
our community after reading this PDF?
You are welcome to join us!
Good luck! Kev The Forex Scalper.
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