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Supply and Demand Trading Strategy

Jul 11, 2024

Supply and Demand Trading Strategy

Introduction

  • Speaker with 10+ years of experience in trading.
  • Focus: Supply and Demand Trading Strategy.
  • Helping traders become consistently profitable in 90 days.
  • Promise: Resources and blueprint for profitability.

Key Topics Covered

  1. Theory of Supply and Demand
  2. Identifying and Drawing Supply and Demand Zones
  3. Entries, Exits, and Take Profits
  4. Three Setups
  5. Importance of Identifying Trend
  6. Journaling and Review Process

Theory of Supply and Demand

  • Identify where big money is buying and selling.
  • Institutions leave footprints in the market.
  • Price imbalances as indicators.

Key Patterns

  • Supply Zones:
    • Rally Base Drop
    • Drop Base Drop
  • Demand Zones:
    • Drop Base Rally
    • Rally Base Rally
  • Note: Reversal patterns (Rally Base Drop and Drop Base Rally) are typically higher quality than continuation patterns (Drop Base Drop and Rally Base Rally).

Drawing Supply and Demand Zones

  • Focus on strong imbalances and bases.
  • Highlight base and draw proximal and distal lines.
  • Ensure zones accomplish a 2:1 imbalance within the first 3 candlesticks.
  • Zones must remove an opposing zone or break a momentum line.

Entries and Exits

  • Entry: At the proximal line of the identified base.
  • Stop Loss: Structure-based or volatility-based; avoid placing it directly above or below the zone.
  • Take Profits: Minimum 2:1. Move stop loss to break even after initial profit.

Identifying Trend

  • Critical for success.
  • Use methods such as moving averages, Elliott Wave Theory, or higher highs/lower lows.
  • Trend on a chart: Removing opposing Supply zones (uptrend) or demand zones (downtrend).
  • Lightbulb Moment: Trend turns from inside out.
    • Example: 4-hour supply zone, trend in smaller time frames up before hitting 4-hour zone.

Trade Management

  • Journaling: Essential for learning and improving.
  • Reviewing Trades: Analyze to find patterns and improve.
  • Confirmation: Wait for structure break and removal of opposing zones on smaller time frames.

Examples and Setups

  • Top-down analysis: Emphasized.
  • **Multiple Time Frames vs. One Time Frame: **
    • Multiple Time Frame Setup: Trading with higher time frame trend, breaking momentum, removing pivot zones.
    • One Time Frame Setup: Trading without needing price inside a higher time frame but with higher time frame trend.

Pros and Cons of Trading Multiple Markets

  • 1-3 Markets: Learn deeply, less stressful, fewer setups.
  • Many Markets: More setups, potential for information overload, ability to cherry-pick setups.

Final Thoughts

  • Importance of having a trading plan and using tools like mind maps.
  • Reviewing and journaling trades is critical for success.
  • Additional Resources: Hour and a half long video, ebook, masterclass for deeper learning.

Contact Information:

  • Social Media: Moneyball Austin
  • Website: Moneyballtrading.com