Demand is the quantity of a product wanted, and supply is the quantity of a product available to offer. Supply and demand in trading are also the same. Based on the general price rule, if the demand for security is high in the trading world, its prices will increase. And when the demand goes down, its price will decrease. This is simply a factor of a limited number of shares in circulation. Investors need to find out where the price starts to change and where it ends. So that they can buy and sell shares to maximize their short-term gains especially in intraday trading.
Trading involves building your buy and sell calls on fundamental and technical analysis. Technical analysis is an important tool to understand the movement of a stock over a period of few days and predicting the movement in price. The terms and conditions in e-commerce platform for share trading should clearly state the risks involved in share trading and the responsibilities of the platform and the trader. Many people like to try and open a free trading account especially for understanding intraday trading meaning and how it works.
Supply Zones
When the price of a particular stock starts to fall, and there is a significant number of sell positions, the stock starts its downward movement. It shows stocks are losing their value. It is the supply zone. This point is known as the distribution zone.
In other words, when the stock price hits the supply zone, the market is in a bearish phase. Thus, supply zones are also the point of origin for bearish market momentum. This is the broad area of resistance wherein supply surpasses demand. As an intraday trader, this is the best time for you to go short. Online trading in India has gained more volumes owing to these concepts. You can use the money by opening FD account online to fund your share trading activities.
Two simple price patterns that help you identify supply zones are:
- Rally Base Drop : In this pattern formation, the price rises, moves sideways within the supply zone base and then drops below it. The price may rally again and then fall. In short, the price goes on forming lower and lower troughs.
- Drop Base Drop : In this pattern formation, the price falls and then moves horizontally for some time. Thereafter, it dips again.
Both the above mentioned price formations indicate a bullish trend reversal or continuity of a bearish trend.
Demand Zones
When the stock price stops falling further at a specific level and starts to move sideways for a while, It is known as the demand zone. It is the point where price reverses. It means the stock is getting its demand back, and the stock can move up. It shows that the stock is seeing accumulation. Demand zones are also known as the Accumulation Zone. The share price of a company that manufactures innovative product packaging may increase due to increased demand for its products.
These zones show the liquidity of a stock at a specific price. Entry of the stock price into the demand zone signals the beginning of a bullish trend. This is also the broad area of support wherein demand overtakes supply. This is the best time for you to take long positions in the market during intraday trading.
Two simple price patterns that help you identify demand zones are:
- Rally base rally : In this pattern formation, the price starts rallying and then moves horizontally within the demand based for some time. Thereafter, it starts rising again.
- Drop Base Rally : In this price pattern, the price falls first. Then, it moves sideways or horizontally for some time. Thereafter, it starts rallying.
Both the above pattern formations indicated a bearish trend reversal or continuity of a bullish trend.
The general rule is that the lesser the time spent by the price at a level, the stronger is the level and vice-versa. There are many other price patterns and candlestick formations that help you in identifying demand and supply zones. The demand and supply zones are usually right below the support and resistance levels respectively. Many technical indicators help you in identifying support and resistance levels. Some of the commonly used oscillators for this purpose are Fibonacci pivot points and retracement levels. Oscillators like RSI, MACD, Stochastic oscillator, etc also give you insights into the demand and supply scenario in the stock market.
Brokerage fees
As an investor in stock markets, your prime transaction cost is brokerage charges. So you must choose a service provider who charges low brokerage fees.
They offer three annual subscription plans that reduce up to 99% of brokerage charges on intraday and delivery trades.
You can opt for a plan that is most suited to your investment requirements. If you are a beginner with low trading volumes, opt for the freedom pack which allows you to open an online Demat account and trading account for free. Moreover, there is an AMC (Annual Maintenance Charges) waiver on Demat Account for the first year with the Beginner pack. The Professional pack is for experienced traders and those who wish to opt for MTF (Margin Trade Financing).