If you understand a bit of economics, then it is easier to realize that the reason forex business thrives is that there are demands and supplies. Without a buyer and seller, a business would not exist. As a forex trader, you need a technology that should help quickly identify supply and demand areas. That is precisely what the supply and demand forex indicator does for you.
When you have a system that makes things easier for you, success becomes possible. You can now add your human intelligence to the forex indicators to enter and exit the market without getting hurt.
Uses of the Supply and Demand Forex Indicator
The Supply and Demand Forex Indicator is an MT4 forex indicator that highlights the supply and demand zones on an MT4 forex chart. A zone is between two price levels, not just a price or a line. The work of the indicator is to help you highlight that on the chart.
In the chart below, the supply zones are colored in maroon, and the demand zone is colored in blue.
Tips on trading the Supply and Demand Zone
The under-listed tips will help you to make the best use of the Supply and Demand Forex Indicator for optimum results.
1. Use Supply and Demand Zones as Confirmation zones to sell or buy
It is a bit of a challenge for some traders to identify support and resistance zone. With the Supply and Demand Forex Indicator, that should be no longer a problem for you. A good tip for you is to buy on the demand zone and sell on the supply zone. However, it is advisable to use the indicator alongside your trading strategies or use them as a price action confluence before buying or selling.
2. Use them as take profit target zones
If you had a buy order and the price is now beginning to move up into a supply zone, try and take profits off your trades or move the trailing stop loss tighter.
3. Use them to place a Stop Loss
If you want to place a stop loss, the best place to do that is outside of the support or resistance level zone. It means you have to use the supply and demand zones.
The ideal place to put the stop loss should be just a few pips under the demand zone if you enter a buy order in a demand zone.
The ideal place to put the stop loss should be just a few pips above the supply zone if you enter a sell order in a support zone.
4. Use them as Trailing Stops
This fantastic indicator can enable you in placing your trailing stop loss. In a downtrend, the supply zones will head down endlessly. You can use your open sell order as your trailing stops to lock your profits price progresses down.
In the same way, the demand zones will start increasing on your chart as it creates new swing highs in an uptrend. This presents you with the possible price levels where you can trail stop your buy trade and lock profits as the upward movement of price persists.
5. Supply and Demand Zones can be traps for traders
There is the possibility for sellers to be caught out with bear traps because demand zones are the same as support zones. You can quickly get out of a losing trade and modify your course immediately using the knowledge of your bear trap charts and bear trap trading strategy. You can easily earn a profit from the up move that price makes following bear traps formation.
Also, there is a possibility for bulls to be caught out in a bull trap in a supply zone.
Advantages of Supply and Demand Zone
The Supply and Demand Zone has some pros and cons you need to be aware of.
1. The price levels are predefined.
2. There is a potential for high-profit.
3. It is easy to see price move with reason and logic.
4. There is a high possibility of the right trade.
5. There is more risk to reward ratio.
It is not a standalone trading plan. It requires that you use it with other, more comprehensive market strategies.
How to identify the Supply and Demand Zones
Identifying the supply and demand zones requires that you follow three steps, which include:
1. Take a look at the chart and notice the successive impulse/candles.
2. Set up the base
3. Draw the zone
It is difficult drawing an accurate zone: Identifying those areas takes time and a lot of practice. You should keep to the rules and practice for an extended period until you are confident to draw the areas.
How to add the Supply and Demand Forex Indicator to MT4
To add the Supply and Demand Forex Indicator to MT4, you need to take the following steps:
1. Download the indicator.
2. After downloading the indicator, open the folder where you saved it and copy the file.
3. Open MT4 and go to file. Click “Open Data Folder.”
4. When the data Folder window pops up, open the MLQ4 folder. Paste the rectangle reader file into the “Indicators” folder.
5. As soon as you finish with that, start your MT4 again, and the indicator will show up in the custom indicators tab.
If there are other custom indicators you love to add to your charts, follow the same steps used above.
Conclusion of Supply and Demand Forex Indicator
The Supply and Demand Forex Indicator plays a significant role in identifying the chart’s supply and demand zones. When combined with other indicators and trading strategies, the indicator boosts your chances of earning more profits.
This is not the only indicator we have on this platform; there are several others that have been tested and confirmed to work effectively. You can boost your chances of earning more profits by leveraging any of the indicators and tools. They can make a lot of difference in your trading career. So check it through the link for more info.