Supply and Demand

Supply and Demand Trading the Wick Methodology Four Hour Charts  This is a rule-based trading trading methodology methodology with emphasis emphasis on mitigating mitigating losses with with strict money management by using candle wicks occurring within supply and demand zones to gauge gauge stop losses. The methodology methodology assumes all zones are are valid for trading but recognizes many zones will fail. Selecting supply and demand zones is part technical technical and part art. No “best way” of dening supply supply and demand zones zones is presented. !t is assumed that the trader has a basic knowledge of supply and demand trading as basics are not presented here but some resources for your study are provided. ". !dentif !dentify y supply supply and demand demand zones zones.. ! tend to use use zones zones associa associated ted with with #ide #ide $ange %ars %ars &#$%'. ! also identify zones zones where price price e(its brief consolidation consolidation via rally-b rally-base-d ase-drop rop &$%)'* &$%)'* drop-ba drop-base-ra se-rally lly &)%$'* &)%$'* rally-ba rally-base-r se-rally ally &$%$' &$%$' and drop-base-drop drop-base-drop &)%)' &)%)' patterns. patterns. #hen these patterns patterns are associated associated with a #$% #$% ! conside considerr them parti particul cular arly ly strong strong.. The The follow following ing reso resour urces ces are are recommended+ a. Sam Seiden Seiden++ ,oogle ,oogle him him and you will will nd nd a wealth wealth of videos. videos. b. $ead the “rice “rice is verythin verything” g” thread thread on /ore( /ore( /acto /actory ry.. 0ou don1t have have to read read the whole thing. 0ou will get the idea after reading 23-"33 pages. c. $ead the “%S “%S Tradi Trading ng with 4enne 4enneth th 5ee” thread thread on /ore /ore( ( /acto /actory ry.. There There is an attached )/ that is super. d. ,oogle ,oogle #ide #ide $ange $ange %ar analys analysis is and read read the free free materi material al availab available le on this. Search through 6idden ,aps posts for much on #$%. 7. This This method method is based based on 68 chart charts. s. method.

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9. #ait for price to enter or touch a supply or demand zone. zone. #ait for the candle candle that engages engages zone the to close. The candle candle that rst rst engages a zone is the signal signal candle candle (SC). bearish signal signal !f the the cand candle le clos closes es bear bearis ish h it is bearish candle (BeSC) !f it closes closes bullish bullish it is a (BuSC) 8. ntr ntry y cri crite teri ria+ a+ a. The wick wick of a %eS: %eS: in demand demand must be 72; or larger larger than than the total total %eS: span b. The wick wick of a %u %uS: S: in demand demand must must be "3; or larger larger than than the total total %uS: span c. The wick of of a %uS: in supply must be 72; 72; or larger larger than the total %uS: %uS: span d. The wick of of a %eS: !n supply supply must be "3; or larger larger than the total %eS: %eS: span 2. Stop loss is is 7 to 9 pips pips beyond beyond the the wick wick end.

<. !f trade trade is enter entered ed in suppl supply y target target is the the closest closest deman demand d zone. zone. !f trade trade is entered in demand target is the closest supply zone. =. >or >ore on zone zones+ s+ a. ? zone is good good for trading until price price has completely traversed the zone and closed beyond its1 boundary. b. !f price closes closes inside inside the zone after after e(ceedin e(ceeding g it the zone is still still good for trading. c. ach subse subse@uen @uentt return return to a zone incre increases ases the the risk that that the zone will will fail. A. Specia Speciall tradin trading g situat situation ions+ s+ a. !ro"y#$ick#candle (!WC)+ Bsed when when the the signal signal candle candle does does not meet criteria criteria for trading. trading. /or /or e(ample e(ample the signal candle candle might be a large large bearish bearish candle candle closing closing on it1s low with with little or no wick. wick. !n this case wait for the ne(t candle to close and consider using it is a pro"y# $ick . #e1ll call this a pro"y#$ick#candle (!WC) . %etracement entry+ b. %etracement The sig signal nal candle candle close closed d with with a larg large e wick wick maki making ng the risk risk great greater er than than the trad trader er desir desires es.. !n such such a case case determine the 23; level of the signal candle and place a limit order. lace the stop loss 7 to 9 pips belowCabove the wick of the signal candle. c. %e#entry a&ter stop#out' ?s long as the ne(t candle meets trading criteria it can be used to trade.