How I made $6000 Weekly with Supply and Demand Strategy

How I made $6000 Weekly with Supply and Demand Strategy

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Supply refers to the amount of an asset that is available while demand is the quantity of an asset that people are willing to buy. As supply of an asset increases, its value declines. Conversely, as supply of an asset decreases, its value rises. As demand for an asset increases, its value rises.
Is supply and demand a good strategy in forex?
When it comes to profit placement, supply and demand zones can be a great tool as well. Always place your profit target ahead of a zone so that you don’t risk giving back all your profits when the open interest in that zone is filled.

Perhaps one of the most important aspects of Forex trading is understanding supply and demand. These two terms will become your foundation as you begin to build an arsenal of trading strategies such as the pin bar and inside bar.

While certain topics in the world of Forex may be optional depending on your style of trading, your ability to properly identify areas of increased supply and demand is paramount to your trading success.

By the end of this lesson you will be able to define these two terms, why areas of increased supply and demand form as well as how to identify them to assist you on your journey to consistent profits.

Supply and Demand Explained

When explaining any new term, I always like to start with a simple definition. This definition is so simple in fact that one word can be used to describe each term.

Supply = selling

Demand = buying

Of course it isn’t quite that simple, but that’s the general idea. An area of increased supply refers to an area of increased selling pressure. This selling pressure causes a market’s price to fall.

The chart below shows a simple supply curve.

Notice how in the image above, as the price increases so does the number of units available. This is because as a market increases in price, participants find it more appealing to sell which in turn drives prices even lower.

On the other end of the spectrum is demand. An increase in demand refers to an area of increased buying pressure. In other words, an area of support. This area of increased buying pressure causes a market’s price to rise.

The chart below shows a simple demand curve.

Notice how in the image above, as the price increases so does the number of units available. This is because as a market increases in price, participants find it more appealing to sell which in turn drives prices even lower.

On the other end of the spectrum is demand. An increase in demand refers to an area of increased buying pressure. In other words, an area of support. This area of increased buying pressure causes a market’s price to rise.

The chart below shows a simple demand curve.

Notice how in the image above, as the price increases the number of units available decreases. This occurs due to buyers stepping up and driving the market higher which in turn reduces the number of units available to other market participants.

The ever-changing balance between supply and demand is what causes a market’s price to fluctuate over time. As supply increases a market will decline while an increase in demand will trigger a rally back the other way.

Now that you have a good understanding of the two terms, it’s time to learn how to identify these areas on a price chart.

How to Identify Areas of Value

The most effective way to go about translating the concepts of supply and demand into actionable areas on your chart is to change the way you think about the two terms.

At the end of the day, an increase in demand is just another way of calling attention to an area of support. In the same way an area of supply can be thought of as an area of resistance.

We call these support and resistance levels. These are the levels that form on your chart from which you want to look for buying and selling opportunities.

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