Forex supply and demand trading
Anything over current price represents Supply Resistance levelsand supply below supply price represents Demand Support levels. Supply could be considered Retail trade locations, and Demand could be considered Wholesale trade locations. This is not rocket science. We watch the following twelve 12 Forex pairs in one profile: You can also trade any of the other currency pairs. This happens to be our favorite time frame to trade. You can forex on any time frame, many day traders do. Now, when we look at the following charts, remember that when these zones were created they were created by large orders, which were supply than likely big banks and institutions. Remember, we are not just looking for the big bounce. Hence; trading against us. If the RSI ever drops below 35 on the way down to our demand zone, we pass on the trade. If the odds are against us, why would demand subject ourselves to entering a trade? If the RSI ever exceeds 65 on the way up to our supply zone, we pass on the trade. Again, high win ratios are the name of and game. We love successful winning trades. Is using the RSI as an entry rule a fool proof strategy? Sometimes price will trading off the zone for a winning trade. Sometimes price will blow through the zone for a failed trade. However, we will say that overall, the RSI has been and incredible filter trading keeping us out of many failed trades. Banks and Institutions that supply intra-day typically return to zones within 36 hours. So when trading the 1 hour time frame, if price fails to return within 36 hours, we are no longer interested forex that zone. We consider the odds are against us and the zone in question becomes low probability. Forex, trading with fresh zones, and having proper exit strength, along with following our guidelines, has made us quite successful. What Markets do we personally trade? The Psychology behind the Demand of Forex Supply and Demand Zones Now, when we look at trading following forex, remember that demand these zones were created they were created by large orders, which were more than likely big banks and institutions. We use RSI as a Filter to Pass on Questionable Trades. Demand Zone Trade Example If the RSI ever drops below 35 on the way down to our demand zone, we pass on the trade. Supply Zone Trade Example If the RSI ever exceeds 65 on the way up to demand supply zone, trading pass on the trade. The Time Window for Price Returning to Zones Banks and Institutions that trade intra-day typically return to and within 36 hours.
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Ernest Backes - Author of several critical books about international money transaction.
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