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Demand and Supply Zone Trading is very popular among investors and traders. The practical concepts of the Demand and Supply Zone Trading are completely different from the theoretical ones. In this video, I have shared my practical rules for trading and investment using a demand zone and the supply zone.
1. Firstly, a stock or index enter in demand or supply only if the complete candle is formed within the zone.
2. You should demarcate the demand and supply zone. Sometimes there is confusion whether a particular zone is a demand zone or supply zone. You need to check the buying and selling activity within the zone to ascertain the type of zone.
3. Normally a stock or index enter or exit the zone with very heavy volumes. If the move is not a volume supported then the stock or index will re-enter the zone. Any move not supported by volume is a speculative move.
4. Basic a demand zone is a fair value of a stock based on the analysis of a big player and the supply zone shows that the stock is overvalued as per smart money.
5. A positive skew is formed when the stock is trading below its highest demand zone with NO supply zone in between. Whereas, a -ve skew is formed when the stock is trading above its highest supply zone with NO demand zone in between.
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