Supply & Demand July 2018 @fxfapd Page 1

SUPPLY
&
DEMAND
Beginner’s guide to Supply & Demand
in Forex

@fxfapd
#forexfamily (class of 9/2017)
 Supply & Demand July 2018 @fxfapd Page 2
ABOUT ME (@fxfapd)

SUPPLY
Been trading on and off for 19 years. It all started with taking a semester off of
college to work on wall street as a broker trainee. Life hit me and I could not do
it full time. Trading is my passion, but not yet my career. I hope to one day be
able to do it full time while traveling around the world with my wife. I have a
stable career and am very successful in my field, which pays the bills and allows

&
my family to live the quality of life we do, so I’m not unhappy. However, I won’t
stop until I’m doing what I LOVE full time.

WHY DID I START THIS “DYNAMIC” DOCUMENT

DEMAND
This is going to be a dynamic document to which I will continue to add
sections/chapters as my personal development using supply and demand
evolves. I gave my word to the best trader I’ve ever known that I would give
back when he accepted me into his group. No offense to anyone, but he is the
hardest working one I’ve ever seen, tirelessly giving back to the family multiple
times per day on the webinars he hosts. If you don’t know who I’m talking
about, you are not part of the forex fam and you should seriously consider
joining. From the ringleader who created his own brokerage for the fam to
trade, to some of the mentors that continue to give back, to the successful
members that do the same…THANK YOU!
Beginner’s guide to Supply & Demand
in Forex
TARGET AUDIENCE

Members of the family that are confused or have heard of supply/demand but @fxfapd
have no clue what it really is or understand it. Join me on my journey, as
supply/demand has completely changed my view on the market and it feels #forexfamily (class of 9/2017)
like I have a cheat sheet to how the banks trade. If you don’t understand basic
trading principles, go back to the drive and study, then come back to this when
you have done your homework.
Supply & Demand July 2018 @fxfapd Page 3

What is Supply & Demand

Price only moves up or down because there is an imbalance/disparity of buyers and sellers. When we see price ranging, its
because neither buyers nor sellers have the upper hand. When we see price shoot up/down in one direction, that’s when we
have more of one over the other (imbalance). The candles we see on our charts illustrate this movement.

Demand (wholesale)
Demand is where buyers are willing to buy. Every
trading book we have ever read has shown us that
this area is called support. However, its not
“support”. It is the area where there are more
buyers and they deem this level (price) to be a good
one for them to go ahead and buy.

Supply (retail)

Supply is where sellers are willing to sell. Every

trading book we have ever read has shown us that
this area is called Resistance. However, its not
“resistance”. It is the area where there are more
sellers and they deem this level (price) to be a good
one for them to go ahead and sell.
Supply & Demand July 2018
Trading with the banks
As retail traders, we have to find these imbalances at
price levels where the banks are getting in/out and trade
with them, not against them. As Ted would say, “pick up
the crumbs” that the banks are leaving behind. In the forex
world, those crumbs can be as big as you want them to be,
but you will not be able to become a big fish like the
institutions. The quicker you realize that the better.
Remember, when an institution wants to buy, they cannot
get ALL of their orders filled, since they need a sucker (new
retail traders) to sell to them. As price goes up and they
suck up all of the sell orders, everyone jumps onboard
because they want to trade with that trend. Eventually,
price will reach an area of supply, where there are willing
sellers. As price goes the other way, here comes the
bandwagon again, everyone starts selling. As price drops
back down to the original demand level created by the
original buy orders, the banks go ahead and get the rest of
their buy orders filled, pushing price back up. To make it
simple, think about a breakout up from consolidation.
People always tell you to “wait for a retest”. That retest is
where the banks have their unfilled orders waiting to be
filled. That imbalance creates price to reject the price level.
Look at all of the great traders in the family, they always talk
about “waiting for price to retest the zone”. Its all the same
@fxfapd Page 4
to me now….its just supply/demand imbalances.
TRADE WITH THE BANKS, AND DON’T BE THE SUCKER
ON THE OTHER SIDE OF THEIR TRADES.
News
I now see news as a catalyst to get us to our supply/
demand zones quicker and I have learned to set limit
orders at these price levels. You want to see visuals? Go
back and take a look at some of Rakeel’s news webi’s.
When he backtested major news (NFP), notice the
conclusion was to wait for price to hit a “zone” and reverse.
I have attached this thought process to supply and
demand.
Top-Down Analysis
Its very important to complete a top-down analysis
before setting up your trade. Supply/Demand zones exist
in all time frames. I personally take my trades based off of
Supply/Demand zones identified on the 1 hr. I do check
the HTF to determine trend. If we are in an uptrend, I look
at buy opportunities off of demand zones. The opposite is
true for HTF downtrends where I look for trades off of
supply zones.
 Supply & Demand July 2018 @fxfapd Page 5

What are “fresh” Supply/Demand Zones

You will often look at my charts and see that I’ve plotted “Fresh Supply” or “Fresh Demand” zones. Don’t overthink it. Its simple
but very very important. If price has not come back to test the supply/demand zone plotted, then the zone is considered fresh.
These are higher probability trades, as there are most likely unfilled orders in that zone waiting to be filled. In the trade below, I did
not get in when price first got into the zone, so on the second retest into the zone, I waited for confirms on lower TF to get in. The
ONLY time I use limit orders is when we have FRESH zones that have not been tested.

How to draw supply/demand zones

In the upcoming pages you will see examples of supply/demand zones and how to identify them. I want to take a little time
and explain exactly where to draw your lines. At a technical level, you have Proximal and Distal lines. Let’s take a demand zone for
example. The proximal line is closest to current price and is drawn going across the highest close in the zone. The Distal line is
furthest away from current price and is drawn at the low of the consolidation (lowest wick, not close). The opposite is true when
drawing your lines for supply zones
 Supply & Demand July 2018 @fxfapd Page 6
Take Profit and Stop Loss

Now that we have discussed how to get into the trade, lets discuss S/L and TP. Let’s take the example of the trade off demand
below. The S/L is right below the Distal line. T/P is AT LEAST 3:1. The difference between the proximal and distal line in the size of
your zone. In this example, the zone is 23 PIPS. I will not take a trade with TP less than 69 pips away from my proximal line (entry).
So if you plan out a trade and you have a supply zone less than 3:1 away from your demand zone trade, don’t trade it. Going 2:1 or
1:1 is not in my trading plan. Minimum for me is 3:1.
Supply & Demand July 2018 @fxfapd Page 7

Drawing S/D zones in Continuation Patterns

Rally Base Rally (RBR) Demand Zones Drop Base Drop (RBR) Supply Zones

Rally Base Rally, a continuation pattern, is when price goes up, then consolidates, and takes off
again going up on the second leg. That consolidation area then becomes the demand zone. If
price comes back to this zone, then you would look to buy. I remember learning about this as FTB
and FTR. Now I know its just supply/demand imbalances. In the trade below, I mapped out a RBR
demand zone and waited for price to come back there for the first time during uptrend. It took 4
days, but price rejected the demand zone nicely for a 3/1 win ratio. DBD is just the opposite with
the base creating a supply level instead of demand level.
 Supply & Demand July 2018 @fxfapd Page 8

Drawing S/D zones in Reversal Patterns

Drop Base Rally (DBR) Demand Zones

Drop Base Rally, a reversal pattern, is when price price goes

down, consolidates, and reverses back up for the second leg.
The consolidation area then becomes a strong demand zone. If
price comes back to this zone, then you would take buys. Rally
Base Drop is just the opposite. Price shoots up, consolidates,
then comes back down. The consolidation area is considered
the supply zone. Supply/Demand zones in reversal patterns I
believe are actually stronger than in continuation patterns. In
the trade on this page, I mapped out a DBR demand zone
during a strong uptrend on HTF. As you can see, I took a loss on
the supply zone due to not paying attention to HTF bulls.
 Supply & Demand July 2018 @fxfapd Page 9

Rally Base Drop (RBD) Supply Zones example

Here is an example of a RBD supply Zone

trade. Its the exact opposite of DBR
Supply & Demand July 2018 @fxfapd Page 10

Conclusion (for now)

I joined the forex family after years of wasting my money on programs and holy grails that never and will never exit. I’ve
learned more from my fellow traders and Rakeel’s webinars in the last 10 months than I’ve learned in 19 years of getting
ripped off and trying it on my own. Never have I ever asked Ted a single question personally and I’ve learned sooo much
from him and all of the content on the drive. Stop the excuses, its all in there. I’ve put hard work and my hard earned money
into mentors that got me nowhere. I’ve been profitable with supply and demand because I’m finally on the right path of
learning how to trade with the banks instead of against them. I joined Instagram just because I noticed its how most traders
nowadays communicate and share their trades. However, I am seeing a culture being created out there of people
misrepresenting their own gains. If they put that effort into documents like this one, we could really help even more people
out there. Stay tuned, and hopefully this can help some of my fellow traders......

@wicksdontlie @uncle_ted_ @emasdontwork

Again…..THANK YOU!