Supply and demand zones introduction ‑ page 5 Why supply and demand zones will keep working

They are NOT just gimmick trades

Every day, a trader somewhere discovers a certain combination of indicators or chart patterns, often in a single or few markets and a single or few timeframes, which yield fantastic win rates and profit factors. Most seasoned traders have experienced this. It's almost too good to be true. Well, not just almost.

Markets are unforgiving: They are the most competitive of human endeavors, and gimmick trades such as these usually fade after a while, or collapse altogether. Either because other traders discover the same trades and crowd or out-arbitrage them; or simply because these trades only worked when the market behaved in a certain way, which changed after a while — as markets always do.

Supply and demand zones are different. They work both as a broad technical analysis methodology and as a complete trading strategy, and have kept working for a century, because they are more than just gimmicks: they are based on fundamental, inescapable market mechanisms.

The "inescapable" bits are not just "the fundamental forces of supply and demand" or "supply and demand imbalances at key price levels", which is trivial consultantspeak that can mean anything and apply to anything.

What is inescapable when it comes to supply and demand zones is the fact that "whales" in financial markets — anybody seeking to load or unload a significant position — cannot avoid gradually accumulating or distributing this position without severely hurting their average price and thus undermining the very trade they are aiming to make.

And these accumulation and distribution activities leave footprints of hidden order pockets for those who know how to identify and trade them. THAT is the inescapable bit.

This has been true for as long as financial markets have existed and will continue to be so.

Even then, markets are constantly evolving, and whales are intelligent creatures, always looking for advantages and trying to avoid revealing themselves: not everything that may superficially look like a zone is a genuine one. And even those that are genuine zones may not be high probability trade setups in a given Big Picture context.

That is why zones must be properly identified, and their validity as trade setups must be properly qualified. Low risk, high reward and high probability trades are the fruits of supply/demand traders with skill, patience and discipline. And with the right tools to execute their strategy efficiently.

We believe we have something to offer on all those fronts. But even if you don't use our SD Zones software, learning the supply/demand zones methodology is one of the best ways to up your trading game. As it has been for us.

Thank you for being here. Happy trading.