C U R A T E D
B Y
MAHESH KAMATH
K
EBOO
WHAT YOU WILL LEARN
WHAT ARE THE TRADING ZONES AND HOW TO
FIND THEM ON THE CHART
A SUPER-POWERFUL WAY TO IDENTIFY A
RELIABLE TRADING ZONE
CANDLE STICK PATTERNS
IDNTFYING LEG-IN AND LEG -OUT PATTERNS
INTRODUCTION
The supply and demand trading strategy
identifies supply & demand zones
created by Institutions and big players
who have the capacity to change the
direction of the stock. Retail investors
do not have the power to move a stock.
Hence, in order to profit from this
strategy, we will learn to identify the
high-probability supply and demand
zones created by these institutions.
Going forward we will learn how to
identify these supply and demand levels.
This strategy can be used in all trading
markets like forex, commodities,
futures, options, crypto, and so on. It
also works in all time frames.
WHY TRADING AND
INVESTING ?
TO MAKE PASSIVE INCOME
TO NOT WORK AS A SLAVE FOR
THE WHOLE LIFE
TO MAKE BIG MONEY
WHY
SUPPLY & DEMAND TRADING ?
SIMPLE RULE-BASED PRICE
ACTION STRATEGY
DOESN'T RELY ON LAGGING &
COMPLEX INDICATORS
FOCUSES ON INSTITUTIONAL
TRADING ACTIVITY
WORKS ON ALL ASSET
CLASSES & ALL TIME FRAMES
HOW TO INTERPRET A
CANDLESTICK CHART ?
Technical Analysts use various forms of
charting, most widely used is Japanese
Candlestick charts. All our analysis will be done
using Japanese Candlestick Charts
Candlestick chart is made up of red and green
candles. Each candle is formed because of
the ongoing supply and demand relationship.
Candlestick charts display the high,
low, open, and closing prices of a
security for a specific period.
CANDLESTICK CHARTS CAN BE VIEWED ON
VARIOUS TIME FRAMES :
E.O.D. ( END OF DAY) : MONTHLY, WEEKLY,
DAILY ETC.
INTRADAY : 60 MINS, 15 MINS, 5 MINS ETC.
Each candle depicts four price points. Open, High,
Low and Close for a particular period. If you are
viewing a Daily chart, each candle will depict the
Open, High, Low & Close for that day.
RANGE OF A CANDLE = HIGH – LOW
BODY OF A CANDLE = CLOSE – OPEN ( ABSOLUTE
VALUE
HOW TO IDENTIFY
INSTITUTIONAL SUPPLY &
DEMAND FOOTPRINTS?
FILLED VS UNFILLED
ORDERS
FILLED ORDERS
Price action (Candlesticks) and Volume only tell us
how many orders have been “Filled” and at what
prices
UNFILLED ORDERS
Only when we know where the institutional
“Unfilled” orders are can we anticipate
market moves consistently
For that we need to learn to read the charts
differently than everyone else
FILLED VS UNFILLED
ORDERS
WHAT IS SUPPLY?
SUPPLY :PRICE TURNS LOWER AT A PRICE
POINT WHERE SUPPLY EXCEEDS DEMAND
WHAT IS DEMAND ?
DEMAND: PRICE TURNS HIGHER AT A PRICE
POINT WHERE DEMAND EXCEEDS SUPPLY
INSTITUTIONAL BUYING &
SELLING IMBALANCES
HOW TO IDENTIFY
LEG & BASE CANDLES?
WHAT ARE LEG CANDLES?
These candles are footprints of
institutional buying or selling.
Leg Candles:The greatest imbalance between
Supply and Demand is found at the origin of
Leg Candles
Leg candles are Expanded Range Candles ( ERC ),
when compared to the other candles on the chart
they are visibly much BIGGER in size.
IDEALLY A STRONG LEG CANDLE SHOULD BE AN ERC
AND HAVE A BODY WHICH IS EQUAL TO OR GREATER
THAN 75% OF THE RANGE.
WHAT ARE BASE CANDLES ?
Base Candles: These candles indicate that Supply and
Demand are balanced and that Orders are potentially
being accumulated by the Institutions.
BASE CANDLES ARE NARROW RANGE
CANDLES ( NRC ), WHEN COMPARED TO THE
OTHER CANDLES ON THE CHART THEY ARE
VISIBLY MUCH SMALLER IN SIZE.
IDEALLY A BASE CANDLE SHOULD BE AN NRC AND HAVE A
BODY WHICH IS EQUAL TO OR LESS THAN HALF OF THE
RANGE
SUPPLY & DEMAND ZONE
FORMATIONS
DEMAND ZONE FORMATIONS
DBR
SUPPLY & DEMAND ZONE
FORMATIONS
DEMAND ZONE FORMATIONS
RBR
TRADE ACTION AT A DEMAND
ZONE
DBR
TRADE ACTION AT A DEMAND
ZONE
RBR
COMPONENTS OF A ZONE
LEG-IN
Price action prior to the base. Has to be a leg
candle. Need not be Explosive. It can be a Rally
or a Drop
BASE
Base should be made off NRC candles. Found
between Leg-in & Leg-Out
Base is where there is a high probability of
finding unfilled orders
LEG- OUT
Price action after the base candles. It has to be
an EXPLOSIVE leg candle
It is the footprint of Institutional Activity. If the
Leg-Out is a Rally it forms a Demand Zone. If the
Leg-Out is a Drop it forms a Supply Zone
COMPONENTS OF A BUYING
ZONE
COMPONENTS OF A SELLING
ZONE
SUPPLY & DEMAND
TERMINOLOGY
EVERY ZONE IS PLOTTED USING TWO
HORIZONTAL LINES
WHAT IS A PROXIMAL LINE?
PROXIMAL – NEAREST TO CURRENT PRICE
WHAT IS A DISTAL LINE?
DISTAL – FARTHEST FROM CURRENT PRICE
PROXIMAL & DISTAL
LINES
SUPPLY & DEMAND
TERMINOLOGY
HOW TO CHECK FOR FRESHNESS OF THE ZONE?
INSTITUTIONAL SUPPLY &
DEMAND ZONES
INSTITUTIONAL ZONES
AN INSTITUTIONAL ZONE IS AN AREA ON THE PRICE
CHART THAT INDICATES AN IMBALANCE BETWEEN
SUPPLY AND DEMAND EQUATION.
EVERY ZONE IS PLOTTED USING TWO
HORIZONTAL LINES.
OUR STRATEGY INVOLVES USING PRICE ACTION
TECHNIQUES TO IDENTIFY THESE ZONES.
THERE ARE TWO TYPES OF ZONES : DEMAND ZONES AND
SUPPLY ZONES
ADVANTAGES OF USING
SUPPLY AND DEMAND
ZONES
1.PROVIDES LOW RISK ENTRY (SMALL STOP LOSSES)
2.PROVIDES HIGH REWARD POTENTIAL (GREATER
REWARDS)
3.PROVIDES HIGH PROBABILITY FOR BUYING AT
WHOLESALE AND SELLING AT RETAIL
4.ESTABLISHES THE FOUNDATION FOR A SIMPLE
RULE-BASED PRICE ACTION STRATEGY
STEPS TO IDENTIFY
DEMAND ZONES
STEP1: GO FROM RIGHT TO LEFT ….
START WITH CURRENT PRICE ON THE CHART
STEP2 :LOOK DOWN AND LEFT UNTIL YOU FIND
A STRONG ( EXPLOSIVE ) RALLY IN PRICE.
STEP3 : IDENTIFY WHETHER THE
FORMATION IS A DBR OR RBR
STEP 4: WHILE MARKING THE ZONE CRITICAL
THINGS TO WATCH OUT FOR
ZONE SHOULD BE FRESH
LEG OUT SHOULD BE STRONG
LESS THAN SIX CANDLES IN THE BASE
STEPS TO IDENTIFY
SELLING ZONES
STEP1: GO FROM RIGHT TO LEFT ….
START WITH THE CURRENT PRICE ON THE CHART
STEP2 :LOOK UP AND LEFT UNTIL YOU FIND A
STRONG ( EXPLOSIVE ) DROP IN PRICE
STEP3 : IDENTIFY WHETHER THE
FORMATION IS A RBD OR DBD
STEP 4: WHILE MARKING THE ZONE CRITICAL
THINGS TO WATCH OUT FOR
ZONE SHOULD BE FRESH
LEG OUT SHOULD BE STRONG
LESS THAN SIX CANDLES IN THE BASE
MECHANICAL WAY
TO PLOT ZONES
STEP1
Plot a vertical line on top of the leg-out
candle, that identifies the beginning of the
move out. Leg out has to be an Explosive
Candle
STEP 2
Plot another vertical line on top of the leg in
candle, that identifies the end of the move in. Leg
in need not be Explosive
STEP3
Identify whether base candles are isolated
between the two vertical lines
STEP 4
After isolating the base, delete the vertical lines.
Then plot proximal and distal lines and extend
them to the right
DIFFERENT TRADING
STYLES & CHART TIME
FRAMES
CONCLUSION
THE KEY IS TO IDENTIFY ON PRICE CHARTS
WHERE INSTITUTIONS & PROFESSIONALS ARE
BUYING (DEMAND) AND WHERE THEY ARE
SELLING (SUPPLY)…. SO THAT WE TOO CAN
BUY AND SELL ALONG WITH THEM.
LONG TRADE
ENSURE THAT POTENTIAL RISK REWARD RATIO
IS GREATER THAN 2:1
IDENTIFY INSTITUTIONAL DEMAND ZONE
&WAIT FOR PRICE TO RETURN TO THAT
DEMAND ZONE
WHEN PRICE ENTERS THE DEMAND ZONE , BUY
TO ENTER THE LONG TRADE
PLACE STOP LOSS BELOW THE DEMAND ZONE
PLACE TARGET AT OPPOSING SUPPLY ZONE
SHORT TRADE
ENSURE THAT POTENTIAL RISK REWARD RATIO
IS GREATER THAN 2:1
IDENTIFY INSTITUTIONAL SUPPLY ZONE &
WAIT FOR PRICE TO RETURN TO THAT SUPPLY
ZONE
WHEN PRICE ENTERS THE SUPPLY ZONE , SELL
TO ENTER THE SHORT TRADE
PLACE STOP LOSS ABOVE THE SUPPLY ZONE
PLACE TARGET AT OPPOSING DEMAND ZONE
Supply and demand trading strategy is a great
way to make money in the market. If you are
looking for a new way to make money, this book
is for you. Supply and demand trading strategy
can give you an edge over other strategies. This
strategy will make you money if you know how
to use it correctly. When you are ready to start
making money, visit
www.maktradingschool.com or call us on
7400088842 for further ENQUIRIES. This ebook is
a great way to get you started.
HAPPY TRADING
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