Once in a while, I will get an email from someone saying, “I like your supply and demand strategy but what strategy should I use in trending markets?” This person thinks the strategy is only for markets going sideways where they use supply and demand to pick tops and bottoms. What this person doesn’t realize is that we use supply and demand as the core strategy for any market, time frame, and market condition. We always want to buy at price levels where demand exceeds supply (where banks and institutions are buying) and sell at price levels where supply exceeds demand (where banks and institutions are selling).
The grid above is a good summary of what action to take in each of the three types of trend/market conditions. The ideal trade for the Online Trading Academy trader is to buy a pullback to a fresh demand level in the context of a larger time frame uptrend. Conversely, to short a rally in price to a fresh supply level in the context of a larger time frame down trend. For a real live trading example of trading with the trend, let’s go to… Continue Reading
