Supply and demand zones — the origin points of strong impulse moves — are one of the most popular 'smart money' concepts. We coded them mechanically and tested them honestly. The verdict: a real but marginal edge you shouldn't trade alone.
Detect an impulse candle leaving a small base (consolidation) — that base is the zone. Enter when price re-enters the zone, stop beyond it, and deactivate the zone after two mitigations (touches). Fully mechanical, no discretionary drawing.
17 of 32 folds profitable at a 1.08 profit factor and 48% win rate. That's barely above break-even — a marginal edge that survives, but with little margin for slippage or a bad stretch. Not something to build an account on by itself.
Zones work because impulses often originate from genuine imbalance, but mechanically-detected zones include a lot of noise — not every base is institutional. Without a directional filter you take zone re-entries against the prevailing flow, which is where the edge leaks away.
We publish this because most courses would dress a 1.08 PF up as a winner. It isn't. Combined with a trend filter and session timing it becomes usable; alone it's a coin flip with a small tilt.