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Trading on Supply Demand

Arjun Bakshi

Introduction

Charts represent filled orders over a period of

time.

Our job is to find the areas where maximum unfilled orders are located.

Some candles represent accumulation of

orders & others represent consumed orders.

Boring candles Supply-Demand in Balance.

Institutions are most probably accumulating orders

Exciting Candles- Imbalance between Supply & Demand found at the origin of these candles.

Institutions DON’T CHASE PRICE. So, there is less institutional activity in these candles.

Boring candle -> Body of candle<= 50% of Range

of candle

Exciting candle -> Body > 50% Range

Arjun Bakshi 4

How do prices turn?

Prices turn when there is an imbalance of

Supply & Demand

Our job is to locate these areas of imbalance

An explosive move followed by a base followed by an Explosive move represents this

area of imbalance

How do these look on the chart?

Setups

Rally Base Rally

Drop Base Drop

Rally Base Drop

Drop Base Rally

Rally Base Rally

Rally Base Rally Arjun Bakshi 7

Drop Base Drop

Drop Base Drop Arjun Bakshi 8

Drop Base Rally

Drop Base Rally Arjun Bakshi 9

Rally Base Drop

Rally Base Drop Arjun Bakshi 10

Multiple Timeframes

Multiple time frames are necessary to provide

a correct perspective of the overall market.

Higher time frame - Range

Intermediate Time Frame - Trend

Lower Time Frame - Execution

Use a factor of 5 approximately

For Equity Markets

   

Trading Style

 

Positional

Swing

Intraday-1

Intraday-2

 

Range

Monthly

Weekly

Daily

60

min.

Trend

Weekly

Daily

60

min.

15

min.

Timeframe

Execution

Daily

60-240 min.

15

min.

5 min.

Higher Timeframe

RANGE

Look for untested Demand & Supply Zones on

the Range Timeframe.

Demand zone will be below CMP

Supply Zone will be above CMP

Divide the area between the Demand &

Supply zones into 3 equal parts

ONGC Example

ONGC Example Arjun Bakshi 14

Intermediate Timeframe Trend

Check the trend on intermediate time frame.

Can be based on whatever you are comfortable with.

Ex:- Moving Averages, ADX +DI/-DI, Price action, etc. Just be consistent with whatever

you are using

Lower time frame Execution

If price is Hi or very Hi in Range time frame, look for

opportunities to short in good quality Supply zones

If price is Low or very low on Range time frame, look for opportunities to go long in good quality demand

zones

If price is in equilibrium, trade in direction of trend of Intermediate timeframe.

Example, if price is in equilibrium & trend on intermediate timeframe is Up, then look for going long in good quality demand zones.

Target- Opposing level of Demand/ Supply. Can also

look at monetary tgts or R:R tgts.

ONGC Example Execution Timeframe

ONGC Example Execution Timeframe Arjun Bakshi 17

Good Quality Zone

Will have less than 5-6 base candles

Will have a very powerful leg out Wide body candles, gaps.

Ideally should be untested or very faint test of the zone

Nifty Day trade for 10/8/2015

Nifty Day trade for 10/8/2015 Arjun Bakshi 19

Nifty Trend 60 min.

Nifty Trend 60 min. Arjun Bakshi 20

Nifty Trade-1

Nifty Trade-1 Arjun Bakshi 21

Nifty Trade-2

Nifty Trade-2 Arjun Bakshi 22

Thanks for Reading