Liquidity Supply & Demand: The Best Retail Trading Strategy?

Introduction

This tutorial covers the key principles of the Supply and Demand trading strategy as presented in the video by Mangoe. Whether you're a beginner or an experienced trader, understanding this strategy can enhance your trading skills and help you make more informed decisions in the forex and stock markets.

Step 1: Understand Supply and Demand Basics

• Concept Explanation: Supply and demand are fundamental economic principles that dictate price movements in financial markets.
• Supply: Represents the amount of an asset that sellers are willing to sell at a given price.
• Demand: Represents the amount of an asset that buyers are willing to purchase at a given price.
• Market Dynamics: Prices rise when demand exceeds supply and fall when supply exceeds demand.

Step 2: Identify Key Supply and Demand Zones

• Zone Identification: Look for areas on the price chart where the price has reversed significantly.
• Steps to Identify Zones:
  1. Use historical price data to find levels where price has bounced back up (demand zone) or down (supply zone).
  2. Mark these zones on your chart for future reference.
• Tools: Utilize support and resistance levels to further refine your zones.

Step 3: Analyze Price Action

• Candlestick Patterns: Observe candlestick patterns in the identified supply and demand zones.
• Key Patterns to Look For:
  • Bullish engulfing or hammer patterns at demand zones.
  • Bearish engulfing or shooting star patterns at supply zones.
• Tip: Look for confirmation signals before entering trades to increase the probability of success.

Step 4: Execute Your Trades

• Entry Points: Enter trades when the price approaches a supply or demand zone and shows a candlestick pattern indicating a reversal.
• Stop Loss: Set your stop loss just outside the supply or demand zone to minimize potential losses.
• Take Profit: Determine your take profit level based on previous price action or risk-reward ratios.

Step 5: Manage Your Trades

• Trailing Stop: Consider using a trailing stop to lock in profits as the market moves in your favor.
• Review Performance: Regularly analyze your trades to learn from both successful and unsuccessful trades.
• Adjustment: Be prepared to adjust your strategy based on market conditions.

Conclusion

The Supply and Demand trading strategy is a powerful tool for traders looking to understand market movements better. By identifying key zones, analyzing price action, and managing your trades effectively, you can enhance your trading performance. Consider joining trading communities or seeking one-on-one coaching for further learning and support. Happy trading!