So, let’s get straight to the point.
What is supply and demand trading in forex?
In short: It’s all about identifying the areas, or ‘zones’, on a price chart where the currency has previously changed direction.
These reversals happen because of an imbalance in supply and demand. When there are more buyers than sellers (demand is higher than supply), prices go up. And when there are more sellers than buyers (supply is higher than demand), prices go down.
Simple, right?
These key zones are where the key market players – banks, hedge funds, etc. – have placed their orders and trading positions.
Remember: As individual traders, we can’t influence the market, but these big guys can.
So, our job is to figure out where they’re likely to jump in.
Once we’ve identified these supply and demand zones, we watch for price to return to these areas.
The goal is to ride the reversal when these big players step back in and cause the price to bounce back in the opposite direction. It’s not about pinpointing the exact price, but rather about identifying an area where the balance between buyers and sellers (aka the banks) is likely to shift.