Transcription
Most traders, they just see this area here as simple resistance. Either skip it completely or enter it wrong and get stopped out. I'm going to show you today exactly why that happens and how to trade supply and demand correctly and why it's the backbone of each trade I take. Stay until the end because I'm going to show you a real setup from this week and exactly how I managed it.
Before I get into the trade breakdown, this is the exact trade I took this week. I entered in this area of supply, targeted that lower low, and as you can see, pretty much zero draw down straight to TP. This wasn't luck. This was predetermined ages before. And by the end of this video, you're going to know exactly how to spot these for yourself.
So, before doing anything, you need to determine the trend. Okay? Are we in an uptrend? If we are in an uptrend, I am solely looking for areas of demand. This is high probability. If I am in a downtrend, I only want to look at areas of supply. Okay, this is high probability. And why is this important? And how does this work? You see, when price shifts, let's say we are in a downtrend, you can see we respect supply. Then as we push higher, we start to respect demand. So let's look at this from a structural basis and see what is going on.
Once price shifts structure, right? You can see if we look at the external highs and lows, low, high, low, high, low, high, low, high, high. This shift here tells us that price has gone into an uptrend. We stop looking at supply and purely look at demand. On this leg down, we're purely looking at supply. On this leg up, we're purely looking at demand. Now, we know that demand is in control. What happens? We still have valid areas of supply. This is a valid area of supply. For this, we just expect price to pull back into where? An area of demand because we're in an uptrend to get the real move. As you can see here, we tap into an area of supply. But this area of supply is just going to provide a pullback into this area of demand where we can get the real move. So, why trade the small movements when we can trade the big movements? How do we know where the big movements are going to come? Because it's the ones in direction of the trend. So remember, uptrend only look for demand. Downtrend only look for supply.
Here's where 90% of traders mess up. Now they know that, they just start drawing random areas. They see this as an area of supply. Yeah, I'm going to enter from here. This is an area of demand. Yeah, I'm going to enter from here. Or this is my area of supply here. Yeah, let me enter from here. This doesn't work. You need specific criteria to ensure they are high probability zones.
So what is this criteria? Well, the first one is price needs to create a break of structure. So if we're in an uptrend, price needs to break some sort of structure to the upside. So we can have that area of supply. If we are in a downtrend, okay, price needs to break some sort of low. Price needs to break an external low to validate this area of supply. If there is no break or structure, there is no valid area of demand or supply. For example, people here may mark this area of demand here. We can see it gave a big move up and even left behind fair value gaps within this leg. However, would I use this based on this criteria? No, because high, low, high, low, high. Did this area of demand break structure? As we can see, it didn't. So if the area of demand has not caused a break of structure, it is not valid. Now as price returns into this area, you can see it gets smoked because this wasn't strong enough for us. Well, how about this area of demand here? This area of demand, I can see it actually took out external structure. So this is a lot more higher probability. Now, if I enter my longs in this area of demand, targeting higher prices, I know it has a lot more strength. It's a lot more likely to work. And as we can see it already tapped, gave a new high and it continues to rip from there.
Now the second step is it needs to have liquidity. No liquidity the zone is useless. You will be the liquidity. Here we have an area of supply. Okay. And we can see that it pushed price lower. However, this gets absolutely smoked. Why? There was no liquidity resting below here for price to sweep and then dump. That means no orders to take out, no movement. This zone is likely going to be used as liquidity. Let's focus on this area of supply here. Why is this amazing? Well, we can see it broke structure to the left, right? Low, high, low, high, low. It's broken structure. That's valid. Step two, liquidity. Look at this. High here, high here, high here. We have all this liquidity formed within this area of supply too. Now this is an A+ zone for you to take a trade from to target lower prices. We have that break structure. We have that downtrend. We have that liquidity sweep. And as you can see as I play price out, it does dump all the way to this external low here and you smash take profit.
Now let me show you exactly how I put this all together in a real live trade this week. I'm finding my trend, finding my area of supply/demand, and validating it. And as you can see, members are using this exact supply and demand criteria to pass their funded accounts, get payouts, and trade like they never have done before.
So, getting to this trade breakdown, like I said, as always, the first thing we want to find is the trend and direction. I can see low, high, lower, low. Price is pushing to the downside. I have decided to look for cells and look for areas of supply. So I want to find an area of supply that was responsible. What was a criteria? The first one was a break of structure. An area of supply that gave me this break of structure here. Now we have really two areas. We have this area of supply here and we have this area of supply here. Two clean areas of supply that gave the breaker structure. Now what was the second step? Liquidity. I noticed that this here didn't really have much liquidity. Whereas this lower zone was acting as perfect liquidity for this higher zone. So while a lot of people were into here, I was seeing this as this is where we're going to fake out traders coming to here to get the real move. Everyone who limits their order here is going to get cooked. Another little step is this is completely fresh and unmitigated. If price had already returned into my area of supply and demand before I took a trade, then it becomes invalid.
So now as price has swept this liquidity, you can see we take out this zone. Everyone who shorted in this area here above this supply zone gets stopped out. We've come into to mitigate our real area here. I was waiting for this small area of demand to break as my confirmation as well as inversing this slight 5m minute fair value gap here. So now I know that this supply has kicked in. We have broke demand. We broke fair value gap. This is the place for me to take my trade. Stop loss above this high. Final target being that external low here. As we play trade out, we can see how great of a supply zone that was because it gave zero draw down, zero fight back. Beautiful supply that smashed to take profit.
Now, here's where I want to be honest with you. I just gave you the entire full framework. You understand this conceptually, but I already know what's going to happen next for those watching this. You're going to go to your charts, you're going to try to draw these zones, and two weeks later, you're still going to be upset, angry because you can't quite do so. Not because the strategy is wrong, but because there's a gap between understanding something and actually being able to execute it live, especially when pressure and real money is on the line. And that gap is exactly what I work on with people in my mentorship. I'm not in there teaching you supply and demand from scratch. I'm sitting with you and your specific charts, your specific mistakes, your specific psychology, and fixing the exact thing that's keeping you stuck. I worked with loads of traders who understood this stuff technically for years and was still blowing accounts. But within 8 weeks, they were consistently profitable, and knowledge was never the problem. If you want to apply for that, the application is in the link below. It will take you no longer than 2 minutes, and I read every single one personally. If it's a right fit, I'll make sure to reach out. If this video helped you, I appreciate any likes and subscribes. I consistently post week in week out.