A BEGINNER'S GUIDE TO
Supply and Demand Trading
Most traders chase indicators. The SDD Method starts somewhere simpler: price moves because buyers and sellers disagree. This guide explains the core ideas behind supply and demand trading — and how the SDD framework turns them into a repeatable process.
01
What is a supply zone?
A supply zone is an area where significant selling pressure entered the market, causing price to move lower. When price returns to that area, sellers may show interest again — which is why price often reacts there. Supply zones mark where sellers were once in control.
02
What is a demand zone?
A demand zone is the opposite: an area where significant buying pressure entered the market, causing price to move higher. When price revisits that area, buyers may step in again. Demand zones mark where buyers were once in control.
03
Why zones are not exact lines
Markets do not reverse at a single precise price. Orders are filled across a range, so supply and demand are areas — zones — not lines. Thinking in zones keeps you from demanding perfection from a market that never offers it.
04
Where divergence fits in
Markets are correlated. When two instruments that normally move together start to diverge, it reveals which side is truly in control. Divergence is the third pillar of the SDD Method: a zone tells you where to look, and divergence helps confirm whether the move has real strength behind it.
05
Putting it together: the SDD framework
Supply tells you where sellers may be waiting. Demand tells you where buyers may be waiting. Divergence tells you whether the move is genuine. Combined, they form a framework for executing the market with precision — not prediction, but preparation.
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