Forex Supply and Demand: Simple Strategy - ForeXposed

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Monday, February 20, 2017

Forex Supply and Demand: Simple Strategy

A trader should consistently identify areas where prices are likely reversed (turning point). There are several strategies that can be used to take advantage on the shifting equilibrium of supply and demand, which is also triggered by human emotions such as Fear, Greed, and Uncertainty.
If we entry on the reversal as practiced by other people, then we have little or no advantage at all over them.

Therefore, it is not surprising if difficult to survive in the market and make consistent profits. Therefore, the process of thinking/analysis should culminate in anticipation of price movements with minimal risks and great opportunities. As the fishermen who were raising the display, make sure that the wind is behind the boat. We should focus on forex trading system that relatively easy to understood.

Forex Supply and Demand: Selling Setup


We use the chart on the previous post, where the daily chart shows that the price moves up, approach and into the area of supply (resistance).

Forex Supply and Demand: Simple Strategy


Forex Supply and Demand: Simple Strategy


  1. Supply and Demand areas identified on the daily time frame (minimum H1).

  1. When the candle making high (A) on the daily chart, moving to an intraday time frame (M15 or M5) to seek opportunities on Sell/Short entry.

  1. In this small time frame, looking up the last candle followed by a down candle. (image below).

  1. Make Entry on the second candle down, and do not need to wait on close it (image below).

  1. Preferably, the Stop Loss (SL) placement is above the horizontal line on Supply and Demand Daily area. If you are an intraday trader then place Stop Loss (SL) above the Hourly horizontal line.

  1. Take Profit (TP) placed on the next Demand area (support), or use the risk-reward ratio, at least 1: 2.
Forex Supply and Demand: Simple Strategy

Forex Supply and Demand: Simple Strategy


Forex Supply and Demand: Simple Strategy


Note: I deliberately showing three images to recognize the signal and entry candle, ignoring the candle formation on the chart. As for Buying Setup, the process is vice versa.

What causing the reversal candle? Certainly not caused by the actions of professional traders. Buying is done by a novice trader after the price moves up far enough, at high risk, and this is the first mistake.

The second mistake is to buy at a level close to the supply area where more sellers are willing to sell. As I have pointed out on daaily time frame. That is, the chance of success is small.

As a trader, we're looking for certainty, but just looking for a better probability. Note that, the closing candle (A) on the daily chart is the reversal candle which invites more traders to enter short on the next day. Confirmation daily reversal usually awaited by most traders become valid, and mostly they will feel comfortable short/sell at this point. This is what we want. Increasing shown at the (B) candle, that indicating they go with full power (full force). In other words, we are part of the person who invited the people to enter, not as an invited guest.

More than that, we did an entry on the lower risk than those who short entry on the following day (B). As a conclusion, we use masses short/sell at the (B) point as a confirmation that the decisions we make are correct. If it wrong, we exit with a small loss risk.