SND Trading Basic Concepts
Before continuing how to trade for beginners with SND (supply and demand), let traders first learn about the basic concepts. Basically, supply is the amount of goods available at one time in the market, while demand is the amount of goods that are desired at one time. For example, if an item increases in supply, while the quantity demanded remains stable, what do traders think will happen? From the trader's point of view, there will be no cycle of money exchange and renewal of goods, or in other words, traders will lose money because the goods are not sold. In order not to experience swelling losses, traders will lower prices so that buyer interest can rise again. Conversely, the lack of availability of goods and high demand will increase the value of these goods.
In forex trading too. The EUR/USD currency pair is represented by the price of the Euro against the US Dollar. If EUR/USD is down at the moment, then most people will assume that the USD is strengthening. In fact, prices may fall because the supply of Euros is piling up, while demand for Euros is decreasing. In the language of forex it might be said, traders who buy Euros decrease and traders who buy US Dollars increase.
The basic concept of supply and demand for beginners is important to understand. By understanding this concept and several other concepts later, it is not impossible for traders to be able to read market movements to their roots. Next, the trader will move on to the basics of how to trade.
SND . Trading Entry Types
Entry Breakout
In the breakout entry type, the order will be executed immediately when the price has broken through a resistance or support. This type of entry is often used in trading systems using Channels, such as Bollinger Bands, Donchian Channels, or on Chart Patterns. The advantage of this type of breakout entry is that we as traders will never be left behind when the price is trending in one direction. This breakout is indeed good for detecting the initial movement of a trending market.
The weakness of this type of entry breakout is a false breakout. A false breakout is an event that initially reflects a price breakout from support or resistance, but then fails because the price does not maintain its existence beyond support or resistance. After breaking through this level, the price even returned to the previous area. This false breakout can often deceive and deplete traders' funds, especially traders without good money management calculations.
Entry Pullback
Pullback is a type of entry after a breakout. In this type of entry, the trader must first wait before entering into a position. It is not certain whether the breakout is valid or not, but by waiting for the price to pull back, the trader will get a better price, lower risk, and higher reward. In essence, the success rate of a pullback entry can be better than a breakout entry.
Beginner SND Trading System
In a trading system, it takes several constituent components that are mandatory and should not be violated. These components are market filters, trading setups, as well as entry and exit rules.
Market Filter
In filtering the market, first mark the existing balance zone from large time frames such as 1-day or 1-week. From there the trader will get a big picture of the market that we will enter later. Traders take the example of EUR/USD on the Weekly time frame above. Currently the price is in its weekly balance zone. Then you just have to determine what type of trader is a trader. If a trader wants to trade swings, then we recommend using a 4-hour time frame and above. If the trader is an Intraday trader then use a 1-hour time frame.
Trading Setup
The setup conditions that we expect as much as possible follow the direction of the big trend. The most appropriate condition is if the large time frame is trending up, then just look for a buy setup. Likewise, if the trend is down, it is recommended to look for a sell setup. But if you can find a stop on a large time frame, you can execute buy and sell on each side.
Entry and Exit Rules
As explained above, the entry is executed with a breakout or pullback method. You are free to choose one of these types of entries. As a suggestion, consider the previous example of the momentum candle. A valid breakout is usually indicated by a large, upright momentum candle.
The rules of exit in trading supply and demand for beginners are very simple. Stop Loss is placed slightly below or above the balance zone, while Take Profit is placed in the next balance zone. It is also allowed to use trailing stops or move Stop Loss levels.
Comments
Post a Comment