How to trade a demand zone

Confirm the zone pattern

Open the zone on its native timeframe and verify it's a true Drop-Base-Rally or Rally-Base-Rally. You're looking for two strong legs flanking a tight 1–5 candle base.

Skip if: the base is wider than either leg, or the legs are choppy with overlapping candles.

Check freshness

Scroll forward from the zone. Count how many times price has revisited it. Trade only zones with 0 or 1 prior tests. After 2+ tests the institutional orders are mostly filled and the zone behaves like noise.

Verify multi-timeframe alignment

Switch one timeframe higher. Confirm no opposing supply zone sits immediately above the entry. If a higher-timeframe demand zone also covers the same region, the setup is MTF-aligned — statistically the highest-quality category.

Mark entry, stop-loss, target

Measure risk-reward — target distance ÷ stop distance. Skip the setup if it's below 1:2.

Size by risk, not capital

Fix your per-trade risk first — most retail traders use 0.5% to 1% of trading capital. Position size equals risk amount divided by (entry − stop-loss). Never size by available margin; the stop-distance must determine the lot size.

Place the order

Use a buy-limit order at the proximal line — let price come to you. Place the stop-loss order at the same time so the trade is bracketed before you walk away. Do not chase.

Manage the retest

If price enters the zone and rejects with a strong reversal candle, the setup is confirmed. If price slices straight through the zone with no reaction, the zone is invalidated — exit at the stop with no second-guessing.

Once price moves 1× the initial risk in your favour, trail the stop to break-even. Many traders also take partial profits at 1:1 to lock in the position.