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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. #51
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    Quote Originally Posted by sameeh View Post
    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.
    Supply and demand is the same as support and resistance and it is very good trading strategy as market respects support and resistance levels and dos not brake the levels easy. So we can place orders on support resistance levels and we can expect good risk reward ratio because market will move long distance to one of directions.

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  3. #52
    Trader Doge's Avatar
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    Supply and Demand are the forces that drive the prices. However to analyze trends it's important to divide them into further groups - speculative trade and actual exchange.
    The difference is normal people buy because it's cheap, the cheaper it gets the more they buy. Speculators buy because it will get more expensive. The more expensive it gets, the more they buy. Usually it depends on the balance between these two groups of market participants whether a support/resistance line will be broken or not.

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    Wow. Much Forex. So Monies. Very Opportunity.Many Trade. So Amazed. Wow.

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