Juxtman
Member
Trading is also a function of economics. Trading is all about price movements and price movements are a result of the market’s perception about the current price, whether it is too high or too low. In a way, trading is the crowd’s psychology regarding price. This is also exactly what economics is, a group’s psychology regarding the exchange of scarce resources. This is why trading is applied to almost any scarce resource, whether it be stocks, bonds, commodities such as gold or oil, or even currencies (forex).
In fact, price movement the result of the two main economic factors, supply and demand. Too much demand and the prices would go up. Too much supply on the other hand puts pressure on price to go down. Because of this, it also seems proper that we explore the use of one of the most tried and tested types of trading strategies related to economics, Supply and Demand.
Supply and Demand strategy is basically a strategy that assumes that certain price points have an inherent bulk of supply or demand on that area causing price to move rapidly away from it. These areas or zones, when revisited could still have more supply or demand on it. This comes in the form of unfilled buy or sell pending orders. It could also be other traders waiting on the sideline waiting for price to drop to that area before they would consider price to be cheap enough to buy, or for price to rise to a certain level before they would consider selling.
Zigzag Indicator
The Zigzag indicator is a basic indicator which many traders overlook. It is probably due to its simplicity that traders overlook it. However, despite its simplicity, it probably is one of the most useful indicators available for traders.
The Zigzag indicator is an indicator that connects swing highs and swing lows. Having a clear idea of where the swing highs and swing lows are is very helpful in many ways. It could be used to identify trends as well as supports and resistances.
Trends are defined by price action traders as swing highs and swing lows that are constantly rising on a bullish trend or constantly falling on a bearish trend. This characteristic could easily be deciphered using a Zigzag indicator.
As for supports and resistances, traders often identify two types of it – diagonal supports and resistances, and horizontal supports and resistances. Traders could make use of the Zigzag indicator to identify horizontal supports and resistances since swing highs could be considered as a horizontal resistance and swing lows could also be considered as horizontal supports.
Supply and Demand Indicator
Supply and Demand strategy relies heavily on being able to correctly identify the supply and demand zones. Traders who have mastered Supply and Demand would often identify these zones based patterns of bases, drops and rallies. However, identifying zones based on this strategy needs a lot of practice and is often difficult for traders who are new to supply and demand trading.
The Supply and Demand indicator provides traders an easier route by automatically marking the zones on the price chart. All traders would have to do then is observe price action as price would revisit these zones.
The Forex Trading Strategy
The Supply and Demand Zones Forex Trading Strategy is a simplified way of trading the Supply and Demand strategy. It makes use of the Supply and Demand indicator as a means of identifying the zones where we should be observing price action. This makes the traders job a whole lot easier. It removes all the guess work that some Supply and Demand traders make and prevents traders from marking low quality zones, which is often the reason why traders who are new to this strategy fail.
This strategy not only attempts to identify the entry zones, but it also aids traders in identifying profit targets. Profit targets will be based on horizontal supports and resistances, which are also based on swing highs and swing lows. In this strategy, traders would be marking the body of the candle which formed the swing high or swing low as the profit target. This is a more conservative method as compared to targeting the high or low of the candle as price could sometimes bounce off prior to even reaching the high or low.
In fact, price movement the result of the two main economic factors, supply and demand. Too much demand and the prices would go up. Too much supply on the other hand puts pressure on price to go down. Because of this, it also seems proper that we explore the use of one of the most tried and tested types of trading strategies related to economics, Supply and Demand.
Supply and Demand strategy is basically a strategy that assumes that certain price points have an inherent bulk of supply or demand on that area causing price to move rapidly away from it. These areas or zones, when revisited could still have more supply or demand on it. This comes in the form of unfilled buy or sell pending orders. It could also be other traders waiting on the sideline waiting for price to drop to that area before they would consider price to be cheap enough to buy, or for price to rise to a certain level before they would consider selling.
Zigzag Indicator
The Zigzag indicator is a basic indicator which many traders overlook. It is probably due to its simplicity that traders overlook it. However, despite its simplicity, it probably is one of the most useful indicators available for traders.
The Zigzag indicator is an indicator that connects swing highs and swing lows. Having a clear idea of where the swing highs and swing lows are is very helpful in many ways. It could be used to identify trends as well as supports and resistances.
Trends are defined by price action traders as swing highs and swing lows that are constantly rising on a bullish trend or constantly falling on a bearish trend. This characteristic could easily be deciphered using a Zigzag indicator.
As for supports and resistances, traders often identify two types of it – diagonal supports and resistances, and horizontal supports and resistances. Traders could make use of the Zigzag indicator to identify horizontal supports and resistances since swing highs could be considered as a horizontal resistance and swing lows could also be considered as horizontal supports.
Supply and Demand Indicator
Supply and Demand strategy relies heavily on being able to correctly identify the supply and demand zones. Traders who have mastered Supply and Demand would often identify these zones based patterns of bases, drops and rallies. However, identifying zones based on this strategy needs a lot of practice and is often difficult for traders who are new to supply and demand trading.
The Supply and Demand indicator provides traders an easier route by automatically marking the zones on the price chart. All traders would have to do then is observe price action as price would revisit these zones.
The Forex Trading Strategy
The Supply and Demand Zones Forex Trading Strategy is a simplified way of trading the Supply and Demand strategy. It makes use of the Supply and Demand indicator as a means of identifying the zones where we should be observing price action. This makes the traders job a whole lot easier. It removes all the guess work that some Supply and Demand traders make and prevents traders from marking low quality zones, which is often the reason why traders who are new to this strategy fail.
This strategy not only attempts to identify the entry zones, but it also aids traders in identifying profit targets. Profit targets will be based on horizontal supports and resistances, which are also based on swing highs and swing lows. In this strategy, traders would be marking the body of the candle which formed the swing high or swing low as the profit target. This is a more conservative method as compared to targeting the high or low of the candle as price could sometimes bounce off prior to even reaching the high or low.
