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  • Clear the Clutter – Supply & Demand Trading

Clear the Clutter – Supply & Demand Trading

  • Posted by Trading Campus
  • Date March 30, 2020
  • Comments 103 comments

As a trader I have witnessed that many novice trader fill their charts with indicators, oscillators, lines and what not. I’m not against them because they might be comfortable in trading using them. But most of the professional traders I saw like to keep their charts clean without clutter and and have proven to be successful as well.

Out of the decades of experience they posses, they stress only one thing “Price Action”. They believe that price is the leading indicator of whats going to happen not volume, not indicators , nothing else.

Of course, any indicator you see in the trading world is based on price/volume which has already taken place. Indicator which involves historical price is always lagging.

Let’s get straight to the point now. How can someone trade based on plain charts? Is that even possible? Yes it is and the answer is “Supply and Demand Zones”

Supply zone is the area where more number of sellers are interested in selling and Demand zone is the ares where more number of buyers are interested in buying. Now, when does this situation occur?

When sellers feel that stock is over valued they try to offload their shares and at the same time they also take care of liquidity. When buyers feel that stock is undervalued, they try to buy the shares.

Below are some of the ways you can identify and supply and demand zones on the chart.

 

 

Supply zone is an active resistance zone, which acts as a magnet to sellers. A zone is by definition a broader area, which attracts bears from all kinds. On the contrary, a demand zone is a broad area of support

 

 

Above two images are two kinds of supply zones that we saw. A bull trap supply zone is nothing but a failed second high. If you are addicted to indicators, you may take the help of RSI here. Basically I’m talking about RSI bearish divergence where price makes highers high but RSI make lower high.

 

Above two images are two kinds of demand zones that we saw. A bear trap demand zone is nothing but a failed second low. You may take the help of RSI here. Basically I’m talking about RSI bullish divergence where price makes lower low but RSI make higher low.

The reason we have used the word trap here is because, in a bull trap supply zone, Buy stop orders of buyers are hit and price gets reversed. In this case sellers are able to sell high.

In a Bear trap demand zone, Sell stop orders of Sellers are hit and price gets reversed. In this case buyers are able to buy low.

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Previous post

Intraday Trading Using Daily Supports and Resistances
March 30, 2020

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Simplest and Most Effective Chart Pattern for Intraday Trading– 70% Accuracy
April 1, 2020

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Company Summary

Bajaj Electricals Limited is engaged in engineering and projects; power distribution, illumination and consumer durables businesses.

It has a range of domestic and kitchen appliances comprising water heaters, room heaters, coolers, irons, mixers, induction cookers, toasters, kettles, microwave, rice cookers, gas stoves, non-electrical kitchen aids and pressure cookers.

It offers ceiling, table, pedestal, wall, fresh air and industrial fans, and lighting solutions, such as light sources, light emitting diode-based lighting products, domestic luminaires, torches and lanterns.

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The Company's business segments consist of

  1. Lighting;
  2. Consumer Durables;
  3. Engineering & Projects,

The Lighting segment includes lamps, tubes and luminaries.

The Consumer Durables segment includes appliances and fans.

The Engineering & Projects segment includes transmission line towers, telecommunications towers, highmast, poles and special projects.

The Others segment includes diecasting and wind energy.

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