Supply and Demand Trading Basics for Newbies |
Posted: April 23, 2019 |
So, you have finally decided to jump into the world of trading! What can be better than the ‘Supply Demand’ trading to get started? If you are new to the Supply & Demand Trading, then this article will help you understand the basics of it. Let us get started to understand the Supply and Demand trading basics for newbies. What is Supply & Demand Trading?As the name suggests, this type of trading that revolves around the basic principle of economy, i.e. Supply & Demand. Supply is defined as the measure of the availability of any commodity at a given time. Demand, on the other hand, is defined as the measure of ‘want’ of a commodity at any given time. As the supply increases, the price of the commodity goes down, as the demand increases, the price goes up. Supply-Demand trading revolves around marking ‘zones’ of supply and demand on the chart before placing a trade. This activity is usually done by identifying points on the charts where price has made a strong advance or has seen a sharp decline. Some Important Terms to UnderstandDemand The ‘Demand Level’ on the chart depicts strong buyers for the commodity in question. Demand level is the price of the commodity below the current level, at which the price is supposed to go upward. At the Demand Level, the fall in the price is slowed down as price nears it, and it is expected to go up as the demand is thought to be the strongest there. Supply The ‘Supply Level’ on the chart depicts strong sellers for the commodity in question. Supply level is the price above the commodity, beyond which it is only expected to fall. Supply shows the area of strong sellers and weaker buyers. The price rises sharply, slowing down as price nears the supply level. From there, it is expected to go down as the supply is thought to be the strongest. Demand level is associated with Buying, Bullish and Bulls. Supply level is associated with Selling, Bearish and Bears. How can you get started with Supply & Demand Trading?If you wish to be a successful trader, supply and demand trading is the way to go. Though, it is highly recommended that you get educated via a reliable trading course and mingle with other experienced supply and demand traders. Doing this will enable you to get started in this industry with an edge. Good luck!
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