Supply/Demand Discovery

Overview

The supply and demand trading strategy is a widely known approach that enables traders to assess and capitalize on the trading decisions made by significant market players such as banks or funds, whose substantial positions hold considerable influence on the market.

Regrettably, every trader has their way of identifying supply and demand zones, and paradoxically, they cannot provide a definite and clear answer about their rules when asked, making it almost impracticable to develop a top-notch supply and demand indicator for NinjaTrader.

For this reason, ninZa.co embarked on a mission to create a demanding NinjaTrader indicator for the community, and as a result, the Supply/Demand Discovery became our accomplishment and source of pride, being one of the few rare supply and demand indicators available for NinjaTrader 8 and potentially the most precise of them all!

What makes our version exceptional is that it avoids the error commonly found in other supply and demand indicators for NinjaTrader. Unlike the others that merely draw supply/demand zones from market tops/bottoms, our indicator does not make this mistake, which renders supply/demand zones the same as support/resistance (which is already covered by Market Extremes). It is essential to understand that supply/demand and support/resistance are distinct concepts and not interchangeable, and this fact is critical for traders to grasp.

Our NinjaTrader 8 supply and demand indicator accurately depicts the supply and demand mechanism, which are the two driving forces behind price discovery in all markets. The following are the proper definitions of supply and demand zones:

• A supply zone is where the supply overtakes the demand, resulting in the dominance of sellers. This causes a significant drop in price.
• A demand zone is where the demand overtakes the supply, resulting in the dominance of buyers. This causes the price to soar.

One crucial distinction between supply/demand zones and support/resistance is that the former can appear not only at the market tops or bottoms but also in the middle.

Our exceptional NinjaTrader 8 supply and demand indicator identifies supply/demand zones by scanning for substantial price movements within a brief period. This is reflected on the chart as a rapid increase or decrease in price. This indicator enables traders to customize the criteria for a significant price move, such as requiring at least three ninZaATR within three bars or ten ninZaATR within seven bars.

Supply/Demand Discovery has numerous benefits for various trading styles, including:

• Reversal trading: In the event of a false breakout, there is a high probability of a successful reversal.
• Support and resistance: Supply and demand zones act as natural support and resistance levels.
• Stop loss and take profit: To manage risk, traders can place their profit target ahead of a zone and set their stop order behind a zone.

For a more in-depth understanding of this significant topic, please refer to the excellent article below → 6 Secrets for Supply/Demand Trading.

Dedicated NinjaScript signals:

• Signal_Supply:
  • 0 = no signal
  • 1 = touch
  • 2 = return
  • 3 = break
• Signal_Demand:
  • 0 = no signal
  • 1 = touch
  • 2 = return
  • 3 = break

Media



Supply/Demand Discovery

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Changelog

• 14 Jan 2022 – Default calculate mode has been set to “OnBarClose”.
• 01 Jan 2022 – Alerts & markers were added for supply/demand zone return & break; dedicated NinjaScript signals were added for supply/demand zone touch, return, break; supply/demand near & far prices were plotted; the option for minimum distance between zones was added.
• 31 Aug 2020 – Regular ATR was replaced with ninZaATR for better performance; massive changes, fixes and improvements were made (DPI, display name, Z order, alert properties, chart info, property naming/positioning/grouping); alert popup was visually enhanced; bar painting was added.
• 06 Jan 2020 – A minor issue was fixed.
• 27 Dec 2019 – The indicator was released (build new).