The Shved Supply and Demand Indicator For MT4
The Shved Supply and Demand Indicator For MT4 wants to help the trader to find supply and demand zones. The concept of supply and demand zones is a little bit different from the concept of support resistance zones.
Demand zones (often equated with support) develop at price levels where a prior price rally (strong upward move) started. The supply/demand theory says that in the price zone where the rally started there have to be many unfilled buy orders in the market. Therefore, if the price moves back again into the demand zone, then there is a higher chance that the price will get rejected from the demand zone and will move upward again.
Supply zones (often equated with resistance) develop at price levels where a prior fast downward move started. According to the supply/demand theory in that zone there must be a lot of unfilled sell orders in the market. Should the price move upward again into the supply zone, then according to the theory, the price has a higher probability to get rejected to the downside again.Even the developer of the Shved Supply and Demand Indicator For MT4 equated demand zones with support zones. And he also equated supply zones with resistance zones. Because the names support and resistance are better known in the retail trading world I will also use the same names for the drawings of the The Shved Supply and Demand Indicator For MT4 as the developer did: Support and Resistance
Trading With The Shved Supply and Demand Indicator For MT4
The boxes that the Shved Supply and Demand Indicator For MT4 should not be traded without confirmation. This means, that you should not blindly place a limit sell order at every box that gets drawn above the actual price. Those boxes are not strong resistance price levels.
However what I recognized in the visual mode of the strategy tester is that you can use the Shved Supply and Demand Indicator For MT4 very profitable if you wait for a verified supply (resistance) zone. This means that the indicator has started to draw a supply (resistance) zone and then you wait until the price moves into that zone again and (this is very important!!) the price gets rejected downward again.
If that happens, then you can jump onto a high probability downward move.
The following screenshot shows 1 successful sell trade and 1 sell trade which is in development.
In the upper part of the chart you can see the first (completed and successful) trade. You can see where Shved Supply and Demand Indicator For MT4 started to draw the red supply (resistance) zone.
Then the price moved lower before it started to move back upwards into the supply (resistance) zone. After the price got rejected downward again, the Shved Supply and Demand Indicator For MT4 renamed the box as "Verified Res). The downward rejection gives you the sell entry signal. This sell trade was a nice trend continuation trade.
In the lower part of the screenshot above you can see the second trade. The sell entry could now be done because the pullback to the upside seems now to be completed and the downward move could start.
In the following screenshot you can see the result of the second trade (again a winner indicated by the Shved Supply and Demand Indicator For MT4):
The same concept but in opposite can be applied for buy trades.
The Shved Supply and Demand Indicator For MT4 starts drawing a demand (support) zone. The price moves upward before it comes back down into the demand (support) zone again.
Now it's very important that a rejection to the upside occurs again. Then you can jump onto a buy trade during e.g. the first pullback after the rejection.
The following screenshot shows the moment where you could have entered the trade. The stop could have been placed below of the demand (support) zone:
And the next screenshot shows the result of this trade, a nice winner on the subsequent upward move:
Shved Supply and Demand Indicator For MT4 Conclusion
By waiting on verified supply/demand zones which are indicated by the Shved Supply and Demand Indicator For MT4 you can have a profitable trading strategy.
As always in trading, it helps to have an eye on the bigger picture (higher time frames) to raise the quality of your trades.