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Thread: SnD and SnR Trading Strategy

  1. #1
    Trader ara's Avatar
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    SnD and SnR Trading Strategy

    Hello all, let me share material about how to trade using Supply/Demand (SnD) and Support/Resistance (SnR). Before practice, I will talk a lot about SnD and SnR concepts. Perhaps some of us have tried to learn about supply demand analysis in many sources, but until now we have difficulties to understand it and YES !!! that's what I feel too. But finally I found learning materials that make me feel easy in understanding supply demand analysis. One of them is learning from this forum, I found some threads about supply/demand in this forum, but I don't need to mention who is the author of those thread. I will only say thank you to him/her.

    What is Supply/Demand? What is Support/Resistance? You can get the answer from many sources, there are tons of sources you can find to learn Supply/Demand, and Support/Resistance.
    I don't need to talking about the definition of both, this is just pure my own mindset about Supply/Demand and Support/Resistance on forex technical analysis. If you think that my mindset about Supply/Demand and Support/Resistance is different from the others, you don't need to ask me again. Because this is really pure my own understanding of SnR and SnD. I have never read a book about Supply/Demand and Support/Resistance, but I know a little about the theories of both. And maybe I have a different understanding with the others for both.

    Relationship between Supply/Demand and Support/Resistance
    Do you ever think what is the difference of SnR and SnD in forex trading technically? Or maybe you have asked other traders what is the difference between SnR and SnD? Many traders say both are the same, or at least SnD and SnR are similar. And also many traders say that Support/Resistant is a level, while Supply/ Demand is an area. As seen in the picture below:

    Attachment 23506

    We see on the picture above, Red boxes is area of supply, Blue boxes is area of demand, Green lines as support levels, Yellow lines as resistance levels.

    Zone A and Zone B : According to economic theory, prices can only move due to an imbalance between Supply and Demand and no other cause. The basic principle causes the price to move down is, because there is a sale, then the supply in the market increases, and based on the law of economic balance, if supply increases, then the price will fall. If the price goes up, then it means there are many buyers so demand in the market increases.

    Then why do we make an area of supply/demand only near support/resistance levels? : Often when we watch the chart, the price just moves up/down to a certain point, then rebounds, then rises again, rebounds again, etc, like there is a wall at that price level. Why did it happen? Why are they selling/buying at that price? Why not at another price level?
    Support is a certain point where psychologically many people will buy the instrument, simply, where the price will rebound after it goes down.
    Resistance, is the opposite of support, a point where psychologically many people sell the instrument, simply, where the price will rebound after rising.
    Usually most of buyers/sellers enter the market near the support/resistance. However, that does not mean there is no buyers/sellers in zone A and B. In fact many traders also enter the market in zone A and B.

    Simple analogy :
    Supposing you want to hoard coconut oil. The price on January 1 is $ 1 per bottle. On January 3, the price rose to $ 1.2 per bottle. Of course you don't immediately buy at the price of $ 1.2 (unless forced or other reasons). You will wait for the price to fall slightly,. It turned out that on January 5, the price dropped to $ 1 again. So psychologically, you'll think .. well, it's down to the same level as January 1st, then you're thinking of buying at this price.

    This principle is more or less the same as what happens in forex. At a certain level (support), traders (both small and big) will think this price is good enough to buy.

    Every Banks, financial institution, etc. has a research team that estimates the value of support & resistance. There is no definite formula for calculating support, quite a lot of things that can be used as support, for example:
    - Figures round (0.20,50,80-for example EURUSD 1.2320, 1.2600, etc.) because most companies like to buy at round numbers
    - Lowest price since last x minutes, last x hours, last x days, etc.
    - From indicators such as moving averages, etc.
    - Order volume at a certain price.
    For resistance, then the reverse, the highest price since x minutes, hours, and so on.

    Well, the values ​​released by analysts and research teams are usually followed by many traders. The more that follow, the greater the effect on the price.

    For example, X analysts expect EURUSD support at 1.2500, so if many read and follow, there will be a lot of buy at 1.2500 which makes the price hard to break.

    Support & Resistance is just information, not a trend, more helpful, where we should start to enter the market, or where we should get out of the market.

    For trend analysis, we can use Technical Analysis or Fundamental, or both.

    Now I don't want to talk more about that, you can make definitions based on your own ideas and understanding, I won't take it seriously as long as your mindset doesn't deviate too far from those theory.

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  2. #41
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    Quote Originally Posted by precious View Post
    This is awesome my dear friend and i really have a nice time going through your chart one by one because what you have here is highly educative and it is something that we traders can learn from.One thing i have always known about business is the forces of demand and supply which you have laced so much emphasis upon here because forex market is a business market and what determine what we see in the forex market from time to time is the forces of demand and supply because forex is all about buying and selling.
    Supply and Demand works in the every day life we are living, this is a law of economics that says when there scarcity of a commodity, price would skyrocket, but with the availability and abundance of that same commodity, price will fall, demand and supply on Forex trading is to buy the bottom and sell the tops, it is very rare for a supply and Demand trader to buy a currency pair that is already within the overbought and oversold, they always trade from the beginning of the new trend. I have traded demand and supply before, I understand the basics.

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  3. #42
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    each trader does not use the support and resistance levels will make a big mistake and will lose some of money from the market and so he will not get the full benefit of trading, so each trader should always analyze the market with support and resistance to analyze the market better and knows when to enter the market and when to exit.

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  4. #43
    Trader jamey's Avatar
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    It's a great presentation on the supply and demand, which is divided into bits using some great graphs to illustrate your point. The fact is, after leaving the thread, I bookmarked the first thing so that I was a little busy, and could come back later to read it again. It's not something you're taking time to present here that a businessman has to go once and close the chart. This is something that should be given some good attention because there are a large number of points presented here. You are a talent ara and well done for this.

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  5. #44
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    Hello ara, and i hope you are doing very well, first of all, let me thank you for this beautiful and down to earth analysis on how to trade the resistance and the support levels. Of a truth, this is the most comprehensive analysis i have ever read on this forum on the resistance and the support level trading. It is not as if i had not seen or read a lot of good thread on the trading of the resistance and the support levels, but yours just blew up everything. You are simply amazing, not with those accurate charts attached here.

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  6. #45
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    i like to trade with support and resistance more than trading with trading with supply and demand because it gives me better results and let me to analyze the market better, but supply and demands are also good and let the trader to find better zones of trading and so the trader can be able to know where to set the orders and so he can make good trading.

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  7. #46
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    The supply and demand in economics all centers about what happens when there is excessive supply or excessive demand. In a lay man point of view when there is increase in demand, supply hardly meet up and this leads to increase in price. This is also what we can face too where excessive supply lowers price level. So it connects with the support and resistance lines in a forex chart and this chart can however describe these supply and demand curve.

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  8. #47
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    Supply and demand with support and resistance have some great resemblance but I think between the two, the supply and demand is more accurate because here we are considering a zone for trading rather than one straight line, this means when supply and demand is used, the trader is opened to more profitable opportunity that can make him grow a small account adequately.

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  9. #48
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    I understand supply demand as support resistance and market respects these levels and moves between them. Principally all trading strategies are based on support resistance levels and if market will brake the levels or it will go back. It is very good to open orders near the SOR levels and tight stop loss because risk reward ratio will be very good.

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  10. #49
    Trader snnaky's Avatar
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    Thank you my friend for this wonderful participation, which i consider very useful for each member .My strategy depends on supports and resistances it’s the best one and the most accurate and widespread with a lot of traders also i use rsi indicator
    The best time frame is the hourly and its very suitable for me and i don’t use any other indicators and through the experience this is the best strategy

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  11. #50
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    the supply and demand is widely used by the traders around the world and also the support and resistance are widely used by the traders, because both are famous and effective and let the trader to analyze the market with more accuracy and so this will keep trading is profitable for them always and so the trader will be able to succeed in the market.

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