A basic premise of professional price action trading is that we are looking to follow the institutional (large money) flow – the money that moves the market. All too often a novice retail trader is either trading against this large money flow or looking to trade in the same direction, but after a sustained move has occurred i.e. entering very late in the move.

The simple strategy outlined in the video above builds on the supply and demand concepts discussed previously with the mindset of a professional price action trader i.e. always looking to be trading with the institutional money flow.

This is the first video in the series on this strategy and it’s purpose is to outline the basics of the strategy and how to identify setups on your chart.

Summary of Key Points

  • Each time price hits a supply (or demand zone) it is consuming supply (or demand).
  • Logical follow on from this is that the first time back to a supply / demand zone represents the strongest chance of the same SD ‘imbalance’ occurring that caused the initial breakout.
  • The same of course applies to SR zones – recall that SR zones are just clusters of SD zones at a similar price zone.

What to look for:

  • A clear SD zone (in terms of pips width and number of bars – substance) which has lead to a strong, high momentum breakout (the strong SD imbalance).
  • In the case of SR zones – a clear SR zone that has history (the more TF’s that the SR appears on the better – multiple market participants).
  • Space (time and distance) between the initial breakout and the first return – an ‘arc’ like pattern.

If the above occurs we expect (with high probability) price to react and move away from our SR / SD zone.

My next video will discuss

  • Why does the FTB work – order-flow concepts.
  • Using supply and demand to establish entries and stops.
  • Finding setups – pairs, time-frames and time of day.