Be A Master of Demand Zone Trading
People are learning old fashion demand supply trading and implementing in their personal trading and finally they are ending up with huge capital.
Normally it will rise a question whether the demand supply zone trading is effective or not?
My answer is no. Only two patterns (Drop Base Drop and Rally Base Rally) are not demand. Better to say no one can define demand using only a few patterns. Demand and supply are the concepts of institutional buying and selling in chart pattern.
One should re-define the trading style with demand supply.
How to identify a demand zone?
See the picture at the right side, it is a current chart of SUNPHARMA, now start from the current market price of the chart, look left down down and down until you find the origin of very strong rally in price.
Remember I have added an adjective "Very" and it is very much needed.
On 18th January it has started the first big up move so we can say it is the origine of the very strong rally. Now mark the bottom of the candle with a horrizontal line, another line personally I wont place.
What I believe that price should not comedown before institutional traders exit from it or something bad happen with the fundamental. That mean, if I wait to buy at demand zone most probably I won't get an entry. In other hand I can say if price come down to its zone then most probably due to something happen bad with it's fundamenta.
That mean if I trade based on demand zone my maximum probability is I am going to lose money. Yes, this is happening with maximum numbers of demand supply zone traders.
When does demand zone trading is effective?
Trading with demand zone become effective for intraday and some cases in weekly or monthly demand. Let me explain properly.
Suppose I have Identified a daily demand zone of a stock, and when the stock will comedown to the daily zone I will buy. In that case I shall exit on Intraday basis, for a very shorter time price respect the zone, may for 1 hour, maximum mentor show this thing to their students.
A commom trader mainly focus on overnight getting rich. So when a mentor show his or her student "How demand zone working in day trading" in an old chart, people become greedy and implement it in all chart.
So the question is can we do intraday based on demand suppy zone? Again my answer is the more you will do intraday the more you will lose money. The mentor mainly show you some old past chart, but if you back test the same you will find more than 60-70% cases it failed.
How to Trade With Demand Zone.
When you identify a demand it means you have identified an institutional buying occur in chart pattern, just wait for any farther buying opportunity as per price action analysis. It may be a trendline breakout or may be a long CMO or may be a Bearish Rejection or may be any other price action pattern whatever you know.
It means, price action trading is more effective with demand and supply zone or vice versa.
Hope this insight will be helpful for your trading, if you want to learn in depth then contact me by visiting
https://www.dronakul.com