Supply and demand trading is a popular method in technical analysis used by traders to identify potential market turning points by analyzing price action and the behavior of buyers and sellers. This approach relies on identifying areas on a price chart where the supply (resistance) and demand (support) are believed to be significant enough to cause a price reversal or continuation.
How the script work:
1. This script find four patterns, RALLY-BASE-RALLY (RBR), DROP-BASE-DROP (DBD), RALLY-BASE-DROP (RBD) and DROP-BASE-RALLY (DBR).
2. Above pattern create maximum 4 base candle and leg out candle size is double than base candle zone.
3. For supply zones, if supply pattern has one base candle then we use distal line above base candle high and proximal line below base candle low with buffer and if there is 2 to 4 base candle then we use body’s low for proximal line and highest base candle high for distal line with buffer.
4. For demand zones, if demand pattern has one base candle then we use proximal line above base candle high and distal line below base candle low with buffer and if there is 2 to 4 base candle then we use body’s high for proximal line and lowest base candle low for distal line with buffer.
5. In this script Risk management and Money management is automatic calculated.
6. In this script Supply and Demand zone quality calculated in the scoring.
7. In Scoring system we used five element –
a. After base candle move
b. Before base candle move
c. Gap
d. Volume
e. Base candle count
8. Total score is 10+10
9. This indicator work all market,stock, forex and future and works on all timeframes
10.no repaint
How user can make profit using this script:
1. User can find Supply and Demand pattern
2.Entry Point
a. For Demand zone (DBR and RBR) When the price reaches in the zone (Below the proximal line) then enter the trade.
b. For Supply zone (DBD and RBD) When the price reaches in the zone (Above the proximal line) then enter the trade.
3. Place a stop-loss order just below the demand zone (Distal line with Buffer) for a long trade or just above the supply zone ( Distal line with Buffer) for a short trade to limit potential losses.
4. Set a take-profit level at the indicator setting (If our risk reward 1:2 then enter 2 in TARGET setting)
5. If the score is 7+9 or above it is better for trading. Scoring system very useful for finding quality trade. Scoring system improve trader’s winning ratio.
6. Manage Your Risk
a. Position Sizing: User can automatic calculated position sizing in this indicator. So risk only a small percentage of your trading capital on any single trade (e.g., 1-2%).
b. Risk-Reward Ratio: This indicator can do automatic calculated. Aim for favorable risk-reward ratio, typically 1:2 or higher. This means the potential profit should be at least twice the potential loss.
Example
https://www.tradingview.com/x/RFehEapL/
1.In the label ST for Stop Loss, 178.94 is stop loss price, 1.07 is stop loss point and 2000 is trading risk in the money.
2. In the label S for Short, 177. 84 is selling price, Q for Quantity, 1874 is share quantity.
3. In orange label see A = 10 & B = 9 Zone Score.
4. In the label T1 for First Target, 172.54 is First Target price, 5.33 is First Target point and 9998 is profit in the money.
5. In the label T2 is Second Target, 167.21 is Second Target price and 333341 is trading money needed for this trade.
6. RBD word means RALLY-BASE-DOWN pattern.
********A=5,B=7 and C=1 This score get better results********
********LEG OUT Candle strength setting 3 is good for quality zone*********