Let me share the basics of supply and demand.
I trade supply and demand. I buy at demand and sell at supply as simple as that.
This is the key to buying at the swing low and selling at swing high.
So what are supply and demand zones?
The picture below are the 2 demand zones that i trade:
Rally base rally (RBR) - Trend continuation pattern.
The base is a pause after a strong rally. This is where smart money accumulate thus the explosive move up after that base. This base then becomes demand zone.
Drop base rally (DBR) - Reversal pattern (stronger than RBR)
This pattern is usually a reaction to the RBR.
Supply zones are the exact opposite:
Drop base drop and rally base drop.
The strategy is to buy at demand zones in an uptrend and sell at supply zones in a downtrend.
Look at the $AAPL chart below where there are 2 RBR and 1 DBR setups
When price retraces back to the demand zone i will be looking to buy where other retail traders panic and sell or worst, short sell! So why do they panic and sell? Because they entered after a breakout from that base/pause. The typical stop loss will be placed at the last swing low and when price goes in their favour, they will move their SL to breakeven.
Smart money need to buy quietly in large quantities. So how do they do that?
Push prices lower to back the retail traders entries and SL which also happens to be a demand zone!
This is why i don’t use any indicator or volume. Smart money can hide/manipulate volume but they cannot hide the prices that are printed on the charts.
Of course this supply and demand strategy is not as simple as buying at all demand zone and selling at all supply zones.
I use a mechanical ruleset to filter out which demand and supply zones to trade from.
See if you can spot the demand/supply zones on the setups i have posted on:
$Raffles Medical(BSL.SI) $Hai Leck(BLH.SI) $Best World(CGN.SI) $ComfortDelGro(C52.SI) $ISOTeam(5WF.SI) $UMS(558.SI) $Sheng Siong(OV8.SI) $InnoTek(M14.SI) $STI(^STI.IN) $Venture(V03.SI) $Mapletree Com Tr(N2IU.SI) $ST Engineering(S63.SI) $Tai Sin Electric(500.SI) $Sarine Tech(U77.SI) $Duty Free Intl(5SO.SI) $Food Empire(F03.SI) $Moya Asia(5WE.SI) $QAF(Q01.SI) $KrisEnergy(SK3.SI) $QAF(Q01.SI) $AEM(AWX.SI) $GLD US$(O87.SI) $SoilbuildBizReit(SV3U.SI) $Sembcorp Marine(S51.SI) $Keppel Corp(BN4.SI) $POSH(U6C.SI) $DBS(D05.SI) $UOB(U11.SI)$OCBC Bank(O39.SI) $OKP(5CF.SI) $SGX(S68.SI) $Micro-Mechanics(5DD.SI) $Spindex Ind(564.SI) $StarHub(CC3.SI) $Creative(C76.SI) $bs6