The Tom DeMark Trading Strategy For MT4 is based on TD Lines different from the traditional trend line. In this strategy, we will see how to anticipate the price based on TD Line breakout with appropriate price action. Moreover, we will see how to take the exact bullish and bearish trading entry with this method with a detailed explanation of every trading tool used in this system.
What is TD Line?
Technical analysts and traders use trendlines to predict the price by considering it as a reversal point. When the price reaches any trendline and rejection candle shows, we usually enter the trade, hoping that the price will reverse.
However, the drawback of traditional trendlines is that they are subjective. Therefore, every trader’s drawing does not match. Moreover, the price in your might be different from other people’s charts that may make analysis different.
Tom DeMark developed the TD Line, and details of these tools were written in “The New Science of Technical Analysis” in 1994.
TD Points requires some logical points, usually the Pivot Point or the Swing low or high.
- The TD Point High is the equal number of higher highs in the price.
- The TD Point Low is the equal number of Lower lows in the price.
The TD Point is significant for this strategy, where we can find the TD line by connecting these TD points.
The TD Supply line is based on a lower high in the price. If we connect at least three TD Point Low, we will find the TD Supply line.
Similarly, the TD Demand line is based on the higher low in the price. We can find the TD Demand line by connective the TD high points in the chart.
The Tom DeMark Trading Strategy For MT4
This trading strategy is a breakout trading system that can provide a fresh move by breaking below or above the TD Line.
Breakout trading is a widely used trading system that is very popular among traders. In breakout trading, we usually wait for the price to complete a pattern or correction, and when the correction is done, the price starts to provide a fresh move.
The logic behind the breakout is excellent, where the price collects orders and prepares for the movement.
The key drivers in the forex market are institutional traders who take the price up or down is in multiple orders. In the order building phase, the price usually makes corrections and violates the recent swing levels.
In this market condition, the TD Point High and low forms, and when the order building is complete, the price moves beyond the TD Supply or the TD Demand line.
This trading strategy uses the simple concept of supply-demand in the chart. When the supply becomes higher than the demand, the price will move down, and when the demand becomes higher than the supply, the price will move up. However, a fresh move based on supply and demand is expected when the price moves beyond the TD Supply and Demand Line.
Bullish Tom DeMark Trading Strategy
The bullish Tom DeMark Trading Strategy is profitable on any currency pairs from the forex market. Therefore, you can apply this method on any pairs from majors, minor, exotics, or precious metals.
However, this method’s accuracy depends on the timeframe where the higher timeframes provide the most accurate results. However, trading on higher timeframes like Daily or weekly is often difficult for retail traders. Therefore, it is better to stick to H1 to daily timeframes only.
Conditions
- The price is trading above the important support level, indicating that bulls are stronger than bears in the price.
- Price breaks above the TD Demand line with an impulsive bullish pressure.
- After the breakout, the price corrects lower towards the TD Demand line and rejects the level
Entry
The bearish rejection is the final confirmation about the upcoming bullish pressure in the price. Therefore, we will enter the trade as soon as a bullish candle appears with an appropriate lot size.
Stop Loss
In this method, the price may move higher as long as it is above the TD demand line. Therefore, the stop loss will be 10/ 15 pips below the TD Demand Line.
Take Profit
The primary take profit is the Stop Loss level’s equivalent, and after hitting the TP1, move the SL at breakeven. Later on, consider important levels to close the trade.
Bearish Tom DeMark Trading Strategy
The bearish Tom DeMark Trading Strategy is profitable on any currency pairs from the forex market. Therefore, you can apply this method on any pairs from majors, minor, exotics, or precious metals.
However, this method’s accuracy depends on the timeframe where the higher timeframes provide the most accurate results.
Conditions
- The price is trading below the important resistance level indicating that bears are stronger than bulls.
- Price breaks below the TD Supply line with an impulsive bearish pressure.
- After the breakout, the price corrects higher towards the TD Supply line and
Entry
The bullish rejection is the final confirmation about the upcoming bearish pressure in the price. Therefore, we will enter the trade as soon as a bearish candle appears in the chart.
Stop Loss
In this method, the price may move lower as long as it is below the TD Supply line. Therefore, the stop loss will be 10/ 15 pips above the TD Supply Line.
Take Profit
The primary take profit is the Stop Loss level’s equivalent, and after hitting the TP1, move the SL at breakeven. Later on, consider important levels to close the trade.
Summary
Let’s summarise The Tom DeMark Trading Strategy For MT4:
The Tom DeMark Trading Strategy For MT4 is based on TD Lines different from the traditional trend line.
- The Tom DeMark Trading Strategy is profitable on any currency pairs from the forex market.
- The trading entry comes from the bullish and bearish rejection above or below the SMA 5.
- The stop loss is based on the recent swing level, and the take profit is based on Horizontal levels.
