Supply and Demand Trading Strategy: The Trends - ForeXposed


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Tuesday, February 28, 2017

Supply and Demand Trading Strategy: The Trends

A simple definition of trend is a series of higher high and a series of lower low. The price moves follow the trend, where the trend itself moving like a wave.

The wave divided into two:

  1. Impulse Wave (moves in the direction of the trend).
Tell us the direction which we should take to make a trade.

  1. Corrective Wave (opposite to the direction of the trend).
Is the reaction/corrections wave that gives information so that we can get entry at the cheaper level price (in terms of an uptrend).
Supply and Demand Trading Strategy: The Trends
Remember how Laird Hamilton surfing in the same direction of ferocious waves? If he surfing against the direction of the wave, he will be rolled by the waves and won't become a pro surfer legend who was still alive.

This trend happen regardless of time frame you use, can be seen on the M1 frame or monthly frame, because price structure and chart structure is constant. What makes the difference is the human beings who make trades on each of that frame, and what we are going to learn is how to do trade over their behavior.

When a trend has started, the market will continue to move in the same direction until a major event changes its direction or equilibrium.

Just like the waves that move to break up the shore. It takes a long time and effort to change the direction of the trend. The bigger frames you use, the more significant the waves are. What I meant to say, a reversal is the process that does not just happen, it took time and effort to reverse the direction of the wave.

As an ordinary human, forex traders tend to do same the thing repeatedly, thus any mistakes often happen over and over again. As the saying goes "the history repeats itself".

The market movement can be quantified, at least have a recurring pattern. The pattern resulting from price movements, we call it as a signal.

The market will always be in one of the following three conditions:

  1. Trend.

  2. Consolidation.

  3. Reversal.


  1. […] trends will continue to move in a certain period to finally get a bigger reaction and reverse the direction […]

  2. […] Red and blue lines are known as Impulse Wave that shows the direction of the trend. […]

  3. […] take an example on GBP/USD (GU) motion. In trends analysis, I use Daily frame as a preference. GU is currently visible on downtrend, indicated by a series of […]

  4. […] do we know the trend has ended? We try to learn a simple technique by identifying the end of a trend and the process of […]