Tuesday, June 20, 2017
Trading traps in the stock markets Supply and Demand
The next and most important point is that often times right above or below these new highs and lows are supply and demand levels which act as repellants to those new buyers or sellers. If you look closely inside those larger time frame candles you will discover those pockets of buy and sell orders just waiting to get filled. This saying references the notion that when the market looks very good, this is usually when it blows up. This is not limited to going long; shorts also find huge reversals to the upside just when the market looks as though it’s ready to fall off and head down. You will see this time and again as the markets are full of traps that the unsuspecting new trader is prone to falling prey to. The cycles will be more stable on longer term charts, but knowing the cycle can assist you in your trading. If you see price approaching a supply or demand level but the cycle is not indicating a top or bottom, the level may have a higher probability of breaking. But if the cycle top or bottom is near, the levels are more likely to hold.