Supply and Demand Trading Quiz: Test Your Knowledge

Question 1

Why do supply and demand zones so often produce a reaction the first time price returns to them?

Accepted Answer

A large order that could not all be filled at one price leaves resting orders behind, which defend the area on the return

Question 2

How does a supply or demand zone differ from traditional support or resistance?

Accepted Answer

A zone is a band drawn around the base that produced the move, not a single price

Question 3

Which retest of a zone carries the highest odds of a reaction?

Accepted Answer

The first retest of a fresh zone that price has not returned to since it formed

Question 4

What does a sharp, almost vertical move away from a zone tell you?

Accepted Answer

The imbalance was real, one side was overwhelmed, making it a higher quality zone

Question 5

When drawing a demand zone, where do the proximal and distal lines go?

Accepted Answer

Proximal at the top of the base nearest price, distal at the extreme low of the base or the wick into the move

Question 6

According to the article, what is the single biggest improvement you can make to zone trading?

Accepted Answer

Only trade zones that align with the trend: demand zones in an uptrend, supply zones in a downtrend

Question 7

On a confirmation entry at a retest, where does the stop belong?

Accepted Answer

Just beyond the distal line, the point at which the zone has objectively failed