1. Supply and Demand
2. Trend
3. Liquidity
All are important and essential for my trade setup.
I’m a full time day/swing trader for a living.
I’ve learned a lot through my time trading.
Here’s a thread going over my exact trading strategy
As well as some helpful tips/tricks.
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1. Supply and Demand
2. Trend
3. Liquidity
All are important and essential for my trade setup.
Supply and Demand zones are areas of price where institutional buying or selling is taking place. These zones are key because price is likely to reverse at these zones since institutions want to defend or add to their position.
To draw these zones, you take the top of the body or wick of the candle PREVIOUS to the explosive candle and draw it down to the bottom. Extend the zone and there it is. (Knowing whether to use the wick or top of the body will take experience)
Entry should be at the top of the zone with a hard stop just underneath the bottom of the zone. Targets will be based off a multitude of things, some mentioned further. These zones work on all time frames and all stocks, futures, cryptos, etc.
I am only interested in taking entries at FRESH supply/demand zones. Fresh zones are ones where price hasn’t been tested yet. Look at pics below
Large gaps in stocks also act as supply/demand zones. If you think about it, it’s essentially the fastest move a stock can have, making them one of the best trades. Here’s a gap fill demand trade I took last week on $WDAY
Identifying trend is key to making sure you are on the right side of the move. Identifying trend is simple. Zoom out to the largest time frame and see if price is making higher highs (HH) and higher lows (HL) or Lower highs (LH) and Lower Lows (LL)
Strong lows are lows that are able to break the previous swing high structure (BOS). It shows that demand is greater than supply, so bulls are in control. This works the other way as well for strong highs in a bearish market.
A BOS is a clear break and hold of a previous high. It validates the previous low as a STRONG low, meaning we can look for buys on a pull back toward its demand. A stop hunt is a spike above the high. Usually a wick depending on the time frame.
A strong low/high can only be made if it retraces AT LEAST 50% from the previous swing high/low. If it’s a more shallow retrace, it is not a low/high that I would recognize. I would call that LIQUIDITY $$$. Talking about that next…
The thing everyone talks about. Liquidity can be found above highs and lows. It’s where retail traders put their stops and where breakout traders use their market orders. Price is ALWAYS reaching for liquidity. It’s like a dog with its bone.
It’s everything above! I look for long term uptrends and buy at demand zones and vice versa with shorts and supply zones. I look for a CHANGE IN TREND on the smaller time frame for confirmation to buy. THESE IMAGES ARE KEY 🔑
* Uptrend (Clear BOS)
* Retrace of at least 50%
* Smaller time frame Supply break (Change in trend)
* Smaller time frame retrace at least 50%
1. Entry is at 50% smaller time frame retrace (or demand)
2. Stop below swing low
3. Target 1 is STF swing high (cover 80%)
4. Target 2 is LTF swing high (cover all)
It all depends on time frame but when it doubt, go farther out! This is what I typically do for swing trades.
* ITM/ATM contracts
* 2-4 weeks out
* If Wednesday-Friday do 3 weeks minimum
LESS IS MORE🔑
^ One of the most valuable tips my mentor gave me
