Supply and Demand Strategy
Mark the zones where price left in a hurry and trade the first return to them, with stops beyond the zone.
Educational only. No strategy wins every trade. Backtest and demo-trade any setup before risking real money, and size every position so one loss can't hurt your account. Risk disclaimer
The idea
Sharp moves leave behind areas where orders overwhelmed the other side. When price returns to such an area for the first time, unfilled orders may still be waiting there, so it can react again.
Finding a zone
- Look for a strong, fast move away from a small base of candles (a "drop-base-rally" for demand, "rally-base-drop" for supply).
- The zone is the base: from the highest body to the lowest wick of the base candles.
- The stronger and faster price left, the better the zone.
Rules
- Higher-timeframe context: trade demand zones in uptrends and supply zones in downtrends.
- Fresh zones only: the first return is the best. Each retest uses up orders.
- Entry: a limit order at the zone edge, or wait for a reaction candle inside the zone.
- Stop: just beyond the far side of the zone plus a buffer of about 0.25 × ATR.
- Target: the next opposing zone, aiming for at least 2R.
Common mistakes
- Drawing zones everywhere. Only mark zones with a strong departure.
- Trading zones against the dominant trend.
- Moving the stop when price goes through the zone.
Plan the trade before you take it
Check the reward-to-risk of your setup and size the position so a stop-out costs only what you planned.