Logically understanding the supply and demand zones are one of the prominent stages in forex trading.
Some topics in the world of forex may out of your trading style, but your ability to identify supply and demand zone make sure your success in the market. The relationship between supply and demand is strong this may be difficult to understand exactly how this takes place and how it would help the trader’s success?
Because trading is simple, not easy.
We will look into how traders can begin to use supply and demand for their advantage.
SUPPLY AND DEMAND.
The price for a particular asset will fluctuate until it reaches a value where the amount demanded by consumers is equal to the amount supplied by producers.
This is known as an economic equilibrium.
Four laws of supply and demand:
1. If the demand increase supply remains unchanged, a shortage occurs, leading to the higher equilibrium price.
2. If the demand decreases supply remains unchanged, oversupply/surplus occurs, leading to the lower equilibrium price.
3. If the demand remains unchanged supply increases, oversupply/surplus occurs, leading to the lower equilibrium price.
4. If the demand remains unchanged supply decreases, a shortage occurs, leading to the higher equilibrium price.