Here is a short article to increase your profitability by using supply and demand zone for Forex and Stock Market Trading. As we provide non repainting supply and demand zone now, naturally we are able to monitor the price action around historical supply demand zone too. What does this mean ? Firstly if you are using fresh supply demand zone only, then you might skip to read this article. It is entirely your choice. However, we observe that historical supply and demand zone is still important in our trading.
Consider the screenshot below. We have picked up one historical supply zone. This supply zone was penetrated already and people may not have an interest in reusing this historical supply zone. Hence, this supply zone was no longer fresh. However, we can see that market is respecting this historical supply zone making good price action around this supply zone. Check out how many times the price was reversed at this historical supply zone. Price was reversed almost four times making nice price trajectory. After it was visited three time, it provides one crucial trading opportunity at the fourth touch. Even this supply zone is not fresh, it is possible to make good money by using this supply zone as resistance line.
Here is simple rules in using historical supply or demand zone.
You can use historical supply or demand zone if there is no fresh supply or demand zone to trade.
You can use supply zone like the resistance assuming they are respected by the market.
You can use demand zone like support assuming they are respected by the market.
Choose the supply or demand zone, which is most repected by the market to trade. You can check this by how many times the price visited this supply or demand zone.
Do the risk management with the zone if your entry is decided.
At the end of day, supply demand zone can be considered as the advanced support and resistance. In the support and resistance, we commonly use historical support and resistance as long as they are respected by market. Likewise, I have just demonstrated the way of using historical supply and demand zone in similar manner. As I mentioned, if your strategy is purely based on using fresh supply demand zone, you do not have to take this advice from this article because it is also one estabilished strategy to trade in supply and demand zone trading. For example, you can read this article below to find out how to trade with the fresh suppy and demand zone using four price patterns incluidng drop base rally, rally base drop, Rally base rally, and drop base drop.
If you need a detailed guide to trade with supply and demand zone, then you can read the book: Technical Analysis in Forex and Stock Market (Supply Demand Analysis and Support Resistance). This book will explain the trading strategy with fresh supply demand zone as well as historical supply and demand zone.
Here is the link to Ace Supply Demand Zone Indicator, which is the non repainting supply demand zone with tons of powerful features to trade. Many professional Forex Trader uses Ace Supply Demand Indicator as their primary technical analysis tool.