Table of Contents

 
PART-1 :- The basics of technical analysis
Module-1 :- Introduction
Module-2 :- Japanese candlestick Patterns
Module-3 :- The market structure
PART-2 :- Introduction to supply and demand method
Module-1 :- Supply and demand trading method
Module-2 :- How do banks use supply and demand method
PART-3 :- Supply And Demand Types
Module-1 :- The Drop-Base-Rally Pattern
Module-2 :- The Rally-Base-Drop Pattern
Module-3 :- The Drop-Base-Drop Pattern
Module-4 :- The Rally-Base-Rally Pattern
PART-4 :- How To Draw Supply and Demand Zones?
Module-1 :- Introduction
Module-2 :- The Pinbar as a basing candle
Module-3 :- The Engulfing bar as a basing candle
Module-4 :- The Inside bar as a basing candle
Module-5 :- The Piercing pattern as a basing candle
Module-6 :- The Dark cloud cover as a basing candle
Module-7 :- The Doji candlestick as a basing candle
PART-5 :- How To Qualify Supply and Demand Zones?
Module-1 :- The strength of the move
Module-2 :- The freshness of the zone
Module-3 :- The breakout of previous support and resistance
Module-4 :- The minimum risk to reward ratio
Module-5 :- The alignment of the zone with the higher time frame direction
PART-6 :- How To Use Japanese Candlesticks As Entry signals?
Module-1 :- The pinbar as an entry signal
Module-2 :- The inside bar as an entry signal
Module-3 :- The engulfing bar as a confirmation signal
Module-4 :- The inside bar false breakout as a confirmation signal
PART-7 :- How To Identify Supply and Demand Golden Zones?
Module-1 :- Introduction
Module-2 :- How to use fibonacci retracement to identify golden zones
Module-3 :- Supply and demand trading tactics

 
PART-8 :- Supply and demand golden zones and top down analysis
Module-1 :- Supply and demand with the trend
Module-2 :- Trading supply and demand zones again
Module-3 :- The higher timeframe is ranging and the trading time frame is
trending
Module-4 :- The higher timeframe is trending and the trading time frame is
ranging
 Module-5 :- The higher timeframe is ranging and the trading time frame is
ranging
PART-9 :- The set and forget method
PART-10 :- Trading Examples
Module-1 :- Trading Example-1
Module-2 :- How emotion can affect your trading results

PART : 1
Module-1 :- Introduction
First of all, I want to congratulate you, for your courage in
taking the first step to learn how to trade on the market,
because most people desire to be financially free, but few of
them take any action to actually be so.
Whether you are a beginning trader or an advanced trader,
trying to find a consistently profitable method, this course
will provide you with one of the most powerful techniques
used by most banks and financial institutions.
This course is a result of 20 years of experience, research
and thousands of hours of screen time. The strategies I
teach are based on what I learnt as a bank trader for over
10 years. I am currently an independent trader, I work from
the comfort of my home, and I make hundreds of thousands
of dollars on a monthly basis using the same strategies and
tactics that I am going to share with you in this course.
You may be asking yourself, why do I share this knowledge
that makes me hundreds of thousands of dollars? Why
should I reveal secrets that make me money? I have been
asked these questions a couple of times, and if I was in your
shoes, I would ask the same.
Let me tell you something, trading is totally different from
any other business. If I show you my strategy and how I
make money, it will not affect my own results. Because
when you start trading the same way as I do, we will take
approximately the same trades.
And if we are a big community of traders who take the same
trades, we will be able to move the market in our direction,
because this is how the market moves, if the amount of
buyers is more than sellers, the market goes up, and if the
amount of sellers is more than buyers the market goes
down.
What motivates me to share my knowledge is the fact that
I’m a big believer that everyone can become a profitable
trader. You can become a successful trader if you have two
important things: the right trading method, and the right
trading mindset.
My course will provide you with the right trading method,
because it will show you how the big boys trade the market,
you will understand how banks and financial institutions
manipulate the market and trap retail traders, and you will
study in detail the principles of their trading strategies
which are mostly based on supply and demand.
This trading method will give you the ability to identify
market turning points in advance before they happen, and
where prices are going to go before they go there. And if
you have this knowledge, you will take trades with low risk
and high reward. That is the key element of success, as a
trader.
Knowing when banks and institutions are selling and buying
in the market will increase your odds of success, and your
trades will have high probability to go in your favor, because
you will not follow retail traders’ analysis, but the footprints
of banks and big institutions.
This trading method is advanced, and if you are a beginner
trader , you should have a basic knowledge of trading
before taking this course. This is the reason why I decided to
start with the basic knowledge that everyone who wants to
trade on the market needs to know.
As a trader, beginner or advanced, you need to know how to
read your charts, because charts have a specific language,
and if you don’t know how to speak this language, you will
not understand what the market is telling you . This
language is called: Japanese candlesticks.
The first basic skill that you should acquire as a trader is the
ability to understand the candlestick pattern formations,
because they will give you information about the buyers and
sellers’ state of mind and will help you predict future price
movements.
-The second basic skill is the market structure. You need to
know how to identify and differentiate between different
types of markets, such as trending markets, ranging
markets, and choppy markets. And you should be able to
identify different types of moves, such as impulsive and
retracement moves.
- You should be able to identify support and resistance,
which are considered to be turning points in the market.
These levels have psychological influence on sellers and
buyers, because once again they are considered to be
turning points.
If you are an advanced trader, you can skip the first lessons
that cover the basic knowledge and start directly with the
supply and demand strategies. But if you are a beginner, I
highly recommend you to pay attention to the first lessons,
and give yourself time to study all technical concepts,
because this will allow you to understand and master our
advanced trading method.
 

Module-2 :- Japanese Candlestick

Pattern
Basic candlestick anatomy
Whenever you look at a price chart, you will select a time
frame for that chart,it can be ,a minute, an hour or even a
daily time frame.Rather than plotting the open or close price
for that time frame, the candlestick gives you information
about what went on during that period of time.
  

Candlesticks give you the following information:

- The open price
- The close price
- The high price
- The low price
If the close price is lower than the open price , we get a
bearish candle which indicates that sellers were in control
during this period. In this example, we have a black candle,
but you can change the colors if you want, what matters is
the open and close.
If the close price is higher than the open price, we get a
bullish candle which indicates that buyers were in control
during this specific period of time.
Having all this extra information, gives you a heads up
about market sentiment and can offer invaluable clues
about the way the market will move.
The Doji :
The Doji is a candlestick where the opening and closing
prices are the same (or almost the same). It can take many
forms, as shown here, depending on what the trading
activity was in that period.
The Doji candlestick indicates that neither sellers nor buyers
have gained control, and that price has ended where it
began. It is a sign of indecision in the market. Let me show
you an example below :

In the chart above, you can see different types of the Doji
candlestick pattern. This candlestick gives us a clear image
about what happened in the market during the specific time
period. In this hourly chart above, the formation of the Doji
means that buyers and sellers are equal, no one is in control
of the market during one hour, which is the time of the Doji
candlestick formation.
You can’t use the Doji alone to make your trading decision,
my goal in this first lesson is to help you read charts by
being able to identify and understand candlestick patterns
formation, so when you see the Doji candlestick pattern for
example, you know that during that period of time the
market was in an indecision phase and sellers and buyers
are equal. This is the most important information that the
Doji gives us when it forms in the market.
The inside bar (Harami pattern) :
The inside bar is one of the most common candlestick
patterns you will come across, so it is important to recognize
it, to understand what it means, and to understand its
limitations. An inside bar is a two-session reversal pattern, it
is made up of two candlesticks, and implies that the price is
in an indecision phase, and the breakout of this pattern
means that the market went out of the range and will go in
the direction of the breakout.

As you can see the second small candle is inside the first
one, the color of the small body is not important. We will
talk about this pattern in detail in future lessons, and I’ll
explain to you how to use it when trading supply and
demand. See a chart with an inside bar.
This is the EUR JPY H1 chart, as you can see, we have two
inside bars that were formed during a downtrend. The inside
bar pattern means that the market is in an indecision phase.
This pause gives us an opportunity to enter the market
again with the trend. We will talk about this in detail in
future lessons. What matters right now is to master the
anatomy of the inside bar and understand the psychology
behind its formation.
The pin bar:
It is a candlestick pattern that consists of just one candle, it
has a long lower wick and short body and little or no upper
wick. Strictly speaking, the lower wick should be at least two
times longer than the body, the longer, the better.
There are two types of pin bars, the bullish pin bar which is
a reversal candle that occurs at the end of downtrend and
reverse the trend.A bearish pin bar which is also a reversal
candle that happens at the end of an uptrend and reverse it.
see the illustration below:

As you can see in the EUR USD daily chart above, the
formation of the bearish pin bar indicates that buyers are
rejected by sellers, and the market is likely to go down. And
the formation of the bullish pin bar means that sellers are
rejected by buyers and the market is likely to go up.
The engulfing bar:
An engulfing pattern signals a reversal, and can be bullish or
bearish. It comprises two candles, the body of the second
one must engulf the body of the first one . There are two
type of engulfing bars:

The bullish engulfing bar that consists of two candles, the

body of the second candle is greater in size than the
previous candle. This pattern is considered to be a reversal,
because when it appears in a downtrend, it signals a
reversal.

The bearish engulfing candle consists also of two candles,

but it is the opposite version of the bullish engulfing bar.
Because when it occurs at the end of an uptrend, it signals a
future price reverse. See the illustration below:
The Marubozu
The word Marubozu means bald head or shaved head in
Japanese, and this is reflected in the candlestick’s lack of
wicks. When you see a Marubozu candlestick, the fact that
there are no wicks, tells you that the session opened at the
high price of the day and closed at the low price of the day.
See the illustration below:

In a bullish Marubozu, the buyers maintained control of the

price throughout the day, from the opening bell to the close.
see the illustration below:
As you can see in the H4 USD CAD Chart above, the market
is trending up, and the formation of the Marubuzo gives us
positive news about the strength of the trend in this period.
The formation of this bullish Marubuzo indicates that the
market in this period is still strong.In a bearish Marubozu,
the sellers controlled the price from the opening bell to the
close, see the illustration below:
As you can see in the USD CAD H4 chart, the market was
trending down, and the formation of the Marubuzo gave us
good information about the trend in this period. I mean that
it indicates that the bearish trend is still strong during this
period, from the opening price of this candle till the close of
it.
The morning star:
A morning star is a three-candle pattern beginning with a
candle that is strongly down. The second candle’s real body
should be small and shouldn’t touch the prior candle’s real
body. The third candle should be strongly up. see the
illustration below :
The morning star pattern is viewed as a bullish reversal
pattern, occurring at the bottom of the downtrend, see the
chart below.
 

As you can see in the chart above, the formation of this

pattern indicates a trend reversal, because it signals that
the control is changed from sellers to buyers. We can’t trade
this candlestick pattern alone, because we need more
information and indications to make our trading decisions.
The evening Star:
The evening star pattern is opposite to the morning star and
is a reversal signal at the end of an uptrend. The pattern is
more bearish if the second candlestick is filled rather than
hollow. See the illustration below :

The evening star is a reversal pattern, and it usually occurs

at the end of an uptrend, see the illustration below:

As you can see in the chart above, the formation of the

evening star indicated that the market is likely to reverse
from uptrend to downtrend, because the patterns signal a
change in control from buyers to sellers.
Three white soldiers:
Three white soldiers is a bullish candlestick pattern that is
used to predict the reversal of the current downtrend in a
pricing chart. See the illustration below:

The pattern consists of three consecutive long body

candlesticks that open within the previous candle’s real
body and a close that exceeds the previous candles’ high.
These candles shouldn’t have very long shadows and ideally
open within the real body of the preceding candle in the
pattern. See the chart below:

As you can see, the formation of the three white soldiers

indicates that the trend is still strong, and buyers are still in
control of the market. If they occurred at the end of a
downtrend, it indicates a trend reversal. The candles can be
blue or any other color that you prefer to use, the most
important is that the candles should be bullish.
The three black crows:
Three black crows indicate a bearish candlestick pattern
that predicts the reversal of an uptrend. This pattern
consists of three consecutive long-bodies candlesticks that
have opened within the real body of the previous candle.
See the illustration below:

When this pattern happens at the end of an uptrend it

signals a trend reversal, and when it occurs at the
downtrend, it gives us an idea about the strength of the
trend, in other words it indicates that the downtrend is still
strong. See the illustration below:

As you can see in the EUR GBP 30 minutes chart above, the
formation of the three black crows signals a trend change
from an uptrend to downtrend, and the second three black
crows’ pattern that occurred confirmed the downtrend.
I don’t use these patterns in my trading but it helps with
measuring the strength of the trend, so you can use it only
as a tool to have an idea about the trend. Because using it
as a signal will not give us a good risk to reward ratio.
The piercing pattern:
The piercing pattern is viewed as a bullish candlestick
reversal pattern, similar to the bullish engulfing pattern. See
how it looks like below :

The piercing pattern occurs when the second candle closes

above the middle of the first bearish candle. It appears at
the end of a downtrend, it is a complex pattern made of two
candle lines. The first candle is bearish in nature and the
second is bullish in nature. See the illustration below:

As you can see in the chart above, the market is in a

downtrend, the price opens at almost the highest of the day,
and as usual, the sellers continue to sell. At the end of the
session, the price closes almost at the bottom for the time
period.
In the next time period, the price opens below the low of the
previous bearish candle, sellers are making new short
trades, those who are already short in the market are also
adding to their positions. But the smart money creeps in
and starts accumulating shares from these ignorant sellers.
As the demand increases, the momentum decreases, and
the prices start rising.
As the price rises, the bears are happy to sell more at higher
price, this facilitates bulls to accumulate more shares at
lower price.
The demand continues to increase more than the supply,
pushing the price up. As the new sellers are in losses. They
also start to buy back to minimize their losses. So the price
rises further and at the end of the session the price closes
above the opening. This results in the formation of a bullish
white candle, which is the second candle of the piercing
pattern.
The Dark Cloud Cover:
Dark Cloud Cover occurs in an uptrend, when a red candle
opens above the previous candles’ closing price. But then
the price retraces to below the midpoint of the previous
candle.

The Dark cloud cover is a two-candlestick pattern, and it is

the opposite version of the piercing pattern, this price action
setup is valid only when it occurs at the end of an uptrend.
The first candlestick in this pattern must be a bullish
candlestick with a large real body.
The second candlestick must be a bearish candlestick that
opens above the high of the first candlestick, but closes well
into the real body of the first candlestick. See the illustration
below :

As you can see in the chart above, the formation of the dark
cloud pattern signaled a trend reversal because it was
combined with a double top. This pattern is more reliable if
the second candlestick closes below the middle of the first
one, the deeper the penetration of the second candlestick,
the more significant it becomes.
As with most trend reversal patterns, the dark cloud cover
becomes reliable depending on where it appears on the
price chart in relation to other technical combinations such
as trend lines, chart patterns, support and resistance.
Candlestick patterns are very important for you as a price
action trader, because you will always use them as keys to
read your charts properly and understand what happens in
the market. But they shouldn’t be the first, or any factor in
your trade decision making process.
When analyzing your charts some things you need to
consider are:
-Current market structure: you need to identify the market
structure and know if the market is trending, ranging or is it
a choppy market. You need to identify impulsive and
corrective moves in relation to candlestick pattern setups in
the market.
-Market major levels: you should identify the most important
support and resistance levels in the market, because this
will allow you to spot high points in the market and consider
any price action setup that occurs in these points as a high
probability setup.
-Higher time frame analysis: you will also need to analyze
higher time frames to get an idea about the bigger picture
and what is happening on higher time frames.
We will talk about all these points in detail in this model, so
please pay attention to all information shared here, because
the goal of this model is to give you solid information that
will allow you to read your charts correctly. This is the first
and most important skill that you should acquire before we
move on to study how banks and financial institutions trade
on the market.
 

Module-3 :- The Market Structure

When a market is moving in one general direction from left
to right on the chart, either up or down, it is called a trend
or a market bias. If a market is moving up, it is said to have
an uptrend, or a bullish trend, if it is moving down, it is said
to have a downtrend or a bearish trend. These can also be
called bullish bias or bearish bias.
The easiest and most effective way to identify a trend is by
observing a market’s raw price action from left to right. As a
market moves higher or lower, its previous turning points or
swing points, become reference points that we can use to
help us determine the trend of a market.
The easiest way to identify a trend is to check and see if a
market is making a pattern of higher highs and higher lows
for an uptrend, or lower highs and lower lows for a
downtrend. See the diagram below:

As you see in this simple example above, the diagram

shows us the basic idea of looking for higher highs and
higher lows for uptrends and lower highs and lower lows for
downtrends. To be honest with you, sometimes the market
makes it difficult for us to identify a trend, it is not always
clear like this, but with screen time and practice, you will be
able to easily identify a trending market. Now let me give
you a real chart example below:

As you can see in the H4 chart above, the market is making

a pattern of lower highs and lower lows. You don’t need to
be Elbert Einstein to decide whether the market is trending
down or up. Only a general observation of swing points can
help you identify the market trend. Now let me give you a
real chart example of an uptrend below:

As you see in the EUR USD daily chart above, the market is
making clearly higher highs and high lows patterns which
indicates an uptrend market.
You shouldn’t have to think too hard whether a market is
trending or not. Most traders make the trend discovery way
too difficult. If you take common sense and patient
approach, it is usually fairly obvious if a market is trending
or not, just by looking at the raw price action of its chart
from left to right. Make sure you make the swing points on
your chart as it will draw your attention to them and help
you see if there is a pattern of HH and HL or LH and LL as
discussed above.
The impulsive and the retracement move
Trending markets are characterized by two important
moves, the impulsive move, and the retracement move. You
should be able to identify these moves when you are
analyzing a trending market, otherwise you will not be able
to make the right trading decisions. So let’s start with the
first move which is an impulsive move.
An impulsive move is one where the market moves strongly
or heavily in one direction, covering a great distance in a
short period of time. They are generally more volatile, and
they provide us with a good risk to reward ratio. See the
illustration below:

As you can see on the AUD USD daily chart above, the
market is trending down. The impulsive move starts from
the beginning of the higher low swing points, because it is
the area where sellers short the market till the lower low
swing point where sellers took their profit. These moves are
always on trend. When the impulsive move ends, it’s always
followed by a retracement move. See the same chart below:
As you can see on the same AUD USD Daily chart above,
when the impulsive move ends, the corrective move, or the
retracement move start. These small moves form against
the trend and they shouldn’t be traded.
The reason behind the corrective move formation in
trending markets is the fact that sellers took their profits, so
the market stop trending down and starts moving up little
bit because some amateur traders try to trade against the
trend while professional wait for the corrective move to end,
and place their new orders with the beginning of the
impulsive move. See another example below:
As you can see in the EUR USD H1 chart above, the market
is trending up, and prices make impulsive moves, and
corrective moves, when buyers buy the market prices go up
and form an impulsive move, and when they take profit, a
corrective move form. During this time,buyers wait for the
end of the corrective move and the beginning of the
impulsive move to take another order.
This is how trending markets move, and if you want to make
the best trading decisions, you need to know when the
corrective moves ends, and when the impulsive move
begins. This knowledge will help you catch the beginning of
the impulsive move to make big profits and avoid trading
the corrective moves. So how can we identify the end of the
corrective move and the beginning of the impulsive move?
To predict the end of a corrective move and the beginning of
an impulsive move, we use support and resistance. So, what
is support and resistance?
Support and resistance levels are horizontal price levels that
typically connect price bar high to other price bar lows
forming a horizontal level on a price chart.
In trending markets, support and resistance are created
from swing points in a trend. As price trends, it retraces
back on the trend, and this retracement leaves a swing
point in the market, which in an uptrend looks like a peak
and in a downtrend looks like a through.
In an uptrend, the old peaks will tend to act as support after
price breaks up past them, and then retraces back down to
test them. See the illustration below:
As you can see in the illustration above, as price swings up
and down creating this trend continuation pattern, it leaves
support and resistance in its wake. When price swings down
due to selling, then it leaves behind an area of resistance.
When price swings up due to buying, then it leaves behind
an area of support. When an area of resistance is broken, it
must be watched from the other side in case it will act as
support. See another example below:
 

The illustration above shows you how support (swing point)

leaves an area when it forms, and this area becomes
resistance, when price retraces back to retest it .
This is how support and resistance work in the market, and
to draw them in a trending market, all you have to do is to
identify a previous swing point and draw a horizontal line on
it.
When the market breaks it and retraces back to retest it,
you should pay attention because if the swing point was
support it will become resistance, and if it was resistance it
will become support. See the real chart example below:

As you can see in the GBP CHF H4 chart above, the market
is trending down, and support levels become resistance,
because sellers always take previous swing points as
references to enter the market again.
In this example, by taking swing points as references, you
can predict the end of the retracement move and the
beginning of the impulsive move, because this is how
traders identify these moves.
When the market breaks out of the support level, this level
becomes a reference, when the market retraces to retest
this old support that becomes resistance, we can predict the
end of the retracement, and the beginning of a new
impulsive move. Look at the same chart below :
As you can see in the chart above, by identifying support
and resistance in trending markets, we can easily predict
the end of the retracement move, and the beginning of the
impulsive move that most traders wait for to take their
orders. Let me now give you another example of an uptrend
market below:

As you can see in the USD CAD H1 chart above, the market
is trending up making higher highs and higher lows. The
resistance level becomes a reference point after the
breakout of it, and when price retraces back to test it, this
level becomes support.
By using resistance levels as reference points, we can
identify future support levels that can be used to predict the
end of retracement moves and the beginning of impulsive
moves.
When drawing support and resistance in a trending market,
you should connect the wicks and not the bodies, and you
should focus on the most recent ones, because they are the
most important levels.
Drawing support and resistance in trending markets is a skill
that you must learn, because these levels will help you plan
your stop loss placement and your profit target, it will also
help you predict with high accuracy the next impulsive
move that you should ride from the beginning to make
bigger profits and avoid being trapped in retracements.
In the first part of this lesson, you learnt how to identify
trending markets, and the most important moves in a
trending market which are the impulsive and the
retracement move, you learnt also how to draw support and
resistance so you can predict high probability entry points in
the market. In the next part of this lesson you will learn
about the second type of markets, which is the ranging
market.
The ranging Market
If you look at any forex pair, or any time frame, you will see
that when price moves strongly in one direction, it makes
strong impulsive moves, followed by smaller corrective
moves that are pointing against the direction of where the
pair is clearly going.
This type of movement generates higher highs and higher
lows in case of an uptrend and lower highs and lower lows in
a case of a downtrend. A ranging market is one that is not
behaving like this. A sideways market is characterized by
the fact that price is not making new highs and lows any
more. Instead it begins to swing high and swing lows
horizontally. See the chart below:
As you can see in the chart above, the market is trading
horizontally between support and resistance levels. This
type of market is called ranging market, because in this
period of time, buyers and sellers don’t know what to do so
they keep selling from resistance and buying from support,
and the market enters an indecision phase.
When a ranging market is formed, traders change their way
of trading, so instead of following the trend and identifying
the beginning of impulsive moves and retracement moves,
they use three important strategies:
False breakout strategies:
This strategy consists of trading the false breakout of the
support or resistance. The reason behind this strategy is
that buyers and sellers know that there are a lot of traders
who are ready to enter after the breakout, so they make
false breakouts to trap breakout traders and then they go in
the opposite direction.
See the chart below:
As you can see, after the false breakout the market goes in
the opposite direction to reach the next support or
resistance levels. Don’t try to use this strategy, because I
want only to show you how a ranging market works so you
can have an idea.
Breakout strategies:
This strategy consists of placing an order in the direction of
the breakout, because when the ranging market is broken, it
is an indication that buyers or sellers are no longer in an
indecision phase and they decide to drive the market up or
down. See the illustration below:
As you can see, after the breakout of the support level, the
market went strongly down, because sellers decided to go
down after a long time of hesitation.
Pullback strategies:
The pullback strategy is used by conservative traders that
wait for the market to retrace back after the breakout to
give them a second chance to enter in the direction of the
breakout. See the illustration below:
Don’t try to use these strategies, because I didn’t talk about
them in detail. I just want to give you an idea about ranging
markets and how they work. So, when you are in front of a
ranging market you should know that prices will move
horizontally between support and resistance.
And after the breakout of the range, the market goes
directly in the direction of the breakout or it pulls back to
give another chance to other traders to ride the trend.
Choppy Markets
Choppy markets are those which have no clear direction
such as sideways markets, but are a really churned up mess
which makes traders lose sleep at night.
This is where previous gain can be quickly wiped out and it’s
a deeply frustrating and demoralizing experience. These
kinds of markets can turn your dreams into nightmares if
you don’t know about them, and if you don’t ignore them.
A ranging market is a market condition that doesn’t exhibit
any type of predictable pattern. It is simply gyrating around
randomly without any clear direction up or down. It can be
characterized by high volatility or low volatility. But the one
defining characteristic is a lack of clear, long term direction
up or down see the chart example below:
As you can see in the chart above, the market is crazy, it is
moving up and down creating a mess in the market. You
can’t identify clear support and resistance levels in this
chart, because nobody knows what the market is doing.
And in this case, the best trading decision to make is to stay
away from this market. Let me give you another example
below:
As you can see in the AUD JPY H1 chart above, it is difficult
to trade in this market because support and resistance are
not clear, if you try to trade in these conditions you will
certainly blow up your entire trading account.
Knowing when to trade and when not to trade is important
for you if you want to become a consistently profitable
trader. This is the reason why I started with the basics,
especially with the market structure, because if you apply
supply and demand strategies in the wrong market
conditions you will not get the results that you want.
Before you move to study our supply and demand trading
method, you should make sure that you can differentiate
between trending markets, ranging markets and choppy
markets. So please take your time to understand these
structures, and then you can move on to study our strategy.
 

PART-2 : Introduction to S&D

Module-1 : Why should you study s&d
method
The markets are composed of two players, the market
makers and retail traders. The market makers are banks and
financial institutions, these players are the most participants
in the market, they trade millions of dollars every single
day, they control and manipulate the market, and drive
prices whenever they want.
These players have the best technical analysts , they know
how retail traders analyze and trade the markets, they know
where your stop loss and your profit targets are, and they
can manipulate the market and take money from you
whenever they want. This is the truth that nobody will tell
you about.
Let me give an example to show you how market makers
know how you trade the market and how they take money
from you.

This is The EUR USD 4H chart, as you can see the market
approaches a high probability key resistance level, the
formation of the pin bar and the false breakout of this level
is a high probability sell signal.
As a retail trader, you will sell the market after the close of
the pin bar and place a stop loss above the resistance level
or a few pips above it. You take your order and you feel
excited about it, but look at what happened next:
As you can see the market hits your stop loss twice before it
goes strongly to the profit target. When your stop loss gets
hit, you feel disappointed, you feel like someone is watching
what you are doing in the market. This happens frequently
in all financial markets, and if you are not aware of that, you
will always be trapped by banks and financial institutions.
Look at another example:
As you can see in the chart above, the market was trending
down. After the breakout of the support level, the breakout
traders will automatically enter the market to join the
downtrend and make profit. If you are trading breakouts you
will enter this trade and you feel very confident because the
support level was strongly broken so the trend will keep
going down. But look at what happened next:
As you can see, after the breakout of this level, banks and
financial institutions changed their tactics, because they
know that there are a lot of retail traders who entered the
market to join the trend. They trapped traders by what we
call: false breakout strategy. If you know about this trap, you
will buy the market after this trap and make money because
you know what happened.
Banks and financial institutions have certain zones where
they buy and sell in the market and if you can identify them,
you will take the same trades they take and make money
with them instead of trading against them, let me give you
an example:
Look at the example of the EUR USD 4H chart above, you
will see that the market dropped down strongly, just look at
the red candlesticks. This move was made by banks,
because they think this price is good. When the market goes
back to test this zone, the same bank will liquidate the rest
of quantities, and other banks will sell from the same price,
so we will see another strong move. Look at what happened
next:
As you can see the market went down strongly when price
tested this zone, this is one of the strategies that banks, and
financial institutions use to trade the market. And if you
know about it, you will make money easily on this trade. If
you look at your charts you will find that these zones form
frequently in the market.
The examples I mentioned above are only some of many
strategies that the market makers use to manipulate the
market and take money from retail traders. And this is the
reason why you have to study and learn how banks and
financial institutions trade the market.
I want you to change the way you look at the market, and
instead of looking at the market as sellers and buyers, you
should look at it as market makers versus retails traders,
market makers know what you are doing, they are more
powerful than you, and they are in the market to trap you
and take money from you.
In the next lessons, you are going to learn how banks trade
the market, you will start looking at your charts as a market
maker, and you will be able to identify big moves in the
market before they even happen.
The strategies that I’m going to share with you work 97% of
the time, they work in all financial markets, because they
are the strategies used by big participants. If you can follow
what I’m going to share with you in this course, I promise
you that your trading results will change dramatically.so
please take your time to read everything, don’t skip any
part, because everything I shared is important for you if you
want to join the 5% of successful traders.
 

Module-2 : How do banks use s&d

method
 

The markets are ruled by the law of supply and demand in

much the same way the law of gravity rules our planet.
Prices go up and down because of the imbalance in supply
and demand. If supply is higher than demand, the price
goes down, and if demand is higher than supply, price goes
up.
The markets are dominated by big investors such as central
banks, hedge funds, market makers, and other financial
institutions. These investors are also affected by some
factors that influence their trading decisions such as daily
news that affects the world’s economies, economic data
about some countries. And when they take their trading
decision they move price strongly and create an imbalance
in supply and demand. The greater the imbalance the
greater the move in price.
How many times have you seen a market retrace back to a
level where a recent major move started from, only to
respect that level almost exactly before making another
strong directional move? It happens frequently in the
market. Look at this example below to understand more
fully:

As you can see in the chart above, the red big candle
represents a big bank sell order, this selling decision was
influenced by big economic news. We don’t care about
news, we only care about big moves like this, because this is
the footprint of banks and financial institutions.
When the bank takes this sell order and drops the market
down, it can’t liquidate all the quantities, so it leaves some
quantities to sell from the same zone. The amount of
quantities left in the zone depends on buyers. If the bank
found a big number of buyers to sell, it can liquidate all
quantities and nothing will be left in the zone. But in most
cases, banks leave quantities as limit orders in the same
zones they sell from.
The beginning of the big move becomes a very interesting
price to sell from, because there are some limit orders left in
that price, other banks and financial institutions will sell
from the same zone when the market pulls back to test this
zone. Because they know that there are other financial
institutions that will sell from the same zone, and this is the
easiest way to make money without being in a conflict. Look
at another example to understand more:

In the chart above, you can see a big blue candle that
represents a bank buy order. This big buy order was
influenced by economic news. Don’t bother yourself with
trying to analyze economic news and how they will affect
the market. You are not a bank trader, you are only a retail
trader with a small trading account. What you have to do is
to identify interesting prices where banks and financial
institutions will buy or sell from.
As you can see the bank made the first buy order, and
because of the lack of buyers, it can’t liquidate all its
quantities, so it makes another limit order.
Other banks and financial institutions will see this zone as
an interesting price to buy from because they already know
that there are banks who bought from it and they still have
limit orders on it. Look at what happens when the market
pulls back to test this zone.

As you can see when the market pulls back to this zone, it
gets rejected because there are some quantities left as limit
orders in this zone, and other financial institutions will buy
from the same zone because it is considered to be a very
interesting area to buy from.
When the market goes up from this zone, other retail
traders will join the move, and if you are aware of how
banks and financial institutions trade the market you will
join the move and make money by following the big
participants in the market.
This is how supply and demand strategy works, in the next
lessons you will learn everything you need to master this
strategy and start using it in your trading.
 

PART-3 : Supply and Demand Types

Module-1 : The Drop-Base-Rally
pattern
Supply and demand zones form and come in different
shapes, this is the reason why you have to know the
different types of supply and demand to be able to identify
them easily.
In general, there are two types of supply and demand, the
first type is Valley and Peaks and the second one is the
continuation pattern.
Valley and Peaks are composed of these formations:
Drop-Base-Rally or Drop-Rally? Look at the example
below :

This is an example of a Valley, the Drop-base-rally means a

move down followed by a pause and then a move up.
The drop is a small move that indicates a weak momentum,
and the base is where the market consolidates to
accumulate enough quantities and then go up. When the
market returns to the base, which is considered to be a
demand zone, there is a high probability that the market will
go up again.
Now let’s look at a real chart example to learn more about
this pattern :
 
As you can see in the chart above, the market made a short
retracement (Drop) before going strongly up, creating a
Drop-Base-Rally pattern which is a high probability Demand
zone.
In the same chart there is another Drop-Base-Rally pattern
that I didn’t mention because it is a weak pattern, I picked
up only the most powerful one. So, don’t get confused
because the purpose of this part is to help you identify this
pattern when you open your chart.
It doesn’t matter if it is a high probability pattern or not,
because in the next parts I will show you in detail how to
differentiate between powerful zones and weak zones that
you should ignore. See another Example :
This is another example of a Drop-Base-Rally pattern, the
psychology behind this pattern is that banks took the profit
of the previous move, and the market moved down forming
a retracement or a drop. Banks make another strong move
up because of a news release, economic data or just
because they think this is a good price to buy from.
Don’t bother yourself with fundamentals trying to
understand the reason behind this move, all that you should
focus on is the pattern. Because when you identify the
pattern, you know exactly that there is a bank that bought
from this zone. And all you have to do is to wait for the
market to retrace and test this zone,then you take a buy
order as well to make money with banks and financial
institutions. Look at another example below:
This is another example of the Drop-Base-Rally Demand
zone pattern, in this illustration prices drop and then form a
base while in consolidation and then make a significant up
move. The base forms our main interest, when price returns
to this base, we may expect some buying reaction.
As you can see when the market dropped back down to the
base which is considered as a demand zone, prices moved
up again because there are still significant unfilled orders in
this zone. Look at another example below :
 

The EUR CHF H1 above shows a clear Drop-Base-Rally

demand pattern, this pattern happens frequently in all
financial markets, and all time frames, because when
financial institutions buy in the market they leave this
pattern as a footprint. If you can identify it, you will be able
to predict where banks are going to buy again.
Look at this chart again, as you can see, the market drops,
and then forms a base, and then makes a strong move up.
Sometimes, you will not find a lot of candles that form the
base. One candle is quite enough to form the base. And this
candle can be used as a basing candle to draw the zone, we
will talk about how to draw the zone in next lessons.
Now look at what happened when the market returned to
test the demand zone, as you can see prices were rejected
forming a nice Doji candlestick pattern. And this rejection
indicates that there are significant unfilled orders in the
zone.so as a supply and demand trader, you can use this
candlestick pattern as an entry signal to buy the market.
We will learn about entry and exit tactics in the next
lessons. Take a look at another example below :

This is another example of the Drop-Base-Rally demand

zone. As you can see the base is formed only by one candle.
When the market returned to test the demand zone, we got
a nice inside bar pattern as a signal to enter the market. But
as I always say, don’t think of how to enter the market or
how to know if it is really a bank order or not, this is not
important for the moment, because I will explain to you how
to enter the market and how to make sure this is a bank
order.
Now ,I want you to please focus on the Drop-Base-Rally
pattern. Open your charts and try to look for these patterns
in the market. You should master them, otherwise you will
have a difficult time trying to understand the whole strategy.
 

Module-2 : The Rally-Base-Drop

Pattern
 

The example above shows a Rally-Base-Drop pattern which

means a short move up followed by a short accumulation
phase and then a move down. The base area is considered
to be the supply zone, because the bank that sold the
market still has some quantities in the same zone. And this
price is very attractive for other banks and financial
institutions. When the market returns to test this zone, there
is a high probability that the market goes down. Look at a
real a chart example below:
This is the AUD USD 4H chart. As you can see the market
made a Rally which is a retracement after the previous
down move. This Rally or retracement was created after that
banks took their profit.
The second move down was made after a short
accumulation period (look at the Doji candle which
represents a consolidation period) followed by a strong
move down,after that,a bank decided to sell the market.
This is how a Rally-Base-Drop pattern is created.
When the market retraces to test this zone, price will be
rejected as you can see in the chart. Long candle tails
represent rejection from this level, because the bank that
bought from this zone still has quantities as limit orders.
Look another example below :
The same thing happened on the NZD USD 4H chart. The
market was trending down, after the previous move down,
the market made a short retracement (Rally), and then
formed a Doji candle which indicates a pause in the market
(Base). Then the market moved strongly down to form a
Rally-Base-Drop pattern. This pattern tells us that there is a
bank that bought from this zone, and when the market
retraces to test it, price will be rejected and the market will
move down. And that’s what happened. Look at another
example below:
In this AUD JPY daily chart, I’ve labeled an easy rally-base-
drop supply zone where the market moved up for a few
candles, sideways for a couple, followed by a sharp drop.
This pattern is considered as a reversal pattern when it
occurs at the end of a move up.
Look at what happened when the market returned to test
the zone, as you can see, the market stopped moving up
forming a nice inside bar pattern, and as we know, inside
bars means indecision or consolidation. So after the
breakout of the inside bar, the market moved down strongly.
If you are used to trading this pattern in combination with
price action signals, you will certainly take this trade after
the breakout of the inside bar. We will talk about this in the
trading tactic lessons. Look at another example below:
The previous example was on the daily chart, and this
illustration is on the hourly chart. I will try to give you
different examples from different time frames, because
these patterns occur in all time frames, and all financial
markets.
Now, look at this EUR USD H1 chart above, the market was
trending up, forming a rally which indicates a move up. It
was followed by a small consolidation or a base, and then a
very strong move down which is the drop. This Rally-Base-
Drop supply zone represents a footprint of a financial
institution that sold the market from that level. So what you
have to do is simple, follow the footprint and do what the
big boys are doing.
As you can see when the market returned to test the supply
zone, prices were rejected, and the market went down
strongly.
With screen time and practice, you will notice that when the
market tests the zone, there are two possibilities:
Either price goes strongly down, because the quantities left
in the zone are quite enough to drop the market down. Or
the market will still need time to accumulate enough
quantities, so we can see a few candles that form an
accumulation phase before the strong move down. Look at
another example:

As you can see in the EUR JPY daily chart, this is another
Rally-Base-Drop Supply zone that was formed in this market.
Sometimes the base or the consolidation is not necessarily
formed by multiple candles, as you can see in this example,
the market moved up (rally) and then moved down strongly
(drop).
So the base was formed only by one candle, and this
happens frequently in the market. So if you find patterns
like these where the market rallies and drops surprisingly,
these setups are still considered a rally-base-drop.
 

Module-3 : The Drop-Base-Drop

Pattern
A continuation pattern is a pause in the market before price
resumes in a current trend. In an uptrend it requires a Rally
followed by a Base followed by another Rally. A continuation
pattern in a downtrend requires a drop followed by a base
followed by another drop.
A continuation pattern is composed of these formations:
Rally-Base-Rally
Drop-Base-Drop
In the continuation pattern, the market doesn’t retrace, it
pauses and enters in an accumulation phase before moving
strongly in the same direction. Look at an example below of
a Drop-Base-Drop

This pattern happens in a downtrend, the market goes

strongly down, and because of the lack of quantities ,it
accumulates for a short period of time to get enough
quantities before moving strongly down again. See a real
chart example below:
 
The AUD USD 1H chart above shows a clear Drop-Base-Drop
Continuation pattern, as you can see there is no
retracement, the price pauses only for a short period of time
before moving down strongly again. When the market
retraced back to test the zone, the price was rejected from
this area. Both pin bars rejected from this zone represent a
clear confirmation to enter the market. Look at another
example below:
This is the GBP JPY H1 chart above. As you can see the
market was trending down forming this drop-base-drop
continuation pattern, when the market returned to test the
zone, prices were rejected forming this nice pin bar signal. If
you are used to using pin bars as entry signals, you will
understand that this price action pattern is a confirmation to
short the market. Look at another example below:

This is another example of a drop-base-drop supply zone;

this continuation pattern occurs frequently during
downtrend markets. Look at what happened when the
market retraced back to test the supply zone. As you can
see, the market was clearly rejected.
The formation of this clear pin bar at the supply zone
indicates that there are significant limit orders left in the
zone. So as a price action trader, you can enter immediately
after the close of the pin bar, your stop loss is above the pin
bar’s shadow and your profit target is the next support level.
We will talk about this in the trading tactic lessons, for now I
want you to focus on learning how to identify this pattern.
 

Module-4 : The Rally-Base-Rally

Pattern
The second continuation pattern that forms in an uptrend
called Rally-Base-Rally, this means a move up followed by a
short accumulation phase followed by a move up. See the
example below:
 

As you can see in the USD JPY 1H chart above, the market
moved up strongly, and paused for a short period of time
before making another move up. When price retraces to test
this zone, it will find strong rejection because there are limit
orders of other banks in this zone.
The rejection of price indicates that the zone is very
powerful and it attracts other financial institutions to enter
and buy the market. Look at the whole picture below to
understand how powerful this zone is.
 

The chart above is the same USD JPY H1 chart we discussed

before. Let me explain to you what happened in the chart
and how this Rally-Base-Rally demand zone was created.
Before the first rally, we had bank traders placing long
trades in the consolidation. When the banks buy orders, the
retail traders sell orders and the market rallies higher.
Now the bank traders are in profitable trades, the next thing
they will want to do is secure some of their profits. When
they decide to do this, they consume all of the buy orders
coming into the market from retail traders who have begun
entering long trades due to the size of the rally.
The consumption of buy orders means the market makes a
small move lower, this creates the base, which the demand
zones eventually forms off. The move lower causes a large
number of retail traders who went long on the rally higher to
close their trades at a loss which puts a lot of sell orders into
the market.
In addition to this, there will be a small number of retail
traders who think the move down is a trend reversal
meaning they will place sell trades with the expectation that
the market is going to move lower.
With two sets of retail traders putting the same type of
orders in the market (sell orders) the bank begins buying
again knowing they will make the market move higher, and
in the process cause anybody who sold on the move lower
to close their trades at a loss which ends up being the bank
traders profits.
But during the buying process, the bank will not find enough
sellers and it can’t buy all the quantities, so it will leave
significant limit orders in the same level which is a demand
zone, and when the market returns to test it, prices will be
rejected. And that’s what happened in the chart above. Look
at another chart example :
 
This is the USD CAD Daily chart, and as you can see the
market was trending up forming a Rally-Base-Rally Demand
zone. The base was not a retracement, there was only a
small pause before another move up. When the market
retraced to test the zone, we got a nice failed pin bar that
can be used as an entry signal. Look at another example
below:

This is the AUD JPY Daily chart, and this is another Rally-
Base-Rally Demand zone pattern. A rally is a move up
followed by a small pause and then another move up. Don’t
bother yourself with trying to understand how this pattern
was created, what matters most is your ability to identify it
on your chart, because this pattern occurs frequently in the
market.
Don’t worry if you think that things are not clear yet, what I
want you to understand in this lesson is that banks
monopolize financial markets and when they enter the
market, they leave their footprints.
To identify where banks are selling and buying you should
master these patterns, because they buy or sell from either
a Valley or a Peak pattern that are composed of a Drop-
Base-Rally which is a move down followed by a retracement
and a move up. Or A Rally-Base Drop Which is a move up
followed by a retracement followed by a move down.
In a strong trending market, they form a continuation
pattern that is composed of a rally-Base-Rally in an uptrend
which is a move up followed by a pause and then another
move up. Or a Drop-Base-Drop which is a move down
followed by a pause and then another move down.
Don’t try to know how to enter the market right now, focus
only on the patterns, because if you can identify the
patterns, you have already done 50% of the work. Now you
should do your homework, open your charts and try to
identify these patterns. This exercise will help you train your
eyes to find these patterns easily on your charts.
 

Part-4 : How To Draw Supply And

Demand Zones ?
Module-1 : Introduction
In the last lesson you learnt how to identify supply and
demand patterns on your charts. I wish you could take your
time to learn about them as much as you can. In this lesson
you will learn how to draw these zones the right way.
The zone is called the base, and it is the beginning of the
strong move made by banks or any other financial
institution. This step is very important because if you can
draw the zones correctly, you will be able to identify
precisely the next biggest move and join big players at the
right time.
Banks and financial institutions take two types of orders,
sometimes they take market orders because they need
quantities to drive the market up or down. And in this case,
you will have an opportunity to enter with them by waiting
for a candlestick confirmation pattern that forms in the
zone, we will talk about this in the next lessons later.
But sometimes banks take limit orders, and when the
market tests the zone, prices move strongly up or down.
And you need to take a limit order as well without waiting
for a confirmation. But if you don’t know how to draw the
zone correctly, you will miss this opportunity to make
money with big players. This is the reason why you should
know how to draw supply and demand zones.
The zone of supply and demand can be identified by
drawing two features:
The Proximal Line : the price closest to current price
The Distal Line : the price furthest away from the current
price. See the illustration below:
 
When drawing a supply zone, we draw a proximal line that
covers the lower shadows of the basing candle, and the
distal line at the upper shadow of the candle. If the candle
has no upper shadow, we draw the distal line only at the
lowest close of the candle. Look at the example below :
As you can see in the chart above this is a supply zone that
was formed in the market, and to help you remember why it
is a supply zone: because it is composed of a Rally-Base-
Drop.
The Rally is the short retracement (blue candles). And the
base is the Doji candle (red candle) that represents a pause
in the market. And the drop is the strong move down in the
market.
The Doji candle is called the basing candle, and this is
where we draw the zone, so as you can see the Distal line
covers the upper shadow and the proximal line covers the
lower shadow. This is how we draw a supply zone.
Now let’s move to the demand zone, to draw the demand
zone, we do the same thing, but this time we draw a
proximal line at the upper shadow of the basing candle, and
a distal line at the lowest close of the candle, and if the
candle has a lower shadow,the distal line should cover it as
well. Look at the example below :

As you can see in the chart above, this is a clear demand

zone that is composed of a Drop-Base-Rally. The basing
candle is a Doji candle. You’re wondering why we didn’t take
the previous candles as basing candles.?
Well the answer is simple: the basing candle is the last
candle before the strong move. And in this example, the
Doji candle was the last candle that paused the market
before the strong move upward. So we draw the proximal
line at the upper shadow and the distal line at the lower
shadow to get the potential demand zone.
When drawing supply and demand zones, you will deal with
different basing candles, such as pin bars candles, inside
bars, or engulfing bars. You should be able to draw your
proximal and distal lines without confusion when you spot
those basing candles. That's what you will learn in the next
lessons.
 
 Module-2 : The pin-bar as a basing
candle
 

A pin bar consists of one price bar, typically a candlestick

price bar, which represents a sharp reversal and rejection of
price. The pin bar reversal, as it is sometimes called, is
defined by a long tail and the tail is also referred to as a
shadow or wick.
The area between the open and close of the pin bar is called
the real body, and pin bars generally have small real bodies
in comparison to the long tails. Look at the illustration below
to see how it looks on your chart.

This is a bullish pin bar, when it forms as a basing candle in

a demand zone, we simply draw the proximal line at the
upper shadow, and the distal line at the lower shadow. Look
at the example below:
As you can see by drawing a proximal line and a distal line
we get a potential demand zone. But if the pin bar doesn’t
have a nose, we can draw the proximal line at the close
price of the candle.
Now let’s see a real chart example to show you how to draw
a demand zone when dealing with a pin bar as a basing
candle. Check out the chart below:

As you can see in the chart above, there is a very strong

move made by a bank or another financial institution. Retail
traders can’t move the market this way, so it is an order of a
big player in the market.
 

We don’t bother ourselves with fundamentals to understand

the reasons behind this move. Who cares? All that we know
as price action traders is that this move was made by a
financial institution, and this zone becomes very attractive
in the market. When price goes back to test the zone, the
market is likely to go up.
To draw this zone, we should look at the basing candle, and
in this case, we have a bullish pin bar as a basing candle. So
we draw the proximal line at the upper shadow and the
distal line at the lower shadow to get a correct demand
zone. And as you can see, when the market went back to
test it, it was rejected and buyers drove the market up. Look
at another example below:

This is the EUR JPY Daily chart, and this is a clear drop-Base-
Rally Demand zone, the basing candle is the last candle that
was formed before this strong move up. So when you
identify the Demand zone and the Basing candle,you simply
draw the proximal line at the upper shadow of the pin bar
(nose). If there is no nose, you draw the proximal at the
close of the candle, and the distal at the lower shadow. So,
by drawing a proximal line and a distal line, we get a nice
demand zone. Look at another example below:

This is the AUD JPY H1 chart, and this is a clear Demand

zone, you don’t need to waste your time to decide whether
it is a drop-base-rally demand zone, or a Rally-Base-Rally.
These patterns were used only to help you identify the
zones. But when you open your charts, and you spot a
strong move up (big blue candles), you should have no
doubt that there is a bank behind this move.
So look at only the last candle that was formed before this
strong move up. In this case, this nice pin bar is our basing
candle. So to draw the demand zone, you draw the proximal
line at the nose of the candle, and the distal at the lower
shadow. When the market retraced back to test the demand
zone, it moved up again as it was expected. Look at another
example below:
This is the USD CAD daily chart, and the demand zone that
was formed is a drop-base-rally pattern, the last candle that
was formed before this move up is this nice pin bar
candlestick pattern. So to draw the zone, you simply draw
the proximal line at the nose, and the distal line at the lower
shadow. As you can see, drawing demand zones using pin
bars as basing candles is not complicated, let’s move now to
the next part of this lesson to see how to draw supply zones
using this price action pattern as a basing candle.

This is a bearish pin bar, when it forms as a basing candle in

a supply zone. We simply draw the distal line at the upper
shadow and a proximal line at the lower shadow. Look at the
example below:
So as you can see, by drawing a distal line and a proximal
line, we get the supply zone, when price test this zone, the
market goes strongly up. If the bearish pin bar has no nose,
you can draw the proximal line at the close of the pin bar.
Now let me give you an example of how to draw a supply
zone when a bearish pin bar forms as a basing candle. Look
at the chart below:

 
In the chart above, we identified a strong move that was
made by a bank. The reason behind this explosion is
economic news. As price action traders, this is not important
for us. We don’t try to analyze news and how they will affect
the market. What matters for us is that this move was made
by a big player. And when the market tests this zone, there
is a high probability that the market will go down.
The bearish pin bar was the basing candle, and as I
explained, when it comes to a bearish pin bar, we draw the
distal line at the upper shadow and the proximal line at the
lower shadow and then we get a correct supply zone.
As you can see in the chart, when the price tests the supply
zone, the market goes down strongly, because there were
quantities as limit orders placed in that zone.Look at
another example below:
 

This is the USD JPY H1 chart, the market formed a nice

supply zone, the last candle that was formed before this
strong move down is a pin bar. So to draw the supply zone,
you simply draw the proximal line at the lower shadow of
the candle and the distal line at the upper shadow (nose).
When the market retraced back to test the supply zone,
prices moved down as it was expected. Look at another
chart example below:

This is the GBP USD H4 chart, this is another supply zone

that was formed during a downtrend. When you identify the
zone, look at the last candle that was formed before the
strong move down. If it is a bearish pin bar pattern, you do
the same thing we did previously, you draw the proximal
line at the lower shadow and the distal at the upper
shadow.look at the last example below :

This is the AUD USD H4 chart. The market formed a rally-

base-drop supply zone, for chart pattern traders, they
consider this pattern as a double top continuation pattern,
what will make a difference between you as a supply and
demand trader, and a chart pattern trader is the timing.
You will not wait for the neck to be broken and for another
pullback to enter this double top. You will be in the market
before chart pattern traders, because you know that this is a
supply zone, and all you have to do is to draw the zone by
drawing a proximal line at the nose of the pin bar and a
distal line at the upper shadow. And when prices return to
test the zone and form a nice price action setup, you will
enter the market with confidence.
Now, you have to do your homework, open your charts, and
try to find supply and demand zones with pin bars as basing
candles. This exercise will help you better draw the zones
easily when the basing candle is a pin bar.
 

Module-3 : The Engulfing bar as a

basing
candle
The zone is called the base, and it is the beginning of the
strong move made by banks or any other financial
institution. This step is very important because if you can
draw the zones correctly, you will be able to identify
precisely the next biggest move and join big players at the
right time.
Banks and financial institutions take two types of orders,
and sometimes they take market orders because they need
quantities to drive the market up or down. And in this case,
you will have an opportunity to enter with them by waiting
for a candlestick confirmation pattern that forms in the
zone,But sometimes banks take limit orders, and when the
market tests the zone, prices move strongly up or down.
And you need to take a limit order as well without waiting
for a confirmation.
But if you don’t know how to draw the zone correctly. You
will miss this opportunity to make money with big players;
this is the reason why you should know how to draw supply
and demand zones.
The zone of supply and demand can be identified by
drawing two features:
The Distal line: the price closest to current price
The Proximal line: the price furthest away from the current
price.
When drawing supply and demand zones, you will deal with
different basing candles, such as pin bars candles, inside
bars, engulfing bars, dojis…. .you should be able to draw
your proximal and distal lines without confusion when you
spot those basing candles.
In my supply and demand course, I have explained in detail
how to draw the zone professionally using different
candlestick patterns as basing candles, and in this course, I
'll show you how to use the engulfing bar as a basing candle
to draw your supply and demand zones.
 

The engulfing bar basing candle

The engulfing bar formation consists of at least two candles,
where the second candle completely engulfs the previous
one. It provides a reversal signal when it is at the end of a
downtrend or an uptrend, and a continuation signal when it
forms with the trend. Look at an example of a bearish
engulfing bar:
The bearish engulfing bar consists of two candles, The
second candle needs to close above the first candle’s body,
the shadows (tails and noses) don’t need to be engulfed,
but if that happens as well then even better.
-We need at least one candle in the base, and sometimes
we can find more than one candle, and this is normal if the
previous candle’s body is completely engulfed.
How to draw a Supply zone using bearish engulfing
bars as a basing candle ?

To draw a supply zone using engulfing bars, you only need

to draw the Distal line at the upper shadow or the close of
the second bar. And the proximal line at the close of the
prior bar or the open of the prior bar if it is bullish. See the
example below :

As you can see in this example above, the second candle

covers only the real body of the prior candle, so the distal
line should be drawn at the upper shadow of the prior
candle, and the proximal line is normally drawn at the
opening of the prior candle to get a supply zone.
Now let me show you a real chart example to help you
understand how to draw a supply zone using a bearish
engulfing bar pattern as basing candles.
As you can see in the chart above, the basing candle was a
bearish engulfing bar. The second candle engulfed the real
body of the prior candle, and to draw the supply zone,we
drew a distal line at the upper shadow of the prior candle,
and a proximal line at the open.
As you can see, when the market tested the supply zone,
the price went strongly down, because the area is very
powerful. Look at another example
As you can see in the GBP USD daily chart above, we have
identified a very strong downward move made by a bank
creating an imbalance area, and this area is called a supply
zone. To draw the supply zone correctly, we need to find the
basing candle which is an engulfing bar as mentioned in the
chart.
Here, in this case, the second candle covered totally the first
one, so we draw the distal line at the upper shadow of the
second candle, and the proximal line at the open price of
the first candle. This is how we draw a supply zone using a
bearish engulfing bar pattern as a basing candle. Look at
another example below:

The EUR JPY H4 chart above shows a clear supply zone. Look
at the three red candles, they are big candles and very
strong, this move down indicates that the big boys are
behind this move.so when you identify the zone, things
become easier. All that you need to do is to draw the zone
and wait for a price action setup to form.
This pattern is also considered as a double top reversal
pattern, but the problem with trading patterns is that we
can’t differentiate between strong and weak chart patterns.
If you can ask any trader about the criteria he depends on
to decide whether to trade a double top or ignore it, he will
not give you a good answer.
As a supply and demand trader, your perception of what is
going on the market is completely different, because you
know that there are banks and retail traders, and when
banks enter the market, they leave their footprints. As it is
shown in the example above, the strong move down is a
bank or a financial institution order.
So, you will not bother yourself with chart patterns, and you
will simply look at the basing candle, which is an engulfing
bar,and then, you draw the proximal at the close of the first
bar, and the distal line at the upper shadow of the same
candle. When prices retraced back to test the supply zone,
the market formed a nice pin bar candlestick pattern that
can be used as an entry signal to place a sell order. Look at
another chart example below:

This is the AUD JPY H1 chart, as you can see, a clear rally-
base-drop supply zone has been formed.
To draw the zone, you draw the proximal line at the close of
the first bar, and the distal line at the upper shadow of the
second candle. When the market returned to test the supply
zone, we had a nice Doji candlestick pattern that was
formed at the zone to confirm our entry.
In the trading tactics section, you will learn how to enter and
exit when trading supply and demand zones.
Now let’s move to study how to draw a demand zone using
a bullish engulfing bar pattern, so, what is a bullish
engulfing bar pattern?
How to draw a demand zone using a bullish engulfing
bar as a basing candle?
To draw a demand zone using a bullish engulfing bar as a
basing candle, you only need to draw a proximal line at the
close of the first candle, and a distal line at the lower
shadow of the second candle. Look at the illustration below :

In the illustration above, the first candle was totally

engulfed, so the distal line was drawn at the lower shadow
of the second candle, and the proximal line was drawn at
the close of the first candle. See the real chart example
below:
As you can see this is a rally-drop rally pattern, the second
bar engulfed the first one, so we drew the distal line at the
lower shadow of the second candle and the proximal line at
the close of the first candle to get a correct demand zone.
But if the second bar engulfed only the real body of the first
candle, we draw the distal line at the lower shadow of the
first candle and the proximal line at the close of it. Look at
the illustration below to understand more.

As you can see in the illustration above, the second bar

covered only the real body of the first candle, so, here, in
this case, we draw the distal line at the lower shadow of the
first candle. See the real chart example below to understand
more :
As shown in the illustration above, the distal line was drawn
at the lower shadow of the first candle because it was not
fully engulfed. As you can see, we got two powerful demand
zones. When the market approached the second zone, the
price was rejected, and it went strongly up. Look at another
example below:

This is the GBP USD H4 chart, and this is a drop-base-rally

demand zone, the last bar that was formed before this move
up is the engulfing bar.as you can see the first bar was
totally engulfed, so to draw the demand zone, you draw the
proximal line at the close of the first bar, and the distal line
at the lower shadow of the mother bar.
When the market returned to test the demand zone, prices
were rejected, forming a nice pin bar pattern. To enter this
trade, you will only place a buy order at the close of the pin
bar and a stop loss below the distal line, the profit target is
going to be the next resistance level. This is not the most
important for the moment, because I will explain you in
detail how to enter and exit your trade in the trading tactic
section, I want you now to focus only on drawing the zones
correctly, so look at another example below :

This is the USD JPY H1 chart, and this is a drop-base-rally

demand zone. Look at the two blue candles, they are big
and strong, and this indicates that there is a bank behind
this move.
Before this demand zone, look left and see the big red
candle, it is also a big and strong candle, and it is
considered as a robust supply zone. I ignored it because
what I want to teach you here is only how to draw demand
zones using engulfing bars as basing candles.
As you can see, when the market returned to test the
demand zone, we got a nice pin bar that was strongly
rejected confirming the zone. So to enter the market, you
only need to place a buy order at the close of the pin bar,
and the stop loss below the distal line and the profit target
is the next supply zone.
 

Module-4 : Inside bar as a basing

candle
 

An inside bar pattern is a two bar in which the inside bar is

smaller and within the high to low range of the prior bar.
The high is lower than the previous bar’s high. And the low
is higher than the previous bar’s low, its relative position
can be at the top, the middle or the bottom of the prior bar.
The prior bar, the bar before the inside bar, is often referred
to as the mother bar, you will sometimes see an inside bar
referred to as IB, and its mother bar referred to as a MB. See
the illustration below:

As you can see in the illustration above the mother bar is

always followed by a small body called the inside bar, this
pattern can be bullish or bearish, it all depends on the
market context. What matters for us is how to use it as a
basing candle to draw a supply or a demand zone when it
happens at the beginning of a bank move in the market.
 Bullish inside bar as a basing candle
The bullish inside bar occurs either with the trend, and it is
considered as a continuation pattern or at the bottom of a
downtrend, and it is considered a bullish pattern. When it
happens at the beginning of a strong move (financial
institution order), we need to know how to draw the demand
zone correctly using this pattern because when the market
approaches the zone, price will go strongly higher.
When we identify a strong move made by a bank, we look at
the beginning of the move to draw the zone, if the
beginning of this move started with a bullish inside bar, we
simply draw the distal line at the lower shadow of the
mother bar, and the proximal line at the close of the inside
bar. See the illustration below:

As you see in the illustration above, this is not complicated,

all you have to do is to identify the lower shadow of the
mother bar and the close of the inside bar to get a correct
demand zone. Now let me give you a real chart example to
understand this better:
 
The chart example above shows a powerful demand zone,
as you see the beginning of this crazy move was made by
an inside bar. To draw your demand zone, you only need to
draw the proximal line at the close of the inside bar and the
distal line at the lower of the mother bar’s shadow.
This zone is considered to be a very powerful demand zone,
look at the large blue bullish candle, this is a clear bank
order, because nobody can move the market this way, you
need millions of dollars to move the market strongly up.look
at another example :
This is the EUR USD daily chart; the marker made a strong
move up forming a nice demand zone. The basing candle is
obviously an inside bar. So to draw the zone, you simply
draw the proximal at the close of the inside bar and the
distal at the lower shadow of the mother bar. As you can
see, when the market returned to test the zone, we had two
Dojis candlestick patterns.
To enter this trade, you either place an entry order at the
close of the first Doji or at the second one and your stop loss
should be below the distal line. The profit target is going to
be the next resistance level. This trade offers more than 4:1
reward to risk ratio. You will learn in detail how to enter and
exit your trades in future lessons. Focus now on how to draw
the zone, because drawing the zone correctly will help you
better enter the market at the right time. Look at another
example below :

This is the EUR GBP H4 chart, as you can see the market
made a huge move up forming a strong demand zone. Look
at the big blue candle. When you open your chart and you
find like this move, don’t waste your time trying to know if it
is a rally-base-rally or a drop-base-rally, you don’t have to
care about that in cases like this, because what matters is
the move, and here the move is clear and strong.
The basing candle can be considered either a small pin bar
or an inside bar, but in this case, it is the same, because if it
is considered as a pin bar you draw the proximal line at the
upper shadow of the candle, and the distal at the lower
shadow, and if you consider it as an inside bar which I think
also, you draw the proximal line at the close of the inside
bar, and the distal line at the lower shadow of the mother
bar. As you can see, we get approximately the same
demand zone. And when the market returned to test the
zone, prices moved up strongly.
To enter this trade, you place your entry after the breakout
of the inside bar that was formed after the rejected tailed
bar, your stop loss should be placed below the distal line,
and the profit target is going to be placed at the next
resistance level.
Bearish inside bar as a basing candle
The bearish inside bar occurs either with the trend and it is
considered a continuation pattern or at the top of an
uptrend and it is considered as a reversal pattern.
When it happens in the beginning of a strong move (Bank
order), it becomes a basing candle, and it allows us to draw
a supply zone. See the illustration below:

To draw a supply zone using a bearish inside bar as a basing

candle, you just draw the proximal at the close of the inside
bar and the distal line at the upper shadow of the mother
bar. When the inside bar (baby) is bullish, you draw the
proximal line at the open of the candle.
Now let me give you a real chart example to show you how
you can use bearish inside bars as basing candles to draw a
correct supply zone.
 

As you can see in the chart above, we identified a good

supply zone and the beginning of the move was made by a
bearish inside bar. So to draw a correct supply zone, we
draw the distal line at the upper shadow of the mother bar
and the proximal line at the close of the inside bar. When
the market tested this area, the price was rejected, and the
market went down strongly. Look at another example below:
This is the AUD USD H4 chart, and this is a clear drop-base-
drop supply zone, the basing candle is this bearish inside
bar. So to draw the zone, you draw the proximal line at the
close of the inside bar, and the distal line at the upper
shadow of the mother bar.
When the market returned to test the supply zone, prices
formed a nice inside bar that can be used as an entry signal.
And then moved down.
When you draw the supply zone, and you get a signal after
the retrace back to the zone, trading becomes easier,
because you will only place an entry at the close of the
inside bar, and a stop loss above the distal line. And the
profit target is going to be the next support level. By that I
mean the black line that I mentioned in the chart. This trade
opportunity offers more than 5:1 Reward to Risk ratio.
This is the USD CAD H4 chart above, the market formed a
clear rally-base-drop supply zone, the basing candle is an
inside bar pattern, it is a mother bar with multiple inside
bars. To draw the supply zone in this case, you draw the
proximal line at the lower close of one of the inside bars, in
this example, the blue candle has the lower close. And the
distal line at the upper shadow of the mother bar to get this
potential supply zone.
When the market retraced back to the zone, prices were
rejected twice to indicate that the market is likely to go
down again, and that is exactly what happened.
I think that drawing demand zones or supply zones using
inside bars as basing candles becomes more clear for you,
so it is your job right now to open your charts, and start
training yourself on drawing the zones using the inside bar
pattern as a basing candle.
Module-5 : The piercing pattern as
a basing candle
The piercing pattern is viewed as a bullish candlestick
reversal pattern, there are two components of a piercing
pattern formation. This pattern occurs when the bullish
candle closes above the middle of the bearish candle.
To draw a demand zone using a piercing pattern, you simply
draw the proximal line at the close of the bullish candle, and
the distal line at the open of the bullish candle or the lowest
wick of both candles. See the illustration below :

When you identify a strong move, and you notice that it

begins with piercing pattern, you draw the demand zone by
drawing the proximal line at the close of the bullish candle
and the distal line at the lower wick of the candle, if the
bearish candle wick was below the wick of the bullish candle
you draw the distal line at it. Let me give you a real chart
example below:

This is the GBP CHF daily chart, as you can see the piercing
pattern was formed at the beginning of this strong move. So
it is considered as a basing candle, and to draw the demand
zone, you draw the proximal line at the close of the blue
candle, and the distal line at the lower shadow of it.
When the market returned to test the zone, prices were
rejected, and the market formed a nice pin bar pattern. So
to enter this trade, you can place your entry at the close of
the pin bar signal, and the stop loss below the lower shadow
of it, and the profit target is going to be the next resistance
level as mentioned in the chart. This trade offers more than
a 4:1 risk to reward ratio. Look at another chart example
below:

This is another daily chart of the GBP CHF daily chart, the
zone is not that strong, but it is tradable, because the huge
rejection that happened when the marker returned to test
the zone indicates that the big boys’ orders are there.
Anyway, we will talk about the criteria that we take into
consideration to qualify a zone in the next lessons. My goal
from this example is only to help you learn how to draw the
demand zone using a piercing pattern as a basing candle.
So to draw the zone, you only need to draw the proximal
line at the close of the blue candle, and the distal line at the
lower shadow or the close of it. Look at another example
below :
This is the AUD USD H4 chart, the market makes a strong
move up forming a nice demand zone. The piercing candle
is the pattern that was formed at the beginning of this
move. So to draw the demand zone you draw the proximal
line at the close of the blue candle and the distal line at the
lower shadow or the close of it. When the market retraced
back to test the zone, prices were rejected forming a nice
pin bar candlestick pattern.
To enter this trade, you only need to place an order at the
close of the pin bar, and a stop loss below the distal line.
The profit target is going to be the next resistance or supply
zone.
Module-6 : The dark cloud cover as a
basing candle
The Dark cloud cover is a bearish candlestick reversal
pattern, it is the bearish version of the piercing pattern, it
occurs at the top of an uptrend. And when it happens at the
beginning of an imbalance, it can be used as a basing
candle.
There are two components of the dark cloud cover, the
bullish candle and the bearish candle, the dark cloud cover
occurs when the bearish candle closes below the middle of
the bullish candle. See the illustration below:
 
This is how the dark cloud cover pattern looks like on your
charts, this reversal pattern can be used as a basing candle
when it occurs at the beginning of a strong move.
To draw the supply zone using the dark cloud cover pattern,
you simply need to draw a proximal line at the close of the
bearish candle and a distal line at the upper wick of it, or if
the bullish candle has upper wick you can draw it at it. Let
me give you an example below:

As you can see in the illustration above, we drew the distal

line at the upper wick of the bearish candle and the
proximal line at the closing price of it to get a correct supply
zone. This is how we use the dark cloud cover to draw a
correct supply zone. Now let me give you another example
to show you how to draw it on a real time chart. See the
illustration below:
 

This is a GBP JPY daily chart, as you can see the dark cloud
cover was the basing candle of the imbalance, we drew the
distal line at the upper shadow of the bearish candle,
because it is the upper shadow of both candles, and the
proximal line at the close of the bearish candle.
When the market came back to test this supply zone, it was
strongly rejected, because there were already quantities
placed by banks in this area. Look at another example
below:
This is the AUD USD H4 chart, the market formed a nice
supply zone. As you can see, a dark cloud cover was formed
at the beginning of this strong move down. So to draw the
supply zone, you only draw the proximal line at the close of
the bearish candle, and the distal line at the upper shadow
of it. When the market approached this supply zone, it was
rejected and went down.
Drawing the distal line and the proximal line correctly will
help you see clearly where to place your entry and your stop
loss. The profit target is always the next support or demand
level. Look at another example below:
This is the EUR JPY H4 chart, the market moved strongly
down forming a clear supply zone. If you can remember our
supply zone patterns, this is a rally-base-drop supply zone.
The dark cloud cover is the last pattern that was formed
before this move down. So to draw the zone, you draw the
proximal line at the close or the lower shadow of the bearish
candle, and the distal line at the upper shadow of the same
candle.
When the market approached the zone, prices were rejected
forming multiple entry signals so you can place your entry
either at the close of the Doji candlestick, or at the close of
the pin bar. Your stop loss is going to be the next support or
demand zone.
I hope that the examples I shared with you could help you
understand how to use the dark cloud cover as a basing
candle. If you want to master drawing supply zones using
this candlestick pattern, I highly recommend you to open
your charts and start looking for examples like these. This
exercise will help you train your eyes on spotting these
patterns easily.
Module-7 : The doji candlestick as a
basing candle
The Doji candlestick pattern has a single candle, the closing
and opening price of this candle are equal. This candlestick
pattern forms due to indecision between buyers and sellers
in the market. In fact there are four types of Doji candlestick
patterns, just take a look at the illustration below:
1-Neutral Doji : It is a small candlestick pattern, the open
and close of price is at the middle of the candle high and
low, this pattern forms when buying and selling activity is at
equilibrium.
2-Long-Legged Doji : It is a long candlestick pattern, the
open and close price is at the middle of the candle high and
low, this pattern occurs also when buyers and sellers are
equal.
3-Gravestone Doji : In this pattern, the open and close of
price is at the candle’s low, this pattern shows a high selling
pressure in the market .
4-Dragonfly Doji : The Dragonfly Doji is the opposite
version of the gravestone, in this pattern the open and close
of price is at the candle’s high. This pattern shows a high
buying pressure in the market.
When drawing supply and demand zones, we can use a Doji
candlestick pattern as a basing candle when it forms at the
beginning of a strong move.
To draw a supply zone using the Doji candlestick pattern,
you only need to draw a proximal line at the lower shadow
of the candle, and a distal line at the upper shadow no
matter what Doji variation it is. Look at the illustration
below:

As you can see in the illustration above, we don’t care about

the variation name when drawing the supply zone, you just
draw the distal line at the upper shadow and the proximal
line at the lower shadow. Let me give you a real chart
example below:

This is the USD JPY H4 chart, and as you can see, a Doji
candlestick pattern was formed at the beginning of the
strong move. So, we can use it as a basing candle to draw
the zone.
To draw the supply zone, you just draw the distal line at the
upper shadow of the candle, and the proximal line at the
lower shadow. As you can see when the market approached
the zone, it formed a nice bearish engulfing bar signal. Look
at another example below:

This is the GBP JPY Daily chart above .As you can see the
market formed a clear supply zone. The move is very
strong, and the last candle that was formed before this
strong move down is the Doji candlestick pattern. So to
draw the supply zone, you simply draw the distal line at the
upper shadow and the proximal line at the lower shadow to
get this potential supply zone. This trade offers a good risk
to reward ratio. Look at another example below:
The chart above is the AUD USD H4 chart, as you can see,
the Doji candlestick is the last candle that was formed
before this move down. So it is considered as a basing
candle.To draw the supply zone, you simply draw the
proximal line at the lower shadow and the distal at the
upper shadow.
When the market returned to test the supply zone, prices
were rejected forming a nice pin bar pattern. So to trade this
setup, you place an order at the close of the pin bar, and a
stop loss above the distal line, and your profit target is the
next support level.
To draw the demand zone, you only need to do the opposite
of what you do when drawing the supply zone, so you draw
the distal line at the lower shadow and the proximal line at
the upper shadow. Look at the illustration below:
This is the same USD JPY H4 chart, and as you see, there is
a nice Doji candlestick pattern that was formed at the
beginning of this strong move. So, we can use it as a basing
candle.
By drawing the proximal line at the upper shadow and the
distal line at the lower shadow we could get a nice demand
zone. As you can see, when the market reached the zone, it
formed a nice pin bar signal and prices pushed the market
to go up again. Look at another example below:
 
This is the AUD USD H4 chart, by identifying the Doji
candlestick as a basing candle, we can easily draw the
demand zone. As you can see, we draw the proximal line at
the upper shadow and the distal line at the lower shadow to
get this potential demand zone. When the market returned
to test the zone, we had a nice engulfing bar pattern as an
entry signal. This trade opportunity provides us with more
than 3:1 reward to risk ratio. Look at another example
below:
The AUD USD H4 chart above is another example that
illustrates how you can use the Doji candlestick as a basing
candle to draw the demand zone.
As we did previously, you draw the proximal line at the
upper shadow and the distal at the lower shadow, when
prices retraced back to test the demand zone, the market
formed a nice inside bar pattern that can be used as an
entry signal.
Part-5 : How to qualify S&D zones
Module-1 : The strength of the move
Trading supply and demand zones is one of the most
powerful trading methods, because it allows you to take the
same trades that banks and financial institutions make.
However, you can’t open your charts and start trading all
the supply and demand zones you find in your charts and sit
back and wait for amazing results. This is not how it works –
there’s more to it than that.
When you identify a supply or a “demand zone”, there are
some factors that you should take into consideration to
decide whether you should take the trade, or you should
stay away (the importance of focusing on high probability
set-ups).
One of the most important elements to determine the power
of the zone is the strength of the move. That means, when
you identify a supply or a demand zone, the move should be
strong and powerful.
There are three factors that will help you determine the
strength of the move:
The time spent in the zone: you should always pay
attention to the beginning of the move; if the move was
quick and the market didn’t spend too much time in the
zone, this is a powerful sign that the order that was taken
was by a bank or a financial institution. Because, when
banks and financial institutions decide to take an order, they
risk millions of dollars, which affects the market behavior.
We can see a strong and quick move from a level without
understating what happens. All that happens is that there is
a big bank that takes orders in large quantities.
So, when the beginning of the move is quick and strong, this
is a clear evidence that there is a bank or a financial
institution behind this move. However, if the market spends
too much time in the zone, this is a sign that the move is
not that powerful.
The Candles size of the zone: “Candles” give us an
obvious representation of the quantities spent during the
move, if the candles are big and have the same color, this is
a sign that there is a big bank behind the move. But, if the
candles are small and have different colors, this is not a
good sign of a strong move.
When a bank takes an order, it affects the market, and you
can see bullish or bearish candles that go strongly in one
direction; but, when you see a move composed by small
candles with wicks, and different colors, this is not
necessarily an order that was taken by a financial
institution, so always focus on the beginning of the move
and see if it is quick and strong. Look at the illustration
below to understand how we qualify the strength of the
move:
As you can see in the illustration below , we have two
different moves, the first and second moves are very strong
because they are composed of three consecutive candles of
the same color, or with a gap, the gap happens
exceptionally in the market when there are high quantities
of orders that was spent, so the price jump to the next level
creating a gap.
This gap is the representation of a bank order and should be
taken as a high-quality zone. The last image on the left is
the representation of a weak move, this move is not strong
because we don’t see an impulsive force that drives the
market go strongly up or down, and zones like this should
be ignored.
The stronger the movement the better, sometimes you can
find only one big candle, and other times you can find three
or four strong candles in a row of the same color. Don’t
spend a long time deciding whether the move is strong or
not, the chart doesn’t lie, and gives you the reality of the
market. If it is a big move, it will be obvious on the chart,
and if it is weak, you can know that just from the first sight.
Look at the chart below to see how we evaluate the move:
As you can see in the chart above, the beginning of the
move was quick and strong; the market didn’t spend a long
time deciding whether to go down or up; it went down
strongly because there was a bank behind that move.
The move was composed of only two big candles, and this is
quite enough to qualify a supply or a demand zone.
Sometimes, you can find only one big candle and other
times you find multiple candles, it all depends on the
quantities spent by the financial institution that was behind
the move. Look at another example of a supply zone below:
This is the AUD JPY daily chart; this zone is considered a
drop-base/drop-supply zone. The basing candle is the Doji
candlestick. In order to draw the zone using this candlestick
pattern, you draw the proximal line at the lower shadow,
and the distal line at the upper shadow.
This supply zone is very strong, because the move was
quick; as you can see, the market didn’t spend at long time
in the zone and the size of the candles are very big, the
speed of the move and the bigger size of the candles
indicates that this sell order was made by a big financial
institution.
When the market returned to test this supply zone, prices
were rejected ,forming a nice dark cloud pattern that can be
used as an entry signal. We will talk about entries and exits
in the next lessons, for now I want you to focus only on how
to qualify the strength of the zone. Look at another example
below:
This is the EUR USD H1 chart. Here, in this example we have
two supply zones, the first one on the left is a weak supply
zone, because the move was not fast, and the candle size is
not that big.
This weak move down found a huge resistance; look at the
pin bar pattern that was formed to stop this move down. If
this supply zone was made by a bank or any other financial
institution, we would see a very fast move down
characterized by big bearish candles. Nothing can stop a
bank from moving a market down.
This weak supply zone worked, even if it is not tradable, but
this doesn’t mean that weak zones work every time. So, I
don’t recommend you to trade any supply zone if you see
that the move is not fast and strong.
Now look at the second supply zone on the right. As you can
see, it is a rally-base-drop pattern. The basing candle is a
pin bar candlestick. So, in order to draw the zone using this
pattern, you draw the proximal line at the close of the
candle, and the distal line at the upper shadow.
This supply zone is very strong, because prices didn’t spend
a long time in the zone, and the move was very fast and
strong. This zone will provide us with a good risk-to-reward
ratio, which motivates us to trade it when the market
returns to test the zone and form a high probability
candlestick signal. Look at another example below:

This is the GBP JPY H1 chart. The market formed a weak

supply zone, as you can see in the illustration, the move
was not fast and strong; the first pin bar that was formed
indicated buyer’s resistance, and the Doji candlestick
indicated pause or hesitation in the market.
This is a clear, weak supply zone, because if it was made by
a bank, you would see big red candles that form a
significant move down. Look at what happened when the
market returned to test the zone. As you can see, prices
didn’t find any resistance and easily broke this weak supply
zone. Please take this advice from me: whenever you spot a
supply zone, look at the move and the size of the candles.
If the move is fast, and the candles are big and strong, you
can then stop by this zone, and look at it to see if it is worth
trading or not. However, if the move is weak and the
candles are small, just ignore it, otherwise you will lose your
money. Look at another example below:
 
This is a EUR USD Daily chart; the market formed a nice
Rally-Base-Drop supply zone. Look at the beginning of the
move; it was fast, and strong, and look at the candle size,
they are all big and bearish without any resistance. This is a
sign of a strong and healthy supply zone.
The last candle that was formed before this strong move
down, is the Doji candlestick.
So, it is considered a “basing” candle. And to draw the
supply zone, you draw the proximal line at the lower shadow
of the candle, and the distal line at the upper shadow; as
you can see, when the market returned to test this area, it
was rejected and prices moved down strongly. Let me show
you another chart example below:
This is the AUD USD H4 chart; the market formed a Rally-
Base-Drop supply zone pattern. This zone is obviously very
strong. Look at the first and second red candles. They are
big and strong, without any resistance. This indicates that
there is a financial institution behind this move down, and
when the market retraces back to test the zone, prices are
likely to move down again.
To draw this supply zone, you should identify the basing
candle, and in this example, the pin bar candlestick was the
last candle that was formed before this move down. Hence,
to draw the zone, you can draw the proximal line at the
nose of the candle and the distal line at the upper shadow.
To qualify a demand zone and make sure it is strong, we
take into consideration the same criteria that we used
previously to qualify supply zones. Take a look at the chart
below:
This is the EUR CAD daily chart; here, in this example, we
have two demand zones; the first demand zone was
powerful because the beginning of the move was quick and
strong, and the second demand zone was also a powerful
area because there was a gap. When prices jump strongly
up or down creating a gap, this is clear evidence of a market
maker order. As you can see, when the market retraces the
test to the first demand zone, it went up again, because
there were quantities left at the same price level.
Look at another example below:
This is the AUD JPY H1 chart; look at this big blue candle, the
size of this candlestick shows that there is a huge bank
behind this move, because retail traders can’t move the
market strongly upward in a very short period of time. So,
the move is powerful, and the candlestick size is bigger,
which indicates that this demand zone is strong.
We don’t care if this bank was motivated by economic news,
this is not our job, because we don’t use fundamentals; we
use the supply and demand method to read how
fundamentals affect banks and financial institutions. And
based on bank(s) behaviors, which we see in the form of
patterns on charts, we make our trading decisions.
This chart above shows a huge move up made by a financial
institution; this huge order was not taken by chance. If this
bank doesn’t find enough sellers, it will leave limit orders in
the same area, and when the market retraces back to test
it, we can anticipate another move up.
To be able to identify the limit order area, we need to draw
the demand zone, and in this example, we will use the pin
bar candlestick as a basing candle, because it is the last
candle that was formed before this move up.
So, to draw the zone, you draw the distal line at the lower
shadow and the proximal line at the nose. And when the
market retraces back to test the demand zone, you should
wait for a price action signal to confirm your buying
decision. Look at another example provided below:

This is another example of the USD CAD H4 chart; the

market formed a Rally-Base-Drop demand zone continuation
pattern. This zone is not strong, because the move is weak;
look at the both red candles, they are small and show lack
of liquidity in the market. So, it is very obvious that this is
not a bank order, and this demand zone should be ignored.
Look at another example below:
This is the EUR USD H1 chart; this chart reveals that we
have a nice Drop-Base-Rally demand zone. The move is fast
and strong, and the candles are big. This is a clear demand
zone that we should take into consideration. So, in order to
draw the zone, you need to just identify the basing candle,
and in this example, the engulfing bar is the last pattern
that was formed before this move up. To draw the zone, you
draw the proximal line at the close of the first candle, and
the distal line at the lower shadow of the second one. When
the market returned to test the zone, prices were rejected,
and the market moved up again. Let me show the last
example below:
This is the EUR USD H1 chart above, which shows that the
market made a huge move up. Look at the three blue
candles; they are big and strong, which give us an idea
about the strength of the move. This zone is clear. Most
strong demand zones are obvious on charts. If you find it
difficult to decide whether the zone is strong or not, just
ignore it, because strong zones will jump out at you
immediately when you open your charts.
The basing candle in this example is a bullish pin bar with a
nose, so to draw the demand zone, you draw the proximal
line at the nose, and the distal line at the lower shadow, and
when the market retraces to test the zone, pay particular
attention and wait for a high probability price action signal
to confirm your entry. I will teach you how to enter and exit
your trades in the upcoming lessons; for now, I want you to
focus on how to qualify supply and demand zones based on
the time spent in the zone, and the candle size of the zone.
 

Module-2 : The freshness of the zone

When you identify a supply zone, you should pay attention
to how many times the level was tested. This will help you
determine whether the zone is worth trading or if you
should ignore it. Look at the illustration below to understand
how we determine whether the zone is fresh or not:

As you can see in the illustration above, the number of

retracements is crucial to qualifying the power of the zone.
The first zone is very strong, because it is fresh, and the first
pullback represents a high probability setup to enter the
market after the confirmation of a price action signal.
The second zone is strong as well, but not stronger than the
first one, because it was tested twice. The second pullbacks
represent a good opportunity as well. However, you will
always need confirmation.
The confirmation can be a pin bar, an inside bar, or an
engulfing bar; waiting for a confirmation is a must to enter
the market if you are a beginner trader.
The third zone is a very weak demand zone, because it was
tested for a third time. Hence, we can’t trust this zone
anymore, because if buyers were powerful, they would not
need to test a zone more than once. So, if the level was
tested more than two times, you should eliminate the zone,
and focus only on the fresh ones.
Now, let me give you a real chart example of a fresh zone to
help you better understand how to determine the freshness
of supply and demand zones. Please view the chart below:
This is the GBP JPY 1H chart; as you can see, the supply
zone was fresh. The freshness of the zone represents the
strength of it. So, when the market will test the zone for the
first time, we can predict a strong move down, because
prices will hit the unfilled limit orders that were left in the
zone.
As you can see, when the market retraced back for the first
time to test the zone, prices were rejected, forming a pin
bar candlestick pattern. Look at another chart example of a
strong supply zone, but this time, the level was tested twice.
Look at the chart below:

This is another example of a GBP JPY H4 chart. The supply

zone was fresh; the first pullback represents a high
probability entry point. As you can see, when the market
retraced to test the zone, it was strongly rejected.
The second pullback is a good opportunity to short the
market, because the zone is still valid and strong. When the
market pulled back for the second time to test the zone, we
had a nice pin bar candlestick pattern as a signal to short
the market. Look at the reference example below:

This is the EUR USD H4 chart: and this is a nice Rally-Base-

Drop supply zone. As you can see, the move is fast and
strong; the candle’s size is big, which indicates that the
order was made by a bank or any other financial institution.
The freshness of the zone gives more strength to this high
probability setup, so the first pullback to test the zone
should be taken into consideration. As you can see, when
the market returned to the zone, prices hit unfilled limit
orders and the market was rejected, forming a nice Doji
candlestick. Look at another example below:
This is another example of the EUR USD H1 chart; it reveals
that the market formed a nice supply zone, the first pullback
and the second one worked because the zone was still fresh,
but the third pullback failed because the area was tested a
couple of times. So please, take this as a rule: the first and
second pullback can be traded if there is a clear price action
signal. However, the third pullback to the supply zone
should be ignored.Let’s move to the demand zone to see
how to decide whether it is fresh and tradable or not; please
see the example below:
This is the GBP USD H4 chart; and as you can see, this is a
clear fresh demand zone, because it was only tested for the
first time. When the market goes back to test the area, it is
obviously rejected. You can consider the zone still strong,
even if it is tested for the second time. But you should
always wait for confirmation to make your trading decision.
Review the example below:

This is another example of the USD JPY H1 chart, showing

the market formed a Drop-Base-Rally demand zone. As you
can see, the move is quick and strong, and the candle’s size
is big. This indicates that the order that caused this strong
move up was made by a financial institution.
The basing candle is the engulfing bar pattern, so to draw
the zone, you draw the proximal line at the close of the first
candle, and the distal line at the open of the second candle
to get this strong demand zone.
The zone is fresh because it was not tested a couple of
times; the first pullback did not give us a strong price action
signal to buy the market; However, in the second pullback,
the market was rejected and formed a nice tailed bar. This
reveals that the zone is valid during the first and second
pullback, if the market makes another pullback, this zone
should be ignored. Look at another example below:

This is the AUD USD H4 chart. In this example, we have a

clear demand zone; the move is quick and strong, and the
candle’s size is big. The basing candle is the inside bar
pattern, which you can consider a Doji candle as well. So in
this instance, to draw the zone you simply draw the
proximal line at the upper shadow of the inside bar or (Doji),
and the distal line at the lower shadow of the mother bar or
the Doji; both ways of drawing are correct.
This demand zone was fresh, and this gives it more
strength, because when prices retrace back to test the zone
for the first time, we will see a clear rejection and a strong
move up. As you can see, that’s what happened after the
first pullback; sellers were rejected, and prices moved up
strongly again. Look at another example below:
In the EUR USD H1 chart above, as you can see, the market
formed a clear demand zone, when the market retraced
back to test the zone. Prices were rejected at the first and
second pullbacks. However, the third pullback failed
because the zone is no longer valid.
So, no matter how strong supply and demand zones are, the
zone should be fresh. This means price has not attempted to
break that level before. Each time price comes back to a
zone, the zone becomes weaker and will eventually break.
 

Module-3 : The breakout of previous

support and resistance levels
 

This factor is important to qualify the power of the move,

because a bank order doesn’t care about support or
resistance levels; banks always trap retail traders and take
their stop loss.
So, when a financial institution takes a buy or a sell order, it
drives the market to go crazy and catch other retail traders.
This trap allows the bank to get more quantities and push
the market strongly upward or downward. See the
illustration below:

As you can see in the USD JPY H4 chart above, the strong
move broke the resistance level and took the stop loss of
sellers who shorted the market from this level. When you
identify a demand or a supply zone, always look left to see if
the move broke the previous resistance or the support level.
See another illustration provided below:

This is another example of the USD JPY H4 chart above. As

you can see, the market formed a nice Drop-Base-Rally
demand zone. The move is quick and strong, the candle size
is big; which indicates that this order was placed by a
financial institution. The breakout of the previous resistance
level is another indication that helps us qualify the move as
strong and tradable.
The zone is fresh, and it is going to be tested for the first
time; this is another criterion that gives us more confidence
in this area. So, to draw the zone, you just look left and
identify the basing candle. In this example, the inside bar is
the one that we use to draw the demand zone. So here, you
simply draw the proximal line at the close of the inside bar
and the distal line at the lower shadow of the mother bar.
Please notice that when the market retraced back to test
the zone, prices were rejected, forming a nice pin bar
candlestick pattern that can be used as an entry signal. Let
me now give you another example of a supply zone below:
 

This is an NZD JPY 4H chart. As you see, the strong move of

the supply zone broke the previous support level; the
breakout of this level indicates that the move is powerful,
and there is a bank behind this move, because after the
breakout of the level, the stop loss orders of previous buyers
will be caught and the market will go strongly down. This is
one of the criteria that validate a supply or a demand zone.
So again, always look left to see what happens to the
previous support or resistance levels. Because a supply or a
demand zone that was rejected from a previous support or
resistance level, it is not a powerful zone. Look at another
example below:

This is another example of the AUD JPY H1 chart; as you can

see here, the market formed a clear supply zone; the basing
candle is the Doji candlestick, so in order to draw the zone,
you simply draw the proximal line at the lower shadow and
the distal line at the upper shadow of the candle. Now, let’s
qualify the power of the zone:
If you look at the move, you will clearly notice that it is quick
and strong; the candle’s size is big (look at the big red
candle). The breakout of the previous resistance level is
further evidence that the move is very strong. The zone is
fresh, and when the market retraced back to test it for the
first time, prices were rejected, and the market went down.
 
 Module-4 : The minimum risk to
reward ratio
When you analyze the market and you find a high
probability entry point, you should always calculate your risk
to reward ratio. By that I mean that you should know how
much you will risk, and how much you will win if the market
goes in your direction. We will talk about this in detail in the
money management section.
To decide whether the supply or the demand zone is valid,
we need at least a 2/1 reward to risk ratio; meaning that the
amount of money you will win should be at least twice the
amount of money you will risk. Let me give you an example,
if the zone has less than 2/1 risk to reward ratio, you should
ignore it ,even if it is a powerful zone, because if you trade
low risk to reward ratio probabilities, you will end up a loser
in the long term.
Let’s say that you find a high probability supply or demand
zone; you know that you will risk 100 dollars, and if the
market reaches your profit target, you win 200 dollars. This
is a 2/1 risk/reward ratio. If the amount of money that you
will win is 300 dollars, this means that this is a 3/1 Reward
to Risk ratio. I will explain to you how to calculate your risk
to reward ratios later.
Let me now give you an example of a supply and demand
zone with a good risk/reward ratio; see the chart below:
This is a supply zone with at least a 4/1 reward to risk. In
order to calculate the risk, you calculate how many pips
between the distal and proximal line (the supply zone), and
how many pips there are from the proximal line to the next
support level or next demand zone. This supply zone has a
good risk to reward ratio. Let me give you another example
of a supply zone with a good risk to reward ratio:

This is the AUD JPY daily chart. Notice that the market
formed a nice Drop-Base-Drop supply zone, as you can see,
the move is strong, the candle sizes are big, and the
previous support level is broken. The zone is fresh because
it will be tested for the first time and the risk to reward ratio
is very attractive. As you can see, this trade offers a more
than 4/1 reward to risk ratio. This is an especially important
criterion that should be taken into consideration. Look now
another example of a demand zone below:

This is an example of a demand zone with a good risk to

reward ratio. The risk to reward ratio is more than 3/1, which
gives the trade good potential. If you take trades like these,
you are not obligated to always be right to become a
profitable trader.
This demand zone is a high probability trade because the
move is strong. Look at the first big candle. This candle
gave us an idea about the move; the time spent in the zone
is short. The breakout of the previous resistance level and
the freshness of the zone are also important criteria that we
should look for when qualifying this area as a valid demand
zone. Look at this example below:
This is another example of the EUR USD H1 chart. As you
can see, the market formed a Drop-Base-Rally demand
zone; the move is quick and strong; the breakout of the
previous resistance level is another element that confirms
the power of the move. The freshness of the zone gives it
more credibility, and the risk to reward ratio is more than
4/1, which makes trading in this demand zone very
interesting.
Now you know how to identify: supply and demand zones,
how to draw the zones, and how to qualify valid zones by
looking at the following criteria:
- The strength of the move:
- The breakout of previous support and resistance levels:
- The freshness of the zone:
-The minimum risk to reward ratio.
The last, and most important element that you shouldn’t
forget when qualifying supply and demand zones, is the
bigger picture. You should make your top down analysis to
see if the zone is formed with the trend or not. This is what
we are going to cover in the next lesson.
 
Module-5 : The alignment of the zone
with the higher time-frame direction
The alignment of the zone with the higher time frame is not
a rigid rule; if the trading time frame and the zone are
aligned with the higher time frame, this gives the zone more
strength. However, if the zone is not aligned with the higher
time frame, this doesn’t mean that you should ignore it,
because in the following lessons you will learn how to trade
supply and demand zones ,even against the trend.
If you are a beginner trader, and you want to master this
trading method, I want you to consider “The Alignment of
the Zone with THE Higher Time Frame Direction ” as
another criterion to qualify valid supply and demand zones.
So, when you qualify a supply or a demand as a valid zone,
you should make sure this zone is in line with the bigger
picture by looking at more time frames.
No matter what type of trader you are, you should always
use multiple time frame analyses to get an idea about the
bigger picture of the market. Most professional traders use
two time frames, which is what I use personally when
trading supply and demand.
If you are a swing trader, and you want to trade daily charts,
you should start with the monthly time frame, which is the
bigger picture, and then move to the daily time frame.
please view the diagram below:
If the bigger time frame (monthly) is up, when you switch to
the daily chart (which is your trading time frame), the daily
chart should be in an uptrend as well, and you should find a
demand zone(s) that forms in line with the direction of the
higher time frame.
If the bigger time frame is down, when you switch to the
daily time frame, which is your trading time frame, it should
be a downtrend as well , and you should look for only supply
zones, because they are aligned with the direction of the
market (bigger time frame).You should also know supply and
demand zones that are formed on the bigger time frame.
Why should you know supply and demand on the monthly
charts? There are two reasons for that; if the monthly and
daily charts have the same supply and demand zone in the
same direction, this zone is very powerful, and it will allow
you know whether to take a limit order or a market order; it
all depends on the other criteria.
The second reason is that sometimes you will find supply or
demand zones on the daily charts, but on the monthly chart,
you find an opposing supply or a demand zone. So, this will
help you know the potential of your trades on the daily
charts.
Let me give you an example, if in the monthly chart the
market is going up, but it will face a powerful supply zone.
When you switch to the daily, you know that the bigger
picture is up; and you should look for a demand zone.
However, if you draw the monthly supply zone on your
chart, you will see it on the daily chart and you will know
that there is an opposing monthly supply zone that could
reverse the market.
So, if you already took a trade, you know that when the
market approaches the supply monthly zone, you should
take your profit and get out. Look at this chart example
below:
This is the AUD USD monthly chart. The market was
trending down, but it spent a long time ranging. The
breakout of the trendline was a good signal that the market
is going to go down. This is the first information we gathered
from this monthly chart, so when we move to the daily
chart, we will try to find supply zones that are aligned with
the direction of the market. See the daily chart below :
As you can see, the market on the daily was ranging,but the
supply zone that was formed broke the range and dropped
the market down. This is a powerful supply zone that should
be taken into consideration because it is aligned with the
monthly downtrend. Look at another supply zone that was
formed after this one:

This is another supply zone that was formed after the one
that was shown before; as you can see it is aligned with the
monthly downtrend and this is one of the most powerful
factors that determines the strength of the zone.
If you want to trade the 4h charts, you should start with
analyzing the weekly charts; the weekly chart is going to be
your bigger time frame, and the 4h chart is your trading
time frame. Look at the diagram below:
To trade the 4h time frame, you should look at the weekly
chart to identify the trend of the market, see the example
below.
As you can see in the weekly chart above, the market is
trending down. We identified the supply zones just to be
careful when we are trading the 4h time frame.
When we move to the 4h time frame, we will focus only on
the supply zones, because we know that the market is
trending down on the higher frame, so our zones should be
aligned with the direction of the market. Look at the chart
below:
 

As you can see in the weekly chart above, the market is

trending down. We identified the supply zones,just as a
precaution for when we are trading the 4h time frame.
When we move to the 4h time frame, we will focus only on
the supply zones, because we know that the market is
trending down on the higher frame. Hence, our zones should
be aligned with the direction of the market. Look at the
chart below:
As you can see in the 4h chart above, we had two powerful
supply zones. When the market tested these supply zones,
the price was easily dropped. Now you will understand why
we took only the supply zones, and we ignore the demand
zones; it is because they are aligned with the direction of
the higher time frame.
Remember that when you are trying to identify supply and
demand zones on the weekly chart, which is the bigger time
frame, you are not obligated to apply the principles we
talked about to see if they are valid supply or demand
zones, the purpose is only to identify supply or demand
zones that can align with the trading time frame or being
opposed to it .
If you are a day trader, and you want to trade 15 minutes
charts, you should look at the 4h chart to see if they are
aligned in the same direction; identify supply and demand
zones on the 4h time frame, and then you move to the
trading time frame which is the 15 minutes .
Look at the following example below to see how we can
trade smaller time frames using supply and demand zones:
This is the EUR CAD 4H chart, in this illustration the market
is trending up, as you can see it is making higher highs and
higher lows. So, the bigger picture is clear, we know that the
direction of the market is up. Now we should move to the 15
minutes chart, and look for only demand zones that are
aligned with the uptrend (bigger picture) look at the chart
below:

As you can see in the 15 minutes chart above, we have

identified a very powerful move (look at the big white
candle) this is certainly a financial institution order.so we
draw the demand zone, and we wait for the market to retest
it again. This demand zone has a big potential because it is
formed in line with the direction of the market.
The top down analysis will help you know when to take a
demand or a supply zone into consideration and when to
ignore it.so remember that on bigger time frames, we try to
identify the direction of the market, and the most important
supply and demand zone. We do this because when we
switch to the trading time frame, we should know if there is
a supply or a demand zone that will oppose or be aligned
with the supply and demand zones we look for in the trading
time frame.
If the trend is up on the bigger time frame, you know that
you should focus on the demand zones on the trading time
frame, and you take into consideration supply and demand
zones of the bigger time frame, and vice versa. Let me give
you some real chart example below:

This is the AUD JPY daily chart; we want to trade the H1 time
frame, so we should analyze the daily to get an idea about
the bigger picture. As you can see the market is trending
down, and this downtrend was confirmed by the breakout of
the support level that becomes resistance. There is no
supply zone and no demand zone (opposing zone) in this
time frame.
So, now we know that the trend is down on the bigger time,
and when we switch to the H1 time frame we need to find a
downtrend and a clear supply zone that is in line with the
bigger time frame direction. See the illustration below:

As you can see in the chart above, the H1 time frame is

trending down and we had a nice supply zone that was
formed in the market. This supply zone occurred in a
downtrend and it is in line with the bigger time frame
direction. So, this criterion gives this zone more strength.
Now let’s try to qualify the power of the zone using the
previous criteria we studied before:
The time spent in the zone: The market spent little bit
time before moving down, but this time is still accepted.
The candle size of the zone: The candle size of the zone
is not that big, but it is not small either, we can say that the
candles are medium sized, which is also accepted.
The breakout of the previous support level: As you can
see, the zone broke strongly the previous support level, look
left and see how this level was broken.
The freshness of the zone: The zone is fresh and if the
market retraces back to test it, there is a high probability
that the market will go down again.
The risk to reward ratio: As you can see, this trade offers
an attractive potential of more than 3/1 reward to risk ratio.
As you can see, in addition to our top down analysis that
showed us that the zone in the H1 time frame is in line with
the bigger time frame direction, the other criteria confirms
the power of the zone and qualifies it as a valid zone. Look
at what happened next:

This is what happened when the market retraced back to

test this supply zone. As you can see, the market formed a
nice Doji candlestick, which indicates indecision or a pause
before this move down. Look at another example below:

This is the EUR USD daily chart above; the market is in an

uptrend forming a nice demand zone, so when you switch to
the H1 chart, which is going to be your trading time frame,
you should bear in mind that the direction of the bigger
picture is up. And you have to take demand zones that are
in line with the daily chart direction more seriously. See the
H1 chart example below:

In the EUR USD H1 chart above, the market is moving up as

well, and there are three demand zones that formed in line
with the direction of the higher time frame. So, the first
element that validates these zones is its alignment with the
uptrend direction to qualify the zone. You should verify the
power of the moves, the breakout of previous levels, the
freshness of the zones, and the risk to reward ratio.
As you can see, when the market returned to test the first
demand zone, prices formed a Doji candlestick which
indicates a pause, and a pin bar which indicates rejection
and all these candlestick patterns can be taken as entry
signals. Please don’t think of how to enter the market right
now, because I will explain in detail how to use candlestick
patterns as entry signals in the next lessons. I want you to
focus only on how to find supply and demand zones that are
in line with the higher time frame direction. Look at another
example below:

This is the USD CAD monthly chart; as you can see, the
market is in an uptrend, so when we switch to the trading
time frame (which is the daily), we should look for demand
zones that are in line with the higher time frame direction.
Look at the chart below:
As you can see, when we switch to the trading time (which
is the daily), we find three important demand zones that
formed in line with the higher time frame direction. I’m not
going to tell you how I qualified these zones as valid
demand zones, because I think that you are now used to the
criteria that we use to qualify a zone (power of the move,
speed of the move, breakout of previous levels, freshness of
the zone , the risk to reward ratio). Let’s look at what
happened when the market returned to test the first
demand zone:

As you can see in the chart above, when the market

retraced back to test the demand zone, prices formed a nice
inside bar pattern that can be used as an entry signal.
I think that you now have all elements in hand to qualify a
supply or a demand zone and decide whether it is a strong
zone or not. But this is not quite enough to start trading,
because whenever you spot a strong supply or demand
zone, you will need some confirmations that support your
trading decisions. And that’s what we will cover in the next
lesson.
 

Part-6 : How to use japanese

candlesticks
as a entry signals
Module-1 : The pin bar as a basing
candle
The strength of the move: How the market leaves the
zone determines the quality and the strength of it. Banks
and financial institutions trade millions of dollars every
single day, and when they place an order, the market
responds strongly, and we can see this on our chart; but
when the move is not strong enough, we can’t be sure that
there is a financial institution behind the move, so to make
sure the move is strong, you simply look at the time spent in
the zone, and the candle size of the move.
The breakout of previous support and resistance: The
breakout of previous support or resistance level is a sign
that the move is strong, and there is a financial institution
behind it.
The freshness of the zone: The zone should be fresh,
either a virgin zone that is going to be tested for the first
time, or a zone that is going to be tested for the second
time.
The alignment of the zone with the higher time frame
: If the zone is in line with the higher time frame direction,
this factor gives it more strength , but we can trade strong
supply and demand zones even against the trend. I'll
explain to you how to do it in the next lessons.
The minimum reward to risk ratio: This factor should be
taken into account when spotting a valid supply and
demand zone; the risk to reward ratio is what will make you
a successful trader or a loser trader. Supply and demand
zones with less than 2/1 reward to risk ratio should be
ignored.
When you spot a supply or a demand zone that respects
these criteria, there is no guarantee that the trade is going
to go in your favor, because this is only a method that
allows you to follow banks and financial institution
footprints. So, when you qualify a valid supply and demand
zone, you will always need to see if the zone responds or
not. If the zone responds, the market will give you a signal
in the form of a price action to confirm your entry.
One of the most important price action patterns that can be
used as a confirmation signal is the pin bar candlestick
pattern.
The pin bar can include the following previously described
candlestick patterns: lower shadow candles, and long upper
shadow candles, hammers and shooting stars, dragonfly
and gravestone Doji, look at an example below:
These different versions of pin bars happen frequently in
supply and demand zones, so when you draw your zone and
you see that all the criteria are in place, if a pin bar is
formed, this is a clear signal to enter the market. Look at
the chart example below:
This is the GBP JPY H1 chart. The market formed a Drop-
Base-Rally demand zone, the basing candle is an inside bar
pattern, so to draw the zone, you draw the proximal line at
the close of the inside bar and the distal line at the lower
shadow of the first candle.
Let’s see if the zone is worth risking our money or not; look
at the move, it is quick and strong, the candles size is big,
and the previous resistance level is broken. The zone is
fresh, and the risk to reward ratio is good, so we can say
that the zone is valid but we need to wait for a clear price
action setup to form.
When the market retraced back to test this zone, prices
were rejected forming a nice pin bar candlestick pattern, so
you can enter after the close of the pin bar; to do this , you
simply place your stop loss below the distal line, and your
profit target is the next support level. Look at another
example below:
This is the USD CAD H4 chart. The market formed a nice
demand zone, the basing candle is a pin bar so to draw the
zone, you draw the proximal line at the nose of the candle,
and the distal line at the lower shadow.
The move is quick and strong, as you can see the market
didn’t spend a long time in the zone, and the candle that
made the move is strong. The zone is fresh and the previous
resistance level is broken.
The risk to reward ratio is accepted, and as you can see, the
trade offers approximately 2.5/1 reward to risk ratio,
meaning that right now, all these factors indicate that this
level is a valid demand zone. However, we still need a
confirmation signal to enter the market.
The formation of the pin bar after this retracement back to
the zone is a strong signal,so to enter the market, you can
place a buy order at the close of the pin bar,a stop loss
below the distal line; and the profit target is the next
resistance level. Look at another example below:
This is the EUR/CAD 15 minutes chart, and as you can see
here, the market formed a good supply zone: The move is
not very strong, but it is accepted, the previous support
level is broken, the candles size is big, the zone is fresh, and
the risk to reward ratio is very attractive. These criteria
indicate that this supply zone is valid, but we still need a
confirmation signal to enter the market. The formation of
the pin bar candlestick pattern was a powerful signal to
short the market.
The formation of the pin bar in this zone means that buyers
were strongly rejected by sellers, this is clear evidence that
the zone still works, because sellers are still willing to sell
from this area.so this price action trading setup validates
the zone and confirms our entry. Look right now at how you
can enter and exit the market using this price action pattern
using the chart below:
 
As you can see, after the formation of the pin bar, your
entry should be after the close of it, your stop loss should be
above the upper shadow, and your profit target is the next
support level. Notice that this trade provides us with a good
risk to reward ratio. Look at another chart example below:

The chart above shows another supply zone. The move is

not very strong, but it is accepted; the zone is fresh, and the
previous support level is broken. The risk to reward ratio is
very attractive because this trade offers at least 3/1 reward
to risk ratio.
The formation of the gravestone Doji (a pin bar) is a
powerful confirmation to short the market. Look at the chart
below to see how you can place your entry order and your
profit target:

As you can see, after the formation of the pin bar, you place
an entry order at the close of the pin bar, and the stop loss
above the distal line or five pips above it, and your profit
target is the next support level. Look at another example
below:
This is the AUD USD H4 chart; the market formed a clear
demand zone, and as you can see, the move is very strong,
the zone is fresh, the previous resistance level is broken ,
and the risk to reward ratio is good.
When the market retraced back to test this demand zone,
prices paused forming an inside bar followed by a pin bar,
so it is up to you to enter at the breakout of the inside bar or
at the close of the pin bar.
 

Module-2 : The inside bar as a basing

candle
An inside bar pattern is a two bar in which the inside bar is
smaller and within the high to low range of the prior bar.
The high is lower than the previous bar high, and the low is
higher than the previous bar’s low. Its relative position can
be at the top, the middle or the bottom of the prior bar.The
prior bar, the bar before the inside bar, is often referred to
as the mother bar. Look at the illustrations below:

This is the traditional anatomy of inside bars. The formation

of this pattern indicates indecision in the market; when this
happens in a supply or a demand zone that requires a
confirmation signal, we should use it to place our market
entry. Let me give you an example below:

This is the USD JPY daily chart. The market created a nice
supply zone, as you can see, the zone is very strong. The
move is quick and strong, the candles are big, the previous
support level is broken, the zone is fresh, and the risk to
reward ratio is huge. These criteria allow us to qualify this
level as a quality supply zone.
The formation of the inside bar patterns offers a great
opportunity to enter the market after the breakout of the
pattern. So,to trade this setup, you can enter either after
the breakout of the second bar, or the breakout of the
mother bar, your stop loss should be placed above the distal
line, and your profit target is the next support level. Look at
another reference chart example below:
This is the GBP/USD H1 chart above; the market formed a
nice supply zone, the move is quick and strong, the candles
are big, the previous support level is broken, the zone is
fresh, and the risk to reward ratio is good.
The formation of the inside bar pattern when the market
approached the zone indicates that the upward move is no
longer powerful, and it faces a consolidation phase. The
breakout of the inside bar pattern means that the market
decided to respect this area.
Inside bars can technically encompass any candlestick
pattern because they are simply a series of at least two
candlesticks where the first candlestick completely engulfs
the entire range of the subsequent candlestick, however,
more often than not, inside bars end up being spinning tops
or Dojis.
Inside bar spinning tops or inside bar dragonfly Dojis are
different versions of the traditional inside bar pattern
anatomy. However, they are also considered as inside bars,
and they should be used normally as the traditional version
of the inside bar pattern. Let me give you a chart example
below:
As you see in the chart above, the market formed a nice
demand zone. The inside bar pattern was formed by a pin
bar as a mother candle, and another pin bar as an inside
bar.
Don’t complicate things and waste a long time deciding
whether the pattern is an inside bar or not. Look at the
pattern and see if the second candle is entirely inside the
first candle, that’s all.
To enter the market, you only need to place an order after
the close of the inside bar (second bar) and a stop loss
below the demand zone, your profit target is the next
resistance level. Here in this trade you have at least 2/1
reward to risk ratio. Look at another example (shown below)
of how to enter and exit the market using supply and
demand zones in combination with the inside bar pattern:
This is another example that shows how to enter the market
using the inside bar pattern, as you see This demand zone is
strong, the move is quick and strong, the candle is big which
shows that this move is made by a bank or a financial
institution. The previous resistance level is broken, the zone
is fresh, and the risk to reward ratio is good.
After drawing the demand zone, the market went back to
retest it and formed an inside bar pattern. The formation of
this pattern means that the market is consolidating, or in an
indecision phase. Why is it an indecision phase? Because
prices approached a demand zone, buyers and sellers don’t
really know what is going to happen. This is why no one
could risk and push the market up or down. The breakout of
the inside bar (second candle) is a confirmation that finally
buyers decided that the zone is worth trading, and you have
to understand the message and place a buy order as well.
So, your entry should be after the breakout of the inside bar,
and your stop loss should be placed below the demand
zone, and your profit target is the next resistance or (supply
zone). This trade provides us with a 4/1 reward to risk ratio.
Let me give you another example below:
 

This is the EUR/USD daily chart; as you can see in the

previous example, you can use the supply and demand zone
strategy in combination with the inside bar pattern in all
time frames, it doesn’t matter if you are a day trader or a
swing trader.in this daily chart, the market formed a nice
demand zone, it is not very powerful, but it is not a weak
zone either. Hence, it requires a confirmation to make sure
the zone is going to work.
When the market approached the demand zone, it formed
an inside bar pattern to inform us that buyers and sellers
hesitate to decide whether the market is going to go up or
down.
As a supply and demand zone trader, I know that the zone is
strong, but I still need confirmation, and the formation of the
inside bar confirms my analysis.
This prompts me to place a buy order immediately after the
breakout of the inside bar (second bar), and a stop loss
below the inside bar or below the demand zone, it all
depends on your risk tolerance. The profit target is the next
support level. When I do this, my work is done; I should stay
away and let the market do the work.
 

Module-3 : The engulfing bar as an

entry
signal
The “engulfing” bar is one of the most important candlestick
patterns that traders can use to benefit from when trading
financial markets.
An engulfing bar consists of a smaller first candle known as
the first candle, and a large second candle which has a
higher high and lower low than the first candle.so that is
seen to engulf the first candle. Look at the illustration below:

The illustration above is about a bearish and bullish

engulfing bar. The bearish engulfing bar happens frequently
in a demand zone while the bullish engulfing pattern occurs
in a supply zone. Let’s first talk about the bullish engulfing
pattern.
The bullish engulfing pattern formed after an extended
move down indicates exhaustion in the market where sellers
begin to take profits and buyers take interest. It is like
sellers and buyers change their role, and after the seller’s
control of the market, buyers change the game and take
control of the market again to reverse the direction of price.
Look at the illustration below:

As you see here, the engulfing candle range engulfs the

previous candle, but it is ok if the body of the engulfing
candle doesn’t engulf the previous candle. The most
important is that the range of the engulfing candle contains
the previous one. See the illustration below:

This is a bullish engulfing bar where the range engulfs the

previous candle, but the body is in line with the preceding
candle. This formation can be considered as an engulfing
bar, because the range of the engulfing candle still
completely covers the previous candle.
The bearish engulfing bar is the opposite of the bullish one,
it forms after an extended move up to signal an exhaustion
in the market and indicate that buyers are no longer in
control of the market and sellers are likely to take control
and reverse the direction of price. See the illustration below:

As you can see in the illustration above, the engulfing

candle range completely engulfs the previous candle, it is ok
if the body of the engulfing candle doesn't engulf the
previous candle, only the range of the engulfing candle
needs to engulf the previous candle to be considered a valid
pattern. See the illustration below:
How to use Bearish and Bullish Engulfing Patterns as
Confirmation Signals:
Bearish and bullish engulfing bars are powerful candlestick
patterns, and when combined with supply and demand
zones, they give great results, because you get all
probabilities in your favor.
When you identify a supply zone, you know that this area is
hot, and when price approaches it… it is likely to reverse.
But you are not sure if the market will respond to this zone
or not, because according to your analysis, the zone is not
strong enough.
The formation of a bearish engulfing bar in that supply zone
increases the probabilities of a move up and confirms your
analysis. Because a bearish engulfing bar indicates that
sellers are more powerful than buyers and when that
happens in a supply zone, this gives more strength to the
area. See the illustration below to understand more:
This is the USD JPY H1 chart; this example illustrates how
the bearish engulfing bar pattern helped us confirm our
entry. As you can see, we had a good supply zone, but to
enter this trade we still need some additional confirmations.
The formation of the engulfing bar pattern was a powerful
signal that confirmed our entry and allowed us to place a
sell order after the close of this pattern, so to enter the
market, all what you need to do is to wait till the bearish
engulfing bar closes, and then you place a sell order after
the close, and the stop loss above the supply zone. The
profit target should be the next support level. See another
example of a demand zone below:
As you can see in the illustration above, the demand zone
was not very strong, but is still tradable, so we were in need
of a confirmation signal to place a buy order.
The formation of the bullish engulfing bar pattern indicated
that buyers are more powerful than sellers and that they are
in control of the market when the price approaches the
demand zone. This is a clear signal that validates the power
of the zone and encourages us to place a buy order after the
close of the engulfing bar pattern and a stop loss below the
wick of the candle or below the demand zone. Look at
another example:
 
This is the AUD JPY H4 chart above; the market formed a
nice drop-base-drop supply zone, let’s try to qualify the
zone:
The strength of the move: As you can see, the move is
quick and strong, prices didn’t find resistance which
indicates that the move was made by a big financial
institution.
The candles size: The candles are big, and big candles
mean huge volumes, which confirms the power of this
move.
The freshness of the zone: This level is fresh because it
has not yet been tested, so this criterion gives more
strength to the zone.
The risk to reward ratio: This trade offers approximately
a 4/1 reward to risk ratio which is very interesting.
So, as you can see, we have a very strong supply level.
When the market retraces back to test this zone, we need to
wait for a confirmation signal to enter the market.
The formation of the bearish engulfing bar at the supply
zone indicates that buyers are no longer in control of the
market, and sellers are going to dominate the next move
down. So, to enter the market, you place a sell order at the
close of the engulfing bar; your stop loss should be placed
above the distal line and your profit target is the next
support level. Look at another example below:

This is the USD CHF daily chart above, and as you can see,
the market formed a nice demand zone; it is not a very
strong zone but it is tradable. When the market retraced
back to test the zone, prices were rejected forming a nice
engulfing bar.
This engulfing bar is big, and if you enter the market at the
close of it, you will have a good risk to reward ratio, so it is
better to enter at the 50% of the candle range, place a stop
loss below the distal line, and the profit target is the next
resistance level.
So, this is how you can use the engulfing bar pattern as a
confirmation signal when trading supply and demand zones.
In the next lesson, you will learn about another confirmation
signal that can be used in combination with supply and
demand zones as well.
 

Module-4 : The inside bar false

breakout
as an entry signal
The inside bar false breakout is one of the most powerful
price action patterns that occurs frequently in the market; it
is one of my favorite patterns, and it is used always as a
confirmation signal when a supply or a demand zone needs
confirmation. Look at the illustration below to see how the
pattern looks like:

The bearish inside bar false breakout pattern occurs in a

supply zone and reverses the market downward. As you can
see, it is composed of two patterns, the first pattern is an
inside bar that indicates hesitation in the market, and a pin
bar that broke the market up and closed inside the inside
bar pattern creating an inside bar false breakout. Look at
the illustration below:
The example above illustrates a bearish inside bar false
breakout that happened in a supply zone and then reversed
the market downward. Let me explain to you why this
pattern is important as a confirmation signal.
When you draw your supply zone, but you think that the
zone is not strong enough to place a limit order and you
need a confirmation signal to enter the market, if a bearish
inside bar false breakout occurred in the zone, this is a clear
signal to enter. This is because the breakout of the inside
bar by the pin bar motives buyers to place buy order
because they think that the market participants decided to
go up after the hesitation phase, making buyers believing
that the supply zone doesn’t work, but when the pin bar
closes inside the inside bar, buyers got trapped in a false
breakout by big players, and the market goes in the
opposite direction.
The bullish inside bar false breakout happens in a demand
zone and reverse the market up, because sellers got
trapped by big players thinking that the demand zone is not
strong and the market is going to break it, but when the pin
bar that made the breakout closes inside the inside bar
pattern, it becomes clear that this breakout was only a trap
and the demand zone is worth it. See the illustration below:

As you can see in the illustration above, when prices

reached the demand zone, the market formed an inside bar
false breakout, which is a trap that was made by buyers to
make sellers think that the market is going to break the
demand zone. But, when the pin bar closes inside the inside
bar, this is clear evidence of a false breakout of this level
and the market is likely to reverse.
Now let me give you a chart example of a supply zone that
needs a confirmation and how the inside bar false breakout
helped us confirm our entry. See the illustration below:
This is the USD/JPY daily chart. Notice the market formed a
good supply zone, but this zone was not strong enough,
because the market spent time before moving down, and it
also found some resistance, so we should wait for a
confirmation when prices approach this level.
The formation of the inside bar in the supply zone tells us
that the market is in a hesitation phase which gives more
strength to the zone. The hesitation means that the area is
taken into consideration by the market participants,
otherwise it will be broken up easily.
The formation of the pin bar that broke the inside bar made
buyers think that the market went out of the hesitation
phase and it is likely to break the zone and continue to go
up, but the close of the pin bar inside the pattern created
what we call a false breakout of the inside bar and showed
us that buyers were trapped by sellers in a very critical area
in the market which is the supply zone.
This information confirms the strength of the zone and helps
us to enter the market with confidence.so we place a market
order at the close of the pin bar, and a stop loss above the
supply zone, and the profit target is the next support level.
Look at another example below:
This is the AUD USD H4 chart; as you can see, the market
formed a nice drop-base-drop supply zone. The basing
candle is the pin bar pattern, so to draw the zone, you draw
the proximal line at the nose, and the distal line at the
upper shadow. Let’s try to qualify the zone.
As you can see the move is quick and strong, the candles
are big, the previous support level is broken, the zone is
fresh, and the risk to reward ratio is good.
When the market retraced back to test the supply zone,
prices formed an inside bar false breakout pattern which is a
reversal signal that indicates that buyers are trapped by
sellers and the market is likely to go down. So, to enter this
trade, you can place your entry at the close of the pin bar
that caused the false breakout, your stop loss should be
placed above the supply zone, and your profit target is the
next support level. Look at now another chart example of an
inside bar false breakout signal that was formed in a
demand zone.
The chart example above shows us a bullish inside bar false
breakout that was formed in a demand zone. As you can
see, the area was not strong enough because it found
resistance and the move was not that strong, so to avoid
taking a risky position we need a confirmation signal.
The formation of the inside bar false breakout was a
powerful confirmation signal to enter the market, so we
place a market order at the close of the pin bar that made
the false breakout, and a stop loss below the demand zone,
and the profit target is the next resistance level. Look at
another example below:
This is the EUR USD H4 chart above. The market is forming
a drop-base-rally demand zone, the move is quick and
strong, the candles are big, the previous resistance level is
broken, and the zone is fresh.
The risk to reward ratio is good, so we can enter the market
immediately after the formation of the inside bar false
breakout pattern. Your entry should be placed at the close of
the candle, and the stop loss below the demand zone. The
profit target is the next resistance level.
Part-6 : How to identify S&D golden
zones
 

Module-1 : Introduction
Right now , if you follow my previous lessons, with enough
attention, you will be able to open your charts and locate
the most powerful supply and demand zones. You know how
to draw the zones, and how to evaluate their strength, you
got also the ability to decide whether to take a limit order or
a market order; if you still have difficulties to locate supply
and demand zones on your charts, I highly recommend to
go back and take a look on the previous lessons, because
without being able to locate the zones, you will not be able
to identify the golden ones.
In this lesson I’m going to reveal to you a secret that nobody
will tell you about, and you will never find it online. Let me
ask you something!!! Have you ever heard about, “the
golden ratio?” It is a special number, approximately equal to
1.618 that was discovered by Leonardo Fibonacci who is a
mathematical scientist. This magical number appears many
times in geometry, art, architecture, and other areas. Nature
relies on this divine proportion to maintain balance.
If you still don't believe it, take honeybees for example; if
you divide the female bees by the male bees in any given
hive, you will get 1.618! Sunflowers, which have opposing
spirals of seeds, have a 1.618 ratio between the diameters
of each rotation. This same ratio can be seen in
relationships between different components throughout
nature, everything in this universe is governed by this divine
proportion. But the question is; does this magic number also
govern financial markets?
When analyzing financial markets, this golden ratio is
translated into three percent, they are as follows: 32.8%,
50% and 61.8%. And to find these ratios, all that you need
to do, is to use a tool called Fibonacci Retracements. This
tool uses horizontal lines to indicate areas of support and
resistance; they are calculated by first locating the high and
low of the chart. Then, five lines are drawn. The first at
100% (the highest on the chart) the second at 61.8%, the
third at 38.2% and the last at 0%. After a significant
movement up or down, the new support or resistance levels
are often at or near these lines. Look at the illustration
below:
The chart example above shows how the market reacts to
the golden ratios, as you can see, the retracement move
was at 50% Fibonacci ratio; the second retracement was at
38.2% and the third retracement was at 23.6%. I shared this
example only to show you how financial markets are
governed by Fibonacci ratios.
We are not going to use all these ratios to trade the market,
but we are going to find supply and demand zones that hold
the golden ratio, because these zones work like magic, so
we will combine the mathematical ratio that governs the
financial market and the way banks and financial institutions
trade the market.
In other words, we will try to find strong supply and demand
zones that hold the golden ratio. These zones are the golden
zones, believe me, this works like magic. But, before that,let
me help you understand how to use the Fibonacci
retracement tool, because if it is not used correctly, the
results will not be as good as you want.
 

How to draw Fibonacci retracement levels:

To draw a Fibonacci retracement, you only need to identify
impulsive moves and retracement moves in an uptrend or a
downtrend, then find out the price level where the impulsive
move started. In simple terms: find out the start of the
impulsive move and the price level where it ended.
1-Then click and activate the Fibonacci tool on your met4
trading platform;
2-Then, click at the start of where the impulsive move
started and drag it to where the move has ended.
Then you will see Fibonacci retracement levels on your
chart, if you did it right, the first point at which you clicked
will show 100, then 61.8, then 50, then 38.8 and 23.6.
These are default values that you should stick with, because
it is used by most banks and financial institutions. See the
illustration below:

As you can see, this is an example of how to use Fibonacci

on your charts in a downtrend market; so when you identify
the impulsive move, you just click on the fib from the start
of the move and drag it to the end of it ,as shown in the
chart above. Look at how the market started reacting when
prices approached levels from 38% 50% and 61.8%. Now let
me give an example of an upward impulsive move (see
below).
 
This is an example that illustrates how to use the Fibonacci
Retracement Tool during an upward move; as you see, you
put the Fibonacci tool at the beginning of the move, which is
100%, and then you drag it to the end. Look at how prices
reacted when the market touched 38% and 50% Fibonacci
ratios. Don’t bother yourself with trying to understand why
the market was rejected from these levels, because this is
not important for the moment; the most important thing is
to know how to draw fib levels correctly, because this will
help you identify golden supply and demand zones using
the same tactic.
 

Module-2 : How to use fibonacci

retracement to identify golden zones
 

First of all, golden zones are supply and demand zones that
hold the Fibonacci golden ratio, which is the 61.8% or the
50%. As I said before, these ratios are very important,
especially the 61.8%, which is engraved in our brain, and
governs trader’s decisions in the market.
Let me first tell you something about the human brain,
because I think that it is important to understand how your
brain works and how it is governed by the golden ratio
61.8%. If you can get this point, you will clearly understand
how the crowd makes their decisions in the market, and you
will be able to predict with high accuracy when the market
will go down or up based on this mathematical formula that
controls the emotional part of our brain.
In the beginning of this course, I showed how you can find
and use Fibonacci Retracements Tool, but we are not going
to use only this tool to find high probability entry points in
the market; our strategy is going to be based on supply and
demand zones, in combination with 61.8% and 50%
Fibonacci retracement levels. This strategy is very powerful,
and works like magic for two important reasons:
When you identify powerful supply and demand zones, you
follow banks and financial institutions' footprints in the
market. You know that if a bank buys from a point when the
market goes back to test this point, the price is likely to
reverse.
The second reason is that you know that the collective
human decisions of banks and financial institutions are
governed by the ratio of 61.8% and 50% Fibonacci
sequences. Hence, you don’t only know how banks and
financial institutions trade but you can also use this
sequence that governs their collective trading decision to
identify high probability entry points in the market. Let me
give you an example below:

As you can see in the EUR USD 4H chart above, we have

two important supply zones that were formed in the market.
Now we know where banks and financial institutions placed
their orders and when the market is likely to reverse.
However, if we can use Fibonacci retracement levels, we can
detect where the 61.8% or 50 % are located in the market,
see the same chart below:

As you can see in the chart above, using Fibonacci

retracement showed us that the second supply zone holds
the 61.8% and 50% Fibonacci retracement. So, now we have
two important elements; we have a supply zone based on
banks and financial institution strategy, and we have 61.8%
Fibonacci ratio that governs the collective trading making
decision of those guys. So, technically and mathematically
we have a very powerful supply zone. Look at what
happened next:

As you can see in the chart above, when the market

approaches the supply zone that holds the 61.8% and 50%
Fibonacci ratios, prices go down; because it is a golden
zone.
A golden zone is a supply or a demand zone that holds the
61.8% or 50% Fibonacci ratios, and these zones work
perfectly well, because they combine the way banks and
financial institutions trade, and the human nature that is
governed by the golden number 61.8%, when it comes to a
collective trading making decision.
Before we decide whether to take this trade or not, since we
don’t know if the market will continue to test the first supply
zone or not, we need a confirmation pattern. And as you can
see, we had a nice inside bar false breakout pattern that
indicated that the market is likely to go down.Let me now
give you another example of a demand golden zone to show
how you can find it and how it works:

As you can see in the chart above, this is a demand zone

that was formed in an uptrend market; it is a very nice zone,
but we will try to use Fibonacci retracement to see if it is a
golden zone or not. See the same chart with Fibonacci
retracement below:
 
As you can see in the chart above, the second demand zone
holds the 61.8% Fibonacci ratio, which makes it a very
interesting zone to watch. So, when the market approaches
this zone, we can wait for a candlestick pattern signal to
form and then we can buy from this point. See what
happened next:
As you can see, the demand zone is considered to be a
golden zone because it holds the 61.8 % Fibonacci
retracement, but because there is another powerful demand
zone below it, we don’t really know what the market is going
to do. So in this instance, we need to wait for a candlestick
pattern signal to enter the market. And as you see, the
formation of the pin bar candlestick pattern was a great
indication that the zone works, and it should be taken into
consideration.
So, right now you know that a golden zone is a supply or a
demand zone that holds 61.8 % Fibonacci ratio. But if you
look at the previous examples, you will notice that these
zones can hold the 50% Fibonacci retracement as well, and
they can be considered golden zones. This is because the
50% Fibonacci retracement is a pattern that most banks and
financial institutions take into consideration to predict the
end of a pullback and the beginning of a new impulsive
move. And this pattern has a huge impact on the market
participants decisions.so the supply and the demand zone
that holds the 50% Fibonacci retracement is considered to
be a golden zone as well.
 

Module-3 : Supply and demand

golden
zones trading tactics
I think that we all have a general idea about golden zones,
and we know that if we can combine supply and demand
zones with the 61.8 % and 50% Fibonacci retracement, the
results will be amazing. But you should not forget that these
Fibonacci ratios are only a factor of confluence that confirm
our setup and give it more strength, what matters most is
the zone itself. Because if you trade a very weak supply and
demand zone that holds the 61.8 % ratio, chances are you
will lose the trade, because we don’t base our trade on
Fibonacci retracements, we use this tool only as a confluent
factor.
Your priority is to find strong supply and demand zones, you
can go back to the previous lessons to see how we evaluate
supply and demand zones, because it is important to
identify the right zones, and then we can use the Fibonacci
retracement ratios to see if they are golden zones or not.
But let me remind you of the steps that you should follow to
make sure the supply and demand zone is correct:
Top down analysis: when you identify a supply or a
demand zone you should see if it is formed with the trend or
against the trend.
Time spent in the zone: look at how the price leaves the
zone; strong and quick moves give us a clear idea about the
strength of the move.
The freshness of the zone: how many times the zone was
tested, fresh zones are the better
Candlestick size: look at the size of candles, strong
candles mean strong move, and strong moves indicate a
bank order.
The minimum risk to reward ratio: you need to see if
the trade can allow you to win at least twice relative to what
you risk in case the trade goes in your favor. because what
will make you a winner in the long term is not this strategy
but the risk to reward ratio.
These elements should be taken into consideration when
identifying a supply or a demand zone. I reminded you of
those steps, because I don’t want you to fall in the trap and
trade the 61.8% and 50% instead of trading supply and
demand zones. REMEMBER ,what matters most to you is
supply and demand zones, we try to follow banks and
financial institutions footprints, and when we identify where
banks and financial institution did take their orders, we can
then use Fibonacci retracements as a confluent factor to see
if the zone holds the golden ratio or not. Let me now show
you another example of how we identify golden zones and
how we can trade it:

The illustration above is the GBP JPY daily chart, as you can
see, there are two supply zones. We will only focus on the
second supply zone, because it is the closest zone to
price.so let’s try to evaluate the strength of the zone.
Look at how the market did leave the zone; it didn’t spend
too much time in an indecision phase before moving
down.so the move can be considered a strong move. The
candle that made the move is big, look at the first red
candle. This indicates that there is a bank or a financial
institution behind the move. What about the freshness of
the zone? As you see the zone is going to be tested for the
first time which makes it very attractive as a supply zone.
Now let’s do our top down analysis to see if the zone is
formed with the trend or against it? so our trading time
frame is the daily, and the higher time frame is going to be
the monthly. Let’s look at the monthly chart below:

This is an illustration of the monthly chart; we can gather

two important elements from it:
As you can see the market is trending down, so this is an
important element that supports our daily supply zone. The
second element is that the market tested a monthly supply
zone and it is likely to go down again.
I got lot of emails about top down analysis from traders who
didn’t understand the purpose from analyzing the bigger
time frame, and this is a great opportunity to show you how
to correctly use top down analysis on your charts.
When analyzing a bigger time frame, we try to answer two
important questions:
-we check if the trend goes in our favor or it is
against us?
-we seek a technical element or a price action setup
that can help us predict what the market is going to
do in the future.
In our example above, we have a downtrend, so we can
simply say that the trend goes in our favor. The second
element that supports our trading decision is the monthly
supply zone that dropped the market down.
Let’s suppose that the market was trending up, what
can we do in this situation? Should we ignore the
trade on the daily time frame?
It is important to trade with the trend, because trading is all
about probabilities, so we try to take all odds in our favor,
but when trading supply and demand zones, we don’t
respect this rule in two cases:
1-if we have a technical element or a price action setup that
can help us predict what the market is going to do in the
future I. For example, let’s suppose that the monthly time
frame is up, and it is against the daily time frame, but prices
on the monthly are going to test a powerful supply zone.
This technical element will help us predict a reversal in the
market. So, this powerful supply zone on the monthly will
support our selling decision on the daily chart. I hope you
can get to this point. But don’t worry, because I will explain
everything to you case by case till you get the point.
2- The second case is when we identify a strong supply zone
, and we have all the elements that indicate a very strong
supply zone, for example ,the move is quick and strong, the
zone is fresh ,the risk to reward ratio is attractive, we can
take this trade against the trend if we have a candlestick
pattern that confirm our entry such as a pin bar, an
engulfing bar , and inside bar, and inside bar false breakout,
a failed pin bar …any way I’ll explain this in details later.
Now let’s go back to our GBP JPY chart example, we have
evaluated the strength of the zone, and we have found that
the move is strong , it is also quick because the market
didn’t spend too much time in the zone, the candles size are
big and the bigger time frame (monthly ) is in our favor .so
right now everything encourages us to take the trade.
The last element that you should evaluate before you
decide whether the trade is worth it or not, is the risk to
reward ratio. Let’s see if the trade has a good risk to reward
potential or not, look at the chart example below:

This is the same GBP JPY daily chart, as you can see when
drawing the supply zone, we can easily measure our risk.
The risk is the amount of pips between your entry point and
your stop loss. And the profit or the reward is the amount of
pips between the entry point and the exit point. As you can
see the amount of pips that you are going to win if the
market goes in your favor is four times the amount of pips
you will risk.
You will not always find trades with 1:4 risk to reward ratio,
but for a supply or a demand zone to be accepted it should
provide at least 1: 2 risk to reward ratio. So, the last
element that validates the strength of this supply zone is
good.
Now we have all elements that indicate that the trade has a
good potential, let’s now see if it is a golden zone or not, I
mean let’s try to see if it holds 61.8 % or 50 % Fibonacci
retracement?

As you can see on the same chart, the supply zone holds
the 61.8 % Fibonacci ratio which makes it a golden zone. We
didn't start with Fibonacci retracements, we started by
evaluating the zone to see if it is valid or not, and then we
used Fibonacci retracement to see if it is a golden zone or
not.
You can trade this zone without using Fibonacci retracement
because it is already a valid zone, and it is worth risking
your money, you only need to wait for a confirmation,
because we don’t really know if the market will respond to
this zone or to the next one above it.
The fact that this zone holds 61.8% ratio represents a
confluent factor that gives more strength to it, because your
trading decision will not be based only on where banks and
financial institutions place their orders, but you have also a
golden ratio that control the collective human trading
decision.Now you have all elements on hand, let me show
what happens when the market approaches this supply
zone, look at the chart below:

This is the same GBP/JPY daily chart, as you can see, the
market approaches the 50% Fibonacci retracement and
drops down, but we can’t sell the market from this level,
because the supply zone is above it, and what matters most
for us is the supply zone.
When the market goes back again and approaches the
supply zone that holds the 61.8% Fibonacci retracement,
the market formed a pin bar to indicate that buyers were
rejected from this level and gave us a signal to sell the
market from this golden supply zone. Let me now show you
how you can enter this trade.
After the formation of the pin bar candlestick pattern, you
can enter the market by placing an entry order after the
close of the pin bar and a stop loss above the supply zone.
And your profit target is the next support or demand zone.
As you can see this trade provided you with approximately a
4:1 reward to risk ratio, because you risked 117 pips to win
486 pips. You can win more if you break even but this skill is
more advanced, and we will talk about it later.
Let me give you another example of a demand zone to show
you how we can identify and trade golden demand zones.
Look at the chart below:
 
As you can see on the AUD USD 4h chart the market broke a
resistance level and went up, so we can say that we are in
an uptrend on the 4h chart. So, we will look for demand
zones that are in line with the uptrend, but before doing
that, let’s see the higher time to check if our trade is going
to be with the trend or against it. Look at the weekly chart
below:

The weekly AUD USD weekly market is also up trending, as

you can see it broke the resistance level and went out of the
consolidation phase. So, we can say that the AUD USD
weekly chart is in line with our trading time frame which is
the 4h.
Now we did our top down analysis to see if the trend is
going up on the weekly chart as well, let’s now go back to
the 4h chart and see if we can identify some demand zones.

As you can see on the chart , we have two demand zones. If

we try to evaluate their strength, we can see that they are
strong, because they are formed in line with the higher
time. The move is quick, not that strong but it is accepted.
And the risk to reward ratio is good as well. So, we can say
that these demand zones are worth risking our money.
In this case you trade the second one if the market formed a
candlestick pattern when it approached the zone such as a
pin bar, or an engulfing bar or any other confirmation
pattern that we talked about in previous lessons.
If the market didn’t respond to the second demand zone,
you can trade the first as well, if you identify a confirmation
pattern that forms when the market approaches the zone.
But what If I told you that one of these zones is considered
to be a golden demand zone. Let’s draw the Fibonacci
retracement from the beginning of the move till the end of it
to see what happens.
 

As you can see, using the Fibonacci retracement helped us

identify a golden demand zone, the first demand zone holds
the 61.8 % golden ratio which makes it stronger than the
second one. Remember that you could make an entry if the
market gave you a signal when it approached the second
demand zone.
But if you can wait for the first one, you would make the
best trading decision because you are aware that banks and
financial institutions placed their order in the zone, and you
also have another mathematical element that shows you
where the collective human trading decisions will be
influenced based on the 61.8% ratio which is engraved in
our brain. See what happens next.
As you can see when the market approached the second
zone it was rejected, but the pin bar that was rejected didn’t
touch the demand zone. On the other hand, the market
spent time in the zone, look at how many bars that are near
the second demand zone before that the pin bar will be
rejected.
This indicates that the second zone is not that interesting,
because if there were big orders that were placed by a bank
or a financial institution, the market will be clearly rejected
from the second demand zone. You can trade the second
demand zone only if the red pin bar that was rejected was
formed inside the demand zone or at least it touched it.
Now look at the golden demand zone. When the market
approached this zone, it was strongly rejected, and we had a
good pin bar formed as a confirmation to enter the market.
You can ask the best supply and demand zones trader why
the second demand didn’t work and the first one worked
perfectly well, nobody will give you the right answer, in the
best cases they will tell you that the first demand zone is
more powerful than the second one. But what makes it more
powerful? Simply because it holds the golden ratio that
influences our collective trading decisions in the market.
This is a secret that nobody will tell you about, and you are
lucky if you are taking this course because you will see the
power of the 61.8 % golden ratio which is engraved in your
brain, in my brain, and in banks and financial institutions
who place millions of orders from their offices. This magical
number affects our collective trading decisions, and when
you can use it correctly in combination with supply and
demand zones, the magic happens in your trading account.
If you decide to work as a technical analyst for a financial
company, believe me that you will surprise your employers
and your colleagues by the precision of your analysis if you
can correctly use supply and demand zones with the 61.8%
and 50% golden ratios.
If you can show them only when the market is likely to go up
or down without showing them how you analyze the market
or the tools that you use to make your trading decisions.
They will really take you for a magician.
Most of your analysis will be right, because they are based
on the power of money that drives the market, because
when you identify supply and demand you are following the
guys who move the market up and down, and when you
identify the 61.8% and 50 % , you are spotting areas where
our collective trading decisions will be affected. So, by doing
this, you are combining the power of money and the power
of the golden ratios that governs our trading decisions.
Let’s go back to our chart and let me show you how you can
enter the trade and where to place your stop loss and profit
target. see the illustration below:
This is the same AUD USD chart, as you can see this trade
provides us with a good risk to reward ratio. The pin bar
confirmation pattern is a little bit longer. So, you have two
types of entries.
Either you enter after the close of the pin bar that was
rejected from the golden demand zone, or you enter at the
50% of it. This is a conservative entry that will allow you to
make more pips if the market goes in your favor, but
sometimes the market goes up without retesting the 50% of
the candle. And you can miss the trade. It is all up to you to
take the type of trade that you want.
 

Part-7 : Supply and demand golden

zones and top down analysis
Module-1 : Supply and demand with
the
 trend
In the previous lesson, you learnt how to combine the power
of supply and demand zones with the 61.8% and 50 %
Fibonacci retracements to spot golden zones and make the
best trading decisions. This strategy is one of the most
powerful strategies that you can ever use in the market.
Because it is based on the law of supply and demand that
governs financial markets, and the 61.8% golden ratio that
governs our collective trading decisions. If you have these
two elements in hand, chances are you will become a
successful trader.
One of the difficulties that you will encounter while trying to
identify and trade supply and demand zones is the top down
analysis. I got a lot of emails about this topic, and I
recognized that most traders get confused when doing top
down analysis, because they find different scenarios, and
sometimes they find it difficult to decide what to do in
certain cases. In this module, I’m going to cover all the
scenarios that you will encounter while analyzing your
charts, and how to gather the right information from your
top down analysis.
Our top down analysis is based on two important time
frames, the trading time frame, and the higher time
frame.as traders we have different personalities, some
traders like to trade smaller time frames and other traders
like to trade bigger time frames. There is nothing wrong with
a smaller or a bigger time frame. You need to choose the
time frame that fits your personality or the trading style that
fits your psychology. But whether you trade bigger time
frames or smaller time frames, when analyzing your charts,
you need to stick with the following rules:
When trading the 5 minutes or the 30 minutes time frame,
your higher time frame is going to be the 4H. and when
trading the 1h time frame, your higher time is the Daily.
If you are a swing trader and you want to trade 4h, you
should look at the weekly as a higher time frame, and when
trading the daily time frame, your higher time frame is the
monthly. You should stick with these rules, because this is
how successful traders analyze and trade the markets. You
can’t base your trading decision on a one-time frame.
Trading with the trend
As you always hear, the trend is your friend, you should
always trade with the trend, because trading with the trend
is the easiest way to make money in the market. Supply and
demand zones that form in line with the trend are easier to
trade than the ones that form against the trend. What do we
mean by trading with the trend?
Trading with the trend means that if you trade the 1h time
frame, the trend in this period should be in line with the
higher time frame which is the daily. In other words, the
trend in your trading time frame should be in line with the
trend in your higher time frame. Look the chart example
below:

This is the GBP USD daily chart, as you can see the market
is making lower high and lower low indicating a downtrend
market. and as you see the last red big candle broke the
previous demand zone which signals that the market is still
going down.
By looking at the daily chart, we know that the trend is
down, now let’s look at our trading time frame which is the
1h. look at the chart below:
 

As you can see on the GBP USD 1H chart, the market was
ranging, after that price broke the support level and went
down indicating a downtrend. So, on the daily chart which is
the higher time frame the market is down, and on the 1H
chart which is our trading time frame the market is also
down. So, we can say that the trend in the trading time
frame is in line with the higher time frame. and we should
now focus on supply zones that are in line with the
downtrend. Look at the chart below:
As you can see, we have three powerful supply zones, we
don’t really know which one of these zones that the market
will respond to. Let’s draw our Fibonacci retracement to see
if one of these zones holds the golden ratio.

As you can see on the chart above, the second supply zone
holds the 61.8 % golden ratio, and the third supply zone
holds the 50% Fibonacci retracement.so the both supply
zones are powerful, what we need to do is to wait for the
market to approach the third supply zone, and wait for the
formation of a candlestick trading signal. See what happens
when price approached the third supply zone below:
As you can see, when prices approached the golden supply
zone it formed a pin bar that was rejected from it. It was
also rejected from the golden supply zone that was above it.
I didn’t want to draw it because I don’t want to confuse you.
Now let me show you how you can enter this trade, because
there are different entries that depend on the strength of
the zone, and also on your personality.
In this case, there were three supply zones, and we didn’t
know which one would be responsive, so I don’t recommend
placing a limit order. You should wait for a confirmation from
the market to make sure that the supply zone is valid.
The formation of the first pin bar candlestick pattern was a
great opportunity to enter the market, so we have two
different types of entries.
The aggressive entry: this entry type is not bad or good, it
all depends on your personality and your risk tolerance.
Aggressive traders usually enter the market immediately
after the close of the pin bar candlestick pattern. The stop
loss is above the supply zone, and the profit target is the
next support level. Look at the chart below:
The example above shows an aggressive entry that was
made immediately after the close of the pin bar. The stop
loss was placed above the supply zone. The advantage of
this entry is that you are sure that you will join the trade if
the market goes in your favor. The disadvantage is that the
stop loss is going to be tight. If you place it above the
second supply zone, you will not have a good risk to reward
ratio.
The conservative entry consists of entering the market
when prices test the 50% of the range bar. And the stop loss
is placed above the second supply zone. See the chart
below:
As you can see on the chart above, you can place a limit
order at the 50% of the pin bar. I mean at the half of it, and
the stop loss above the second supply zone.
The advantage of this entry is that your stop loss is placed
in a safe place, and if the market goes in your favor, you will
always win the trade with a good risk to reward ratio. But
the disadvantage is that sometimes the market doesn’t
retrace to test the 50% of the range of the pin bar. This
happens frequently in the market and this will make you
miss a lot of opportunities.
I can’t really tell you which entry is the best for you, nobody
can tell you about it, because it all depends on your
personality and your risk tolerance. Sometimes I take
aggressive entries, and sometimes I take conservative ones.
They both work perfectly well, but only with time and
practice, you will decide which type of entry you would take
when you spot a high probability setup in the market.
 

Module-2 : Trading supply and

demand
 zones against the trend
 

Trading with the trend is the easiest way to make money in

the market, I highly recommend you to stick with the trend
if you are a beginner, because trading with the trend will
give you more confidence in your method, and it will teach
how to be patient, because the market trends only 30% of
time and spends 70% of the time ranging.
If you stick with the trend, you will trade less, because you
will not find opportunities every single day, and trading less
means taking less risks and protecting your trading account.
This quality is what most traders need to become profitable,
because traders think that they have to be always in the
market.so they take low quality trades and destroy their
entire trading account.
There are times when trading against the trend can be very
lucrative, in fact some of my most profitable trades have
come from beating against the trend. And to be honest with
you, when you get some experience you need to learn how
to trade supply and demand zones that form against the
trend.
In this lesson, you will learn how to trade supply and
demand zones against the trend, and you will know the
criteria that you should take into consideration when trading
a zone that forms against the trend.
When we are talking about trading with the trend or against
the trend, we need to answer an important question! Which
trend are we talking about? the trend of our trading time
frame, or the trend of the higher time frame?
As you know, in our top down analysis, we have two
important time frames, the higher time frame that shows
the bigger picture .and the trading time frame in which we
take our trading decisions.
If you want to trade the 4h time frame for example, you
should look at the weekly time frame, because it is the
higher time frame. If the weekly is up, and the 4h is up as
well, you should look for a buying opportunity on the 4h.
This way we can say that you are trading with the trend. In
other words, you are following the bigger picture.
But if the weekly is up, and the 4h is down, and there is a
good selling opportunity on the 4H time frame, if you decide
to sell the market on the 4h, we can say that you are trading
against the trend.
So, when we are talking about the trend, we are talking
about the trend of the higher time frame, it is the primary
trend that you should watch. And then when we switch to
the trading time frame, we see if it follows the higher time
frame or not. If it follows the higher time, this means that
you are in a trend, but if it is against it, this means you are
against the trend.
How to trade supply and demand zones against the
trend?
We don’t trade all supply and demand zones that form
against the trend, there are strict conditions that you should
respect to filter the zones and pick up high probability areas
in the market.
The first element that you should take into consideration is
the strength of the zone, you should make sure the zone is
strong.
-The second element is the freshness of the zone, the area
should be tested for the first time
-The third element is the risk to reward ratio: your trade
should have a good risk to reward ratio, because you can’t
take a risky trade for a low risk to reward ratio.
-The zone should provide you with a candlestick pattern
signal to enter the market.
If the zone holds the golden ratio, either 50% or 61.8 % is
better, but if it doesn’t hold the golden ratio, this is not a
problem, because it is only a factor of confluence that gives
more strength to the zone. Let me now give you an example
below:
 

This is The USD JPY daily chart, as you can see the trend is
down, so when we switch to the smaller time frame, we can
take supply zones because they are in line with the bigger
time frame, but we can also trade demand zones if they are
strong enough and respect the criteria that we talked about
previously. See the hourly chart to see how we can deal with
demand zones against the trend.
As you can see above, this is the USD JPY 1H chart, there
are two powerful supply and demand zones, the supply zone
that is in line with the daily time frame, and the demand
zone that is against the trend.
When the market approaches the supply zone, we can trade
it with confidence because it is with the trend, and it is a
very strong zone. The demand zone is against the trend, so
we should pay attention to the following criteria:
The beginning of the move: as you can see the move is
very strong, there was no resistance from sellers (three
powerful blue candles) this indicates that there was a bank
behind this order.
The breakout of the previous resistance or supply
zone: if you look left, you will find that this move broke the
previous supply zone, and the breakout was very powerful.
The freshness of the zone: as you can see the zone is
fresh and it will be tested for the first time.so it is a very
interesting zone to watch.
The risk to reward ratio: the risk to reward ratio is
attractive, this trade can provide us with more than 1:2 risk
to reward ratio if the market goes in our favor.
These elements are very important, and you should take
them into consideration when evaluating a zone that is
formed against the trend. Now we need only a candlestick
pattern confirmation to enter the market. See the chart
below:

As you can see, when the market approached the demand

zone, prices formed a Doji candlestick pattern. This
candlestick indicates indecision in the market in this period
of time, and this is normal because the zone is very hot
even if it was formed against the trend. That can create
some confusion for the market participants because they
don’t really know what to do and as a result, we have a Doji
candlestick pattern.
The formation of this candlestick pattern that was rejected
from the demand zone is a great signal to enter the market,
so you place a buy order at the close of the Doji, and a stop
loss below the demand zone, and the profit target is the
next resistance level. Let’s see another example below:
This is the EUR/USD daily chart, as you can see the market
is trending down, so when switching to the hourly chart, we
can trade demand zones that are in line with the daily
uptrend, but we can also trade supply zones that form
against the trend if they are very strong and hold the
criteria that we discussed in the previous examples. See the
chart below:

As you see on the hourly chart above, the market was

trending up as well, but it formed a very powerful supply
zone against the trend. Look at the strong move (red
candle). You can clearly see that the move is strong, and
when the market approaches this level, we can predict
another move down. See what happens next:

As you can see, when prices retest the supply zone, the
market formed a Doji candlestick pattern, which is a nice
signal to enter the market.so as usual, we place a sell order
at the close of the Doji candle, and the stop loss above the
supply zone, the profit target is the next support or supply
level.
Remember that before taking this trade, we checked if the
zone respects the criteria that we discussed previously, and
after making sure that the zone is valid, we decided to take
the trade after the formation of the Doji candlestick pattern
confirmation.
-When waiting for a confirmation signal, don’t think that you
will always find a Doji candle, you can find different setups
such as a pin bar, a failed pin bar, an inside bar, an inside
bar false breakout, or an engulfing bar. (look at the
confirmation pattern lesson).
-The examples discussed in this lesson were focused on the
1h time frame as a trading time frame, and the daily as the
bigger one. You can follow the same steps to trade the 4h
time frame, but the bigger time is going to be the weekly,
and the monthly (bigger time frame) for daily charts.
 Module-3 : The higher time frame is
ranging and The trading time frame
is
trending
When you are making your top down analysis, you will face
different scenarios, sometimes it seems to be confusing but
if you follow my strategies and tactics, you will find it easier
than what you think.
Let’s suppose you are in a situation where the higher time
frame is ranging, and the trending time frame is trending.
Let me give you an example below:

This is the USD CHF weekly chart, as you can see the
market is trading between support and resistance levels, or
we can say between supply and demand zones.it is a
ranging market. Let’s switch to the trading time frame which
is the 4H to see what is happening in this period of time.
In the 4H chart above, you can see that the market broke off
the range and start trading down, we have noticed a nice
supply zone. But let’s first make sure if the higher time
frame supports the zone or not. Let's go back to the higher
time to analyze it and see what information we can gather
from it. see the chart below:
As you can see on the weekly time frame, the market is
ranging, but we can gather the following information:
-The market is rejected from a resistance level, that means
that sellers are stopping buyers from going up and they are
willing to drop the market down. (look at the rejected
candle).
-The false breakout of the resistance level indicates that
buyers were trapped by sellers, and the market is likely to
go down to test the next support level.
These information help us predict the future movement of
price on the weekly chart, so we can see clearly that the
market is likely to go down and retest the next support
level.so when we switch to our 4h trading time frame we will
trade all supply zones that are in line with our bigger time
frame analysis. Look at the 4h time frame again.
 
This is the 4h time frame, as you can see, there are two
powerful supply zones that were formed after the breakout
of the range. They are in line with our bigger time frame
analysis, and they are worth trading if the market goes back
to retest one of them.
By doing our top down analysis and evaluating the power of
the supply zone, we can clearly see that these areas
represent a good opportunity to enter the market, all that
we need is waiting for a candlestick pattern formation when
the market retests the first or the second one.
Now we know what we should do if the market retraced
back to the first or second supply zone, but what if we can
use Fibonacci retracement to see if the second zone holds
the golden ratio, this information can be an additional factor
of confluence that can support our trading decision. Look at
the chart below:
As you can see in the chart above, the second supply zone
holds the 50% Fibonacci retracement which is considered to
be a golden ratio that controls our collective trading
decisions in the market.
So, now we have this additional information that can give us
more confidence in our trade. Let’s see what happens when
the market approaches this zone.
As you see, the market was very responsive to the supply
zone that holds the 50% Fibonacci retracement. The
formation of the Doji candle that can be considered as a pin
bar was a confirmation to enter the trade.so your entry
should be at the close of the pin bar. The stop loss is above
the supply zone, and the profit target is the next support
level. That’s all, set your trade and forget it.
 

Module-4 : The higher time frame is

ranging and the trading time frame is
trending
 
The next scenario that you will face when making your top
down analysis is when the bigger time frame is ranging, and
the trading frame is trending down. Let me show you an
example below:

This is the EUR/USD H1 chart, the market was ranging, it

broke out of the range, pulled back and then went down. We
can say that the market is trending down. But this market
will face a powerful demand zone against the current trend.
What should we do in this situation? Do we have to trade
this demand zone when the market approaches it and forms
a candlestick pattern signal? or do we have to ignore it
because it is against the current trend.
To get a good answer we need to analyze the market on the
higher time frame to take an idea about the bigger picture
and predict what is going to happen in the future. See the
chart below:
As you can see on the daily chart, the market was trending
down, it formed a reversal double bottom, and then broke
out of the range. Look at how the market broke out of the
range!
The formation of the double bottom reversal pattern at the
end of the downtrend and the strong breakout of the range
indicated that the market would change direction and will go
up on the higher time frame. So, the most important
information that we got from analyzing the daily time frame
is that the market is likely to go up.
When switching the 1H time frame, we will see that by
trading the demand zone, we are not trading against the
trend, but we are trading with the trend (the trend of higher
time frame). See the chart below:
As you can see on the 1H chart, the market reversed when
it approached the demand zone, if we didn’t make our top
down analysis and see what happens in the higher time
frame, we will hesitate to take this trade because we will
think that it is against the trend but the fact is that the trade
is with the trend.
We didn’t trade this demand zone by chance, we first
checked if it is valid or not by evaluating the strength of the
move, the size of the candles, the freshness of the zone,
and the risk to reward ratio. When we made sure that the
move was made by a bank or a financial institution, we
switched to the higher time to make our top down analysis.
And when everything was all right, we kept watching the
zone and waiting for the market to approach it.
When the market approached the zone, it formed a tailed
bar that was rejected from this area and indicated that the
zone is responsive, and we should make our buying and
trading decisions.
As usual, to trade this setup, we place a buy order at the
close of the tailed bar, and a stop loss below the demand
zone, the profit target is going to be the next resistance
level. When you do this just set your trade and forget it.
 
 Module-5 : The higher time frame is
ranging and the trading time frame is
ranging
This is another scenario that you will find when making your
top down analysis.when analyzing the trading time frame,
you will find that it is ranging, and when you switch to the
trading time frame you find that it is trading between
support and resistance levels, so what can we do in this
situation?
As you know our purpose from making top down analysis is
to understand what happens in the higher time, so when we
switch to our trading time frame, we can then see if our
decisions are in line with the bigger picture’s scenario.
Let me now show you an example of a nice demand zone
that I identified on the EUR/CAD 1H chart :

as you can see the move is strong (look at the three blue
candles). The market didn’t spend much time in the zone,
the candle size of the move is acceptable.
The breakout of the previous resistance level (look left)
validates its strength, and the freshness and the potential
risk to reward ratio of the zone makes it more attractive.
This zone is tradable, and we can take a trade immediately
when the market approaches the area and forms an obvious
candlestick pattern signal. But what about the higher time?
Does the higher time frame validate our trading decision?
This is an important question that we should answer. Let’s
look at the daily chart to see what happens on the higher
time frame.

As you can see in the daily chart above, the market is

ranging as well, but it is going to test a nice daily demand
zone. This is important information, because it helps us
predict the future move of price when approaching the daily
demand zone, or the support level.
By analyzing the daily chart, we know that the market is
going to face a huge support or supply zone, that means
that the market is likely to get rejected when prices
approaches this level. This information supports our trading
decision on the 1h chart. because the market is going to
test a demand zone as well.
Now we know that what we want to do on the trading time
frame which is the 1H is in line with what is likely to happen
on the higher time, this will give us more confidence to take
the trade when the market forms an obvious candlestick
pattern signal. Look at what happened on the 1H chart
below:
 

As it was predicted when the market approached the

demand zone, it was rejected and formed a nice pin bar
candlestick pattern. This signal was quite enough for us to
place our trade. As you can see, we entered at the close of
the pin bar, the stop loss is below the demand zone, and the
profit target is the next supply zone. This trade provided us
with more than 4:1 reward to risk ratio.
 

Part-9 : The Set and Forget Method

The set and forget method simply means to place your
trade and forget about it for a period of time, this method
will help you stay disconnected from the markets, and it will
allow you to be more disciplined because when you place
the trade, and you go away, you will not give the
opportunity for the market to play on your nervousness.
The Set and Forget method will allow you to go about your
life as you normally would, you can even keep your day job
by analyzing your daily charts, placing your trades, and
letting the market decide whether you are right so you will
be rewarded, or you are wrong so your stop loss will be hit.
Most traders spend long hours in front of their screens
trying to analyze more data and thinking that this is the
best way to make the best trading decisions. The main
reason why this occurs is because of your human
conditioning.
In our social life, we try to control everything to feel safe,
and we think that the more work we do the better results we
get, when we come to the trading environment with the
same mindset, we spend long hours trying to understand
everything by analyzing too much data, and trying to work
harder more than others. This social conditioning can work
against you in the forex market.
Working hard in our social life has nothing to do with the
forex market, it doesn’t mean that you will not make efforts,
but all your focus should be on your trading system, you can
work hard to master the trading method, and understand
fully how it works, but any further research or system
tweaking will eventually work against you.
When you are analyzing your charts, focus only on your
strategy, don’t try to analyze economic reports, or try to see
what other experts are saying about the market, this will not
help you make money in the market, on the opposite, this
will confuse you and make you feel lost.
 

More is better in your social life, less is better in the

Forex Market
You should accept the fact that you can’t control the
uncontrollable forex market, nobody can control it, and
nobody knows what is going to happen in the future. Trading
is all about probabilities, this is how professional traders
think about the market, so they do few technical and
fundamental analysis, they master their trading system, and
they wait patiently for an obvious trading setup to form in
the market. If there is no opportunity they stay away for a
while because they know that the market is abundant; they
don’t feel pressured or anxious to trade. When an
opportunity appears, they place their order, their stop loss
and profit target and they go away, because they know that
any further action will probably work against them because
they understand the fact that they can’t control the
uncontrollable and any other action wouldn’t be an
objective action.
Traders who place their trades and stay in front of their
charts watching what is happening, sabotage themselves by
being emotionally involved and that leads to over-trading,
increasing position size, moving their stop loss further out of
no logic reason.
These bad trading behaviors always lead traders to blow up
their entire trading account, because these actions didn’t
come from their trading plan or their method, but it was
only a reaction to control the uncontrollable market. Let me
give you an example below:
As you can see in the USD CHF H4 chart above, there is a
nice supply zone, when the market reached it, it formed a
good inside bar false breakout pattern signal. You can call it
a pin as well. The most important thing is to understand the
signal.
When you enter your trade, the market will not go
immediately in your favor, as you can see the market
reacted back trying to make us understand that the zone is
not that powerful, and prices are likely to break out of it.
If you don’t have much confidence in your trading method,
and you don’t apply the set and forget method, you will get
emotionally involved and maybe you will exit the trade
thinking that the zone is not working, so you exit to protect
yourself from losing.
When you are trading supply and demand zones, you will
experience these scenarios a couple of times, and you have
to understand that the market will never let you trade in
peace, it will always try to play on your nervousness. This is
the reason why you should adopt the set and forget method,
because when you place your trade, you will either win if
the market goes in your favor or lose a small amount of
money if you were wrong. Let me give you another example
below:
As you can see in the GBPUSD H1 chart above, the market
formed a supply zone, and when prices reached the zone, it
formed a nice pin bar entry. When traders make their entry,
the market starts consolidating, so if you are not patient
enough you will start doubting your trade’s potential. Maybe
you will be fed up with waiting and you exit your trade. This
is why set and forget is important.
Look at the second demand zone, when the market reached
the zone, prices formed another pin bar entry, but the
market didn’t go directly to the profit target, it spent time
consolidating and manipulating undisciplined traders. If you
take this trade and you keep watching what is going on, you
will end up exiting your trade because you will think that the
market didn’t validate the demand zone. And if you were
patient enough and you didn’t exit your trade, you will
spend the hardest moment in your life begging the market
to go in your favor. So, the bottom line is; spending time in
front of your charts after placing your trade is a waste of
time and money, because you will not control the market by
staring at prices for hours. But you can control your results
if you do these important actions:
-You place your trade
-You place your profit target
-You set your stop loss
-YOU STAY AWAY
If you realize that the market is uncontrollable and build
your trading plan around this fact, you will eventually arrive
at a set and forget type mentality that induces an emotional
state that is conducive to ongoing-market success and
consistent profitability.
 

Part-10 : Trading Examples

Module-1 : Example-1
You have probably just spent several days or weeks reading
through this price action trading course, you have seen the
various concepts I put forward, I have disclosed my trading
mindset, all my wisdom and knowledge, you know all my
tools and all my price action entry method. Now you have
one of the most powerful trading methods based on how
banks and financial institutions trade the market.
In this lesson, we will try to apply all the knowledge that I
shared with you, so you will understand how to approach
your trade step by step by following rules and strategies we
discussed in previous lessons. Let’s start by the first trade’s
example below:

Look at the AUD JPY H1 chart above, as you can see there is
a very strong move that attracts our attention, this move
cannot be made by retail traders, this move is certainly the
result of a bank or a financial institution order. So, we are in
front of a powerful demand zone. The first thing that we
should do is to draw the zone. Look at the chart below:

As you can see on the chart above, we identified the

beginning of the move to spot the basing candle, in this
example, the tweezer bottom was the basing candle.
So, we draw the proximal line which is the closest line to
current price at the close of the bullish candle, and the
distal line at the close of the bearish candle. As A result, we
get a nice demand zone.
This is not quite enough to take our trade, this is only the
first step, the next step is to evaluate the zone and see if it
is worth our hard-earned money or not. Look at the chart
below:
This is the AUD JPY H1 same chart, as you can see, we
identified a good demand zone. But we need to evaluate it
and see if it is a valid zone or not. These are the following
factors that we took into consideration:
The beginning of the move: as you can see the move
was strong and quick, and the market didn’t spend too
much in the zone. This indicates that the order was placed
by a big bank or a financial institution.
The candle size of the zone: the candle size is big and
showed that the buyer invested too much quantities to push
the market to go higher in a very short period of time.
The breakout of previous resistance level: the strength
of the move was confirmed by the breakout of the previous
resistance level.
The freshness of the zone: as you can see the zone is
fresh, and it will be tested for the first time.
These factors help us evaluate the strength of the zone,
because we can’t trade any zone that we find on our chart.
But what about the risk to reward ratio? let’s see how we
calculate our risk to reward ratio:
As you can see on the chart above, by comparing the risk
and the reward, we can clearly see that the trade has a
good potential and provides us with a good risk to reward
ratio. This is only the first impression that we got from
looking at the chart. But to be able to calculate the risk to
reward ratio, we need to wait for a confirmation pattern that
forms in the demand zone.
Another factor of confluence that makes the trade setup
more attractive is the 61.8 golden ratio, if we use the
Fibonacci retracement, we can see that the area is a golden
zone that holds the magic Fibonacci ratio. See the
illustration below:
As you can see on the chart, by using Fibonacci
retracement, we found that the area of demand is a golden
zone because it holds the golden ratio. So, this factor of
confluence will give us more confidence in this trade.
Now let’s move to the top down analysis and see if the zone
is in line with the trend or against it, let’s see the daily chart
below:
As you can see on the daily chart, which is the higher time
frame of the hourly, the market is trading down, so the
trend on a higher time frame is against our trade on the H1
time frame.
What should we do in this situation?
In this situation we have two options:
-To ignore the trade if the zone is not strong enough
-To take the trade against the trend if the zone is very
strong, and we have an obvious candlestick pattern signal.
In this case we should take this trade even if it is against the
trend because the zone is very strong, look at the move and
the candle size the both shows the strength of the zone. And
the risk to reward is attractive as well. Besides, the zone
holds the 61.8 golden ratio which makes it stronger. But we
need to wait for an obvious candlestick pattern signal to
confirm our entry. Let’s go back to our trade to see what
happened:

As you can see, when the market approached the demand

zone, we noticed that the price was rejected from this area,
this means that sellers found a powerful level and couldn’t
break it. The tail of the both candlesticks show us how
sellers were rejected from the demand zone.
-The first breakout of the demand zone was another
indication that shows us that sellers were a victim of a bear
trap. And this manipulation or what we call it “false
breakout” is always made by banks and financial institutions
to trap traders, hit their stop loss and then go in the
opposite direction. This is what happened in the chart
above.
-We have a pin bar candlestick pattern that formed in the
demand zone and indicates the beginning of a buying
pressure. That’s what we were looking for. This candlestick
pattern confirms our entry. See the chart below:

As you can see on the chart above, the formation of this

candlestick pattern confirms our entry and encourages us to
place a buy order. So, we place our entry at the close of the
pin bar. The stop loss should be placed below the tail of the
red candle. And the profit target is the next supply zone.
See how we calculate our risk to reward ratio below:
As you can see in the chart above, we use this simple
formula to calculate our risk to reward ratio:
The risk = The Entry Value -The Stop Loss Value
The Reward = Profit Target -Entry Value
So, our risk is 25 pips and our reward is going to be 83 pips
which represents a 3:1 risk to reward ratio. After you
calculate your risk to reward ratio, you need to adjust the
amount of pips that you are going to risk to the percentage
of your trading account that you risk per trade.
Let’s say you have a 10,000-dollar trading account, and you
risk only 3% per trade. That means, your risked amount of
money per trade is 333 dollars which is 3% of your trading
account.
Now let’s adjust the 25 pips risk to 300 dollars to see how
many dollars we will risk per pip, so let’s do the math 333
dollar /25 pips = 13.32 dollars per pip. Let’s say 13 dollars.
So, in this case, you will risk 13 dollars per pip, and in case
your stop loss is hit by the market you will lose 25 pips
which is 300 dollars. That means 3% of your account.
If your risk is more than 25 pips let’s say 100 pips stop loss,
so you will adjust it to the 300 dollars, let’s do the math:
300 dollars /100 = 3 dollars per pip. So, if the market hits
your 100 pips stop loss you will lose 300 dollars which is 3%
of your account.
You need to adjust the number of pips you risk to the 3% or
2% of your trading account that you will risk per trade, this
way, you will not need to tighten your stop loss in order to
avoid losing too much, because your risk will always be 3%
no matter how many pips your risk.
Now let’s go back to our AUD JPY chart to see what happens
next:

As you can see in the chart above, the market goes in our
direction and makes 83 pips profit and provides us with a
1:3 risk to reward ratio. Let’s suppose that you have a
10.000 dollars account, and you risk only 3% of your trading
account per trade. Let’s say you took 10 trades this month
with a 1:3 risk to reward ratio.
That means when the market goes in your direction, you win
9% of your account which 333*3 = 999 dollars. and when
the market hits your stop loss you lose 333 dollars.
Let’s say you took 10 trades this month, and you lost 7
trades, you only won 3 trades, so let’s do the math to see
the magic of the risk to reward ratio.
7 losing trades*333 dollars = 2331 dollars loss.
And 3 winning trade*999 = 2997 dollars profit.
As you can see, even in the worst scenario when you lose
more than 70% of your trades, you finish the month with
over 2997 profit -2331 loss = 666 dollars.
This is the power of the risk to reward ratio, and when it is
combined with supply and demand zones, the results will be
just amazing, because the win rate of this strategy is more
than 80%.
 

Modul-2 : How Emotion Can Affect

Your Trading Results
Most traders spend time learning forex trading strategies
and analysis skills but don’t even bother to learn the
emotional aspect of trading. It is true that technical and
fundamental analysis skills are the aspects of trading that
are commonly talked about on financial news channels and
trading blogs, and they are easier to learn.
However, it is the emotional skills that determine how
successful a trader can become. The truth is that a great
percentage of retail forex traders fail in trading, and the
reason for that is not far from lack of mental discipline and
emotional control.
Emotions are those strong feelings and attachments you
have as a human being. In normal life circumstances, your
emotions are normal ways of expressing yourself, but in the
forex trading world, your emotions may be doing more harm
than good.
In this article, we will look at why you need to control your
emotions when trading and the most difficult emotions that
can hinder your success in trading. Read on!
Experienced traders know that their emotions do not
contribute anything to their trading success, rather, it can
cause them to make some costly mistakes. So, they try all
they can to put their emotions under check and focus on the
thing that matters, which is to properly execute their
strategies without fear or favor.
Trading is a game of odds — some trades will be winners,
while some will be losers — and the way you feel has no
effect on the outcome of any trade. The most paramount
thing is to have a strategy that has an edge in the market —
more winners than losers or bigger winners and smaller
losers.
You should have a strategy that clearly defines the criteria
that must be met before you enter or exit a trade. With that,
you shouldn’t concern yourself with the outcome before
placing a trade, and even after the trade, the result
shouldn’t bother you, as it has nothing to do with the next
trade you are going to take.
Profits shouldn’t bring joy, neither should a loss bring
sorrow. While you can enjoy the fruits of your profits with
your family and friend at a later time, there is no point
entertaining the feeling of achievement when you are in
front of your trading screen. Doing so may lead you to make
unnecessary mistakes that will affect your profitability.
For instance, you may be so excited about the last win that
you fail to identify the next trade setup, or you place
another trade when your trade criteria have not been met.
Similarly, after a losing trade, you may be so worried about
being wrong again that you miss the next trade setup, and if
the setup ends up a winner, you will start regretting why
you never took the trade.
Since the profitability of any strategy depends on taking all
the trade setups that occur in the market and executing
them properly, omitting trades or not taking them properly
will definitely reduce your chances of success. Worse than
that, unguarded emotions can make you to betray your risk
management strategies — trading without a stop loss —
which is the perfect recipe for blowing your trading
account.Thus, the ability to control your emotions is the first
skill you have to learn as a forex trader if you want to
succeed. Not mastering your emotions can sabotage your
efforts.
The emotions that hinder your trading success
  

There are so many emotions that can prevent forex traders

from being successful, and each trader may be dominated
by a different set of emotions. Generally, the most difficult
emotions that hinder traders from being successful in forex
trading include the following:
Fear
Fear is a distressing emotion that is triggered by the feeling
of an impending danger, which may be real or imagined.
When a trader is overcome with fear, he tends to act on
survival instincts without reasoning, and the response is to
stay away from the cause of danger, which in this case is
the situation in the market.
In forex trading, fear can manifest in four different ways:
● Fear of losing: This can make a trader use a tight stop
loss or close a trade before it even has the chance to
play out.
● Fear of being wrong: It can make a trader not to take
the next trade
● Fear of missing out: This can make a trader, who has
been on the sideline, to jump in so as not to miss an
opportunity, and he ends up entering a trade when the
market is about to reverse.
● Fear of letting a profit turn to a loss: Here, the
trader leaves money on the table by taking his profit
too early.
The first step to overcoming any of these fears is to be
aware of them and know when you are feeling any of them.
When you acknowledge the feeling of fear, make efforts not
to act by the dictates of the fear, and instead, follow what
your trading plan stipulates for that situation.
 
Greed
This is an excessive desire to make the most money in the
shortest possible time. In forex trading, greed manifests as
the desire for a trade to produce an unrealistic amount of
profit. It makes a trader stay in a trade for too long, trying to
milk every last pip.
The trader focuses on how much more money he could
make if the price continues moving in his favor and forgets
the possibility of the price turning against him and wiping
out all the profit and even leading to a loss — more like
going from heaven to hell.
To overcome greed, you should understand that unrealized
profits are profits only on paper. A trade can only be a
winner if the profit is booked. But that doesn’t mean you
should take your profits too early (the fear of letting a profit
turn to a loss). Instead, you should have a solid trade
management plan, which is to have a target profit for each
trade or a profit trailing strategy.
Hope
This is the feeling of expectation (which in most cases is
unrealistic) and desire for a specific thing to happen. While
fear is the most common emotion among traders, hope is
the most deadly emotion a trader can have when trading,
and here’s why.
Hope can keep a trader from closing a trade that is not
working out. It is hope that can make a trader not to use a
stop loss, increase his stop loss while already in a trade, or
worse still, practice the martingale strategy — all these can
lead to catastrophic losses and even blowing a trading
account.
If you wish to succeed in your trading career, you should
know this: in the forex market, hope is for the hopeless.
Nobody cares about what your expectations are. You should
trade what you see and not what you expect — have a
strategy and follow it to the letter.
Overconfidence
Having confidence in your trading strategy and your ability
to execute it is good when trading, but overconfidence can
be very bad for you. Overconfidence is that feeling of
invincibility you get when you are on a winning streak.
The euphoria that comes after every win can make you start
seeing trading as a riskless adventure, which can lead to
making poor decisions in the subsequent trades — for
example, trading bigger lot sizes. It often ends with a
catastrophic loss.
When you are on a winning streak, you should know that
you are not invincible, so you should be more cautious.
Don’t increase your lot size because you are on a winning
streak. Rather, follow your trading plan and only increase in
accordance with your account balance.
Inability to pull the trigger
This often shows that the trader lacks confidence in his
strategy and his ability to properly execute the strategy. It
can also be as a result of a perfectionist attitude — analysis
paralysis.
When a trader is unable to pull the trigger because he is
afraid that the trade may not be a winner, he will end up
missing the trade, and if the trade moves in the anticipated
direction, he may start chasing the trade and end up losing.
To avoid this condition, back-test your strategy, and if it is a
profitable one, forward-test it in a demo account until you’re
convinced that it is profitable. Then follow it strictly.
Exiting a trade prematurely
This occurs when a trader has the fear of letting a profit turn
to a loss. A trader develops this attitude after watching his
profits get wiped out on many occasions, probably out of
greed.
But prematurely exiting trades isn’t the solution. Rather, it
limits the trader’s potential for success over the long term
because the risk-reward ratio will be against him.The best
solution is to have a profit target that is at least twice the
risk or to use a trailing stop.
Indiscipline
Lack of discipline will often lead a trader to make careless
mistakes when trading. The mistakes can range from
putting the wrong lot size or entering the wrong order to
forgetting to put a stop loss or missing out a crucial element
of his trading rule.
To improve your ability to be disciplined and strictly follow
your trading plan, you need to keep a copy of your trading
rule in front of you when trading. Also, create a checklist
that you must tick before taking any action in the market.
Lack of commitment
When a trader is not fully committed to his trading, he tends
not to take his trading seriously. He trades only when he
feels like trading will be fun, but trading is a serious
business and not a hobby.
The problem with not being committed to your trading is
that you will miss a lot of trade setups that your strategy
has identified. And, since the profitability of the strategy is
premised on taking all the trades identified by the strategy,
randomly trading some setups may skew the outcome.
Lack of focus
If you are not completely focused on what is happening in
the market when you are trading, your chances of making a
big mistake are high. Trading is mentally tasking because
the brain is processing so much information at the same
time, so there is no room for distractions.
To enhance your ability to focus on the market, your trading
room should be serene. It should only have the things you
need for trading and nothing else.
Impatience
A lot of traders are naturally impatient in everything they
do, and trading is no different. But patience is a necessary
virtue for any trader who aspires to be successful.
An impatient trader is more likely to jump the guns (enter a
trade when the setup hasn’t fully formed), move the stop
loss to breakeven too early and get spiked out, or close a
trade prematurely.
The best way to prevent these situations is by strictly
following your trading plan, making sure that you act only
when the criteria for the action are met.
Anxiety
This can come from not being sure of which trades to take
and how often to trade, and it follows a prolonged period of
losing streak. Anxiety is a state of panic or apprehension
which reduces your ability to think clearly and make sound
trading decisions.
Most of the time, anxiety gives rise to trading erratically
without a strategy, and the result will be more losses and
more panic. To control anxiety during trading, you can try
some relaxation techniques, like deep breathing, yoga,
mindfulness exercises, and emotional freedom technique
(EFT), or you can take a break.
Regret

Regret is that feeling of disappointment or sadness you get

when something has not happened the way you wanted it.
For example, when you take a huge loss and the market
turns back immediately or when you refuse to take a trade
and it turns out to be an easy winner.
The implication of this emotion is always thinking about the
past and not looking for future opportunities. Regrets can
lead you to miss more trades because you won’t see them.
But most importantly, it can make you shift your stop loss
next time or chase a missed trade.
To be a successful trader, you must learn how to always put
the past in the past. Learn from your mistakes and move on.
Final words
Although your emotions are normal feelings that express
what is going on inside of you, when left unchecked during
trading, they can be your worst enemies. It is best you
understand them and try to be aware of them when trading.