Top 7 Tips for Trading in Supply and Demand Zones

1. Look for zones on timeframes of H1 and above. Reduce the scale of the chart - so it will be better to see from what levels and in what zones reversals occurred most often.
2. Pay attention to the following points: the horizontal border of long extrema is built considering shadows. The far extremum is a stronger, more significant level than the near one - if the price has passed the level of near extrema, the reversal at the far extremum is more probable.
3. More often than not the price makes a level test and two retests in the zone, followed by a breakout. For example, a flat has formed on the downtrend with a clear demand zone. At most after three touches of the lower line the final exit from the zone upwards will occur.
4. Watch for the formation of reversal patterns when prices enter zones and inside zones. They will tell you when to turn.
5. Set stops several pips outside the zones: above the supply zone and below the demand zone.
6. Pay attention to round levels - bid and ask zones often form near them as well.
7. Watch the volumes. If there is a significant increase in volume as you move from the far side of the zone to the near side, it indicates that more investors are entering the market, moving the price in the direction of the reversal.

The method of zone trading seems complicated only at first sight, everything becomes clear after a few attempts to determine the boundaries of the zones. The borders are a kind of the first and the second levels: the price breaks through the first level, which means that with a high probability it will reverse on the second one. That is why we draw several horizontal levels on the chart, and the space between them defines the supply/demand zones.

Summary

What you should know about the zones of supply and demand in Forex:

• These are zones in which a significant imbalance appears in the direction of buyers or sellers. Support is formed in the demand zone and resistance is formed in the supply zone.
• In these zones, a reversal after a retest of the extreme boundary and the beginning of a new trend is most often observed.
• There are no unified rules for drawing the borders of zones. It is best to draw them when zooming out visually.
• The strategy for trading by zones is a search for reversal points and the moment of price exiting the zone in the direction of a new movement.
• Tools for building strategies - trend indicators, oscillators, patterns, Fibonacci levels, volume indicators.
• Try to find a few zones on a demo account. The ability to see them comes with experience.

Also, if you want to use all available trading tools to increase your profits as soon as possible - follow this link below, or contact us via live chat. Our experts will help you to choose the best strategy for success.

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