Starting up my old thread and will post my trades again for accountability. Been awhile, life got busy but it would be nice to share again.
I'll be making some updates to the zones and adding a few other smart money levels to bring this system up to date with my current knowledge and style.
I'll be making some updates to the zones and adding a few other smart money levels to bring this system up to date with my current knowledge and style.
- Here's my original 2011 post if you're curious.
2023 Version of Supply & Demand Zone Trading
My Logic for Entering Trades with Supply & Demand Zones
- Switch to Weekly and Mark off Supply/Demand Zones.
- These Supply/Demand Zones include but are not limited to Value Lines, Fair Value Gaps, Pivots, Previous Highs/Lows, Round Numbers, Order Blocks, etc.
- These are zones or areas where Smart Money Sells at a Premium, Buys at Value OR Establishes Value (Value Line).
- Switch to Daily, what is the slope of the 200 SMA, determines whether you will be a buyer or seller. Look for lower highs or higher lows to give a bias.
- You can use whatever indicator you feel gives you a good feel for current trend. Don't over complicate this one.
- The important thing is to know where the Value Line in relation to current price.
- Short:
Price Above Value
Bearish Bias (Lower Highs)
Sell At A Premium - Long:
Price Below Value
Bullish Bias (Higher Lows)
Buy At A Bargain
- Switch to your entry time-frame of choice, I will use the 5m chart for entries.
- I now use 5m chart for getting better entries but if I don't have time then H1 is where I default.
- If you are going long on your chosen Entry Time-frame into a weekly supply zone then that is a no trade.
- You want to Sell at a Premium here and wait for a sniper opportunity which will give you very little risk and great reward.
- If you are going short on your chosen Entry Time-frame into a weekly demand zone then that is a no trade.
- You want to Buy at Value and wait for a sniper opportunity which will give you very little risk and great reward.
- If you are clear and nothing is in the way then enter a limit order on your chosen Entry Time-frame for the zone.
- If I'm trading the 5m chart, I generally use a market order as setting limits feels cumbersome and takes too much time.
- If I'm trading H1, a limit is totally fine.
- Make sure you have at least 3:1 reward to risk ratio available.
- Target 2/3 of the move between the next Supply/Demand Zone from you entry.
My Supply Demand Zone Chart
- 200 SMA + Manual Drawn Trendlines
- Only used for visual indication of current market structure and to set your Trading Bias (direction of trade you are looking for).
- Higher Highs and Higher Lows = Bullish Bias.
- Lower Lows + Lower Highs = Bearish Bias.
- Pay attention to trendline breaks and look for Order Blocks and Value Lines to be established.
- Supply Demand Indicators (TradingView)
- FOREX MASTER PATTERN Value Lines by nnam
This indicator looks for a sustained contraction in price initially indicated by TWO contraction bars in a row, thus detecting a contraction point and a potential new master pattern origin point. This point is the value line.- If overextended above or below, the more supply or demand drive prices back towards the direction of the mean. Mean reversion back to the Value Line.
- When price rallies and becomes overextended, Smart Money comes in and Sells at a Premium back and below the mean. Mean reversion back to the Value Line.
- When price declines and becomes overextended, Smart Money comes in and Buy at Value back and above the mean. Mean reversion back to the Value Line.
- MTF S&D - Orderblock by @JP7FX
Would love to get an open source version but this will draw Order Blocks. - Pivots HL
Shows the previous swing high and lows. Important levels. Helps determine areas where bounces, reversals and trend confirmations can happen.
- FOREX MASTER PATTERN Value Lines by nnam
- Caveats
- Use this only for identifying possible zones where logically buyers or sellers will be waiting.
- Although it will mark the levels, you still need to go through the logic process to qualify a trade but it does help point areas out that you may not have considered.
- I don't own these indicators, they are freely available on TradingView.
My Thoughts On Lower Time-frames
- My entry time-frame of choice is M5 (when I have time during the day) & H1 (when I don't have time during the day).
- To filter out false trades, don't chase the zones on the lower time-frames, use the H1 & Daily zones.
- If going below H1, then view it as a way to get a more precision entry.
- Set your limit order or market order when price is at the peak of enthusiasm or panic and move back to H1 for setting targets.
- Most importantly stay in H1 while waiting for the trade to keep psychologically in context of the logic that was used to validate the trade.
- Keep context of the daily trend and where you are in reference to the weekly supply and demand zones.
As time and opportunity allow, I will place my trades and thoughts here.
Trade with logic.