Entering the trading universe can be downright terrifying to a person who has no clue what to do. With so many indicators, patterns, and conflicting opinions available on the internet, new traders become confused, stressed, and ultimately lose money. They can’t seem to come across a system that consistently delivers, let alone one that is simple enough to understand and utilize without having spent decades in the business.
But suppose there was a strategy that made all of that easy. A tested approach that’s been backtested thousands of times and delivers long-term profitability? That’s what this day trading strategy does by targeting supply and demand zones—where the institutional buying and selling take place. And the great news? It’s actually tailored for you who are complete newbies and are wondering how to day trade.
By learning some vital techniques like recognizing valid supply and demand areas, discovering inducement traps, breaking of structure detection, and fair value gap identification, you have a greater chance of success. This manual will guide you through the very same method, step by step, so you can start trading with confidence today.
What are Supply and Demand Zones?
Essentially, much of this approach is built upon a fairly rudimentary yet invaluable idea: supply and demand levels.
Demand is where most institutional buying happens, which sends prices upward.
Supply indicates cases of institutional selling, driving prices lower.
These are the areas where price reverses or makes significant movements. As a beginner trader, learning how to day trade as a complete beginner begins with identifying these zones correctly.
How to Identify High Demand and Support Levels
To find these high-probability areas:
- Search for the candle at the instant before a deep price move.
- Mark the low to high of the candle (in demand) or high to low (in supply).
- Wait for the price to return into that range, then look to buy.
But all zones are not created equal. New traders fall into trading from weak zones, and they end up losing money.
Inducement: The Trap You Should Avoid
Here’s something important that any beginner who is learning to day trade needs to know: not every zone is the “real” zone. Most are set up to get the traders in too soon.
Inducement is the strategy of the market to entice retail traders into the spurious zones before the genuine, institutionally-backed zone. A typical example is when price appears to respond at a level of demand, only to break and reverse at a more fundamental, stronger level.
How to Determine Inducement
- Look for equal highs or equal lows, which form resting liquidity.
- These levels are where retail traders set stop-losses.
- The market will often push through these fake zones to grab liquidity before moving in the actual direction.
Break of Structure: Strength Confirmation
The second most important principle in learning to day trade as a complete beginner is the break of structure. This is used to check if a zone is good or not.
For example:
If price rises from a demand zone and breaks the old high, then the zone certainly has institutional buying pressure.
On the other hand, if it cannot breach the high, then it may not be a legitimate zone.
Structure break is a confirmation indicator utilized to determine if a zone is worth trading from or not.
Fair Value Gaps: Opportunities in Hiding
Fair value gaps (FVGs) are locations where the price moved too rapidly to permit time for correct order matching. They are seen as a three-candle formation with one missing in the middle where there is no overlap of the wicks.
These are the critical regions because price will revert to these gaps in order to close them.
How to Use FVGs
- Search for a reasonable value gap close to or above/below a zone.
- The market will move to the FVG, frequently piercing weaker areas in order to find it.
- This serves to eliminate the false zones and locate the true institutional area.
Combining fair value gaps with supply/demand and inducement zones significantly increases your success rate.
Step-by-Step Example: Bullish Scenario
Let’s use this strategy on a real life bullish setup:
- Identify an uptrend (higher highs and higher lows).
- Mark all likely areas of demand before steep advances.
Eliminate areas
- Zone 1 does have a fair value gap above Zone 2—price will likely break through it.
- Zone 3 is weak (no structural break).
- Zone 2 satisfies all the conditions: it’s robust, of broken shape, and below inducement levels.
Entry Plan:
- Wait for the price to reach Zone 2.
- Place your stop-loss below the zone.
- Place your take-profit at the last high.
Step-by-Step Example: Bearish Scenario
In a decline, we reverse the reasoning and look for areas of supply.
- Mark lower highs and lower lows.
- Identify spot supply zones during the initiation of powerful downtrends.
Remove weak points:
- Zone 2 produces equal peaks (inducement).
- Zone 3 has liquidity above (fake setup).
- Zone 1 has a fair value gap above—price will want to push through.
- Zone 4 is the clear winner—it’s tidy, there’s no temptation up there, and it’s institutionally backed.
Entry Plan:
- Wait until price comes to Zone 4.
- Place your stop-loss above the zone.
- Target the previous lows as take-profit.
Bonus Tip: Use Greater Time Frames
Though this approach works on all time frames, the 1-hour and daily charts will give you the most reliable zones. Institutional money flows are simpler to observe and more accurate on larger time frames, cutting noise and fakeouts.
Broker Choice: Lower Commission Fees
Another hidden variable that affects profitability—broker commissions. Most brokers charge per trade, and these can eat away at your profits very fast.
That is why websites such as AFX.com are exceptional. They provide:
- 0% commissions on every trade
- Forex, stock and crypto availability
- Tracked in 176 countries
Choosing a good broker is as important as learning your technique, especially if you’re learning to day trade as a complete beginner.
Conclusion
Learning to day trade as a complete newbie does not necessarily have to be overwhelming.
By focusing on institutional concepts such as:
- Supply and demand areas
- Inducement
- Break of structure
- Fair value gaps
You can set up an easy, repeatable system which puts you ahead of the vast majority of the retail traders.
Use the greater time frames, get rid of the false zones, and trade for reason rather than emotion. Combine this with a commission-free broker, and you have all you need to succeed.
Start using this system today, and notice your trading confidence—and account—grow.