 Super cool alright then today guys we are having awesome it's gonna be awesome webinar with Leon Roark Leon's up there with one of my oldest original students Leon Emmanuel he's actually on the call as well. Oh he's on the call? Yeah he is and yeah Leon basically took my ideas actually had a few drinks with Leon me and Leon's a couple of times come friends and he took my ideas and basically developed them into his own sort of process and has taken that and been able to be unprofitable as a trader consistently over a long period of time trading his ideas and one of the big things that Leon's really good at is identifying certain levels that have more gravitas than others and hopefully we can learn about that today so Leon yes thank you mate much appreciated so supply and demand forex trading I'm sure many of you have heard about supply and demand trading and I'm going to be basically just giving my take and my ideas and thoughts and how I've been trading supply and demand it's it's different from what you tend to see online and on on YouTube so the agenda for today is gonna be determining value because without understanding value you know supply and demand just won't it won't work it's basically just like trading support and resistance you have to have a directional bias and in everything every you know asset fit and class that you're buying or selling you really need to know how to determine value we've got DBRR BD or HHL HHL or LHL L bit of a mouthful but I'll explain that when I get to it you've got drawing supply and demand zones on the candlestick price chart so I go over exactly how I draw these zones on a price chart what makes a good supply or demand zone because not all supply and demand zones are created equal and I'll be going over some live chart analysis and some trade examples support and resistance or supply and demand is a common question I get what's the difference between them if there is a difference and I'll be basically showing you how to really kind of trade them together and differences and also the supply and demand equation and that's basically to do with forced and willing supply and demand so determining value I hope everyone's can hear me everyone's okay still everyone's still there yeah brilliant brilliant by the way if you want to you know just chime in ask me anything please do and because I don't want to leave anyone you know behind if they're you know if I've gone a bit too far so I don't understand anything yeah yeah well Matt brilliant brilliant brilliant okay so first things first is I'm sure you will know this but someone's got their microphone open do you want to just shut your mics guys just mute yeah mute it until maybe you're ready to you know to ask a question yep okay all right so I'll continue one and we know that pretty much the markets are run before its market anyways run by the bank and this is a euro FX survey 2017 and basically this is the top 10 overall market share of the banks of basically the FX market sorry and the top 10 banks and their market share in 2017 and this was 2016 and pretty much you've got top 10 bank banks you know Seymour JP Morgan US UBS etc they their market share overall is of round 60 percent of the market and then you know everyone else is just against some other financial institutions and banks so I say that because we are in their game we're in their field you know retail traders make up something like you know maybe six seven percent of the the forex market even though it's a massive market it's about four trillion five trillion or something like that and even if you know seven percent of that is still a lot of money but this is these are the guys that basically create the price on the price chart so these guys aren't looking at you know candlesticks and and and certain levels if you know I'm looking certain price levels but they're not looking at you know basically like price action these guys are creating the price action so what are they what are these guys looking at right if they're looking at making decisions on buying and selling it can't just be technical patterns they're looking at there's got to be something beyond the price chart that they're looking at if they're the ones creating the price action so that leads us to fundamentals and really determining value and what the financial institutions do through fundamentals well in my opinion there's three main reasons for the hello is everyone there hello yeah all right no worries yeah sorry it's just that you know what happened on my screen like your names just kind of dropped off the side of my screen so I thought something had happened no worries so I continue in in my opinion there are three main reasons why the market moves one is fundamentals and and sentiment which is basically value you've got risk sentiment which is basically where you have financial institutions and money will flow into safe haven assets like for example gold government treasury bonds in the forex world it's the Japanese yen and Swiss Frank when risk is on basically meaning that everything is good with the world and investors have got risk appetite and they want a bigger return they'll go into higher yielding assets and higher yielding currencies regarding interest rates and that would be for example the dollar and commodity currencies like the Australian dollar New Zealand dollar Canadian dollar etc right and then you've also got liquidity and equities to do with stop hunting it there's not enough you know buy or sell orders the market will seek those orders as we know but when it comes to fundamentals and value these are the main three things that we need to look at is GDP and the business cycle so financial institutions again will put their invest their money in a currency and in a country that is in the for example expansion or boom phase rather than putting their money into a country that is going into contraction or recession or bust face inflation and inflation targets central banks have got a 2% target and they really want to get to that inflation prices target and the way that they can do that is via interest rates in the interest rate cycle and not to get into it too much but if you do want to you know learn about any any of these or you want to touch up on your fundamentals and really how I trade the fundamentals there's a link take a picture if you want and that's pretty much it but fundamentals and determining value is what we need to do right when it comes to our directional bias and buying strength versus weakness anyone got any questions or anything like that yeah so value what you're saying is that once you've got like your fundamental direction but by understanding what central banks do with interest rates and the business cycle you're essentially saying that that value would represent something cheap within within that context absolutely cheap we're looking for cheap we're looking for bargain prices that's pretty much what we're looking for we're looking for cheap and what and I kind of focus on what a bargain price is I try not to look at what is potentially expensive it's easier for me to look at what is a bargain price from GDP from inflation well from interest rates and inflation etc and what's really you know the value that's what I'm looking at right so so so how that would play out on a chart is it would look like your bag of spanners as it's going down against against you know whatever currency but ultimately in the backdrop you have that broader understanding that this is actually you know this is an opportunity this is not right so so for example we would look at for example the maybe the dollar yen right would be a great example or any kind of risk of currency where it strengthens based off of basically just some sort of you know economic uncertainty political uncertainty you know or interest rate say interest rate but some risk of sentiment basically but if you're looking at it looking at the Japanese yen from or for example the Swiss franc economically and where they are in their interest rate cycle or where they are with regards to inflation targets they're terrible but risk sentiment or risk off sentiment where money will flow into the Swiss franc or the Japanese yen making it stronger what that does is it brings price to a certain level when you're when you want to buy the dollar and what I'll do is I'll put you explain it better with a price chart let's go to dollar right risk sentiment was can everyone see my charts well yep yep so risk was off so money was flowing into the Japanese yen when risk when risk goes back on the Japanese yen if you're looking at it fundamentally is basically worse than the then then then the US dollar so risk sentiment what it does and risk off sentiment will drive prices to where we want to be buyers of the US dollar because we know at this price level right when risk comes back on when fundamentals are in play and when investors want a bigger return on their money so for example the Japanese yen their interest rates are like minus was it was minus 0.1 or something like that compared to the dollar where you're getting was it 2.5% where's the money gonna go this is an absolute bargain that makes sense yeah doesn't make it makes it doesn't make sense to someone just let me know yes a bit so basically imagine it just as like an individual if you if you if you on a high street and you you know got an opportunity to put your money in two banks one as an interest rate well it's here we're gonna take money off you for putting money into it oh you can put it over here on the other side of the high street you can get 3% interest where you're gonna put your money that's exactly it and that's risk on you know when risk is on when the fundamentals are in play you know that's what you're seeing pretty much you know develop in the market risk sentiment and risk off sentiment drives prices to where we would want to be and can drive prices to where we want to be buyers where a level is cheap right and we'll go into this basically this this trade example on the dollar yen a bit later as well so fundamentally so so technically and fundamentally what we want to look at is business cycle inflation and interest rates and determine what is the the stronger currency versus the weaker currency and then look for for example if we're looking to buy the dollar dollar yen you'd be looking for just demand zones and those would be areas of value make sense right so you're actually you're actually you're having a bias and then you are only trading in that direction exactly cheap prices yeah at cheap prices and technically I'm going to show you exactly why the areas of demand logically in my in my head you know and how I kind of figured out the levels and I'll show you that pretty much in on the diagram as far as I'll draw it out for you guys Leon yep are you gonna give us a demonstration of how you actually figure out the sentiment and the fundamentals like a go into a website and do you play in a spreadsheet or actually have a spreadsheet actually do have a spreadsheet and it's for the basically the trade is that I do mental but I will show it to you right I will show it to you it was created by a trader I'm not sure if he's in the room I don't think he is Shane my invited him and I think he could probably make it our fits is here and we kind of sat down worked out what we want to look at and over the past I would say what maybe two months three months fundamentals of actually really kind of played out and I'll show you the spreadsheet as well thank you all right remind me actually at the end matter of fact yeah yeah yeah sure we'll do it no worries mate okay so RBD DBR or HHHL LHL basically when everyone thinks about supply and demand they think about rally base drop drop base rally right that's what pretty much everyone is told and so you've got basically rally base drop and then what happens is that if prices come back up to this area that's where you want to be a seller and then you've got drop base rally and then when prices come back down to this area this is where it's supposed to be a buyer so you're looking at imbalances in supply and demand so demand and then you've got the imbalance takes place right here and that's where traders are looking at and then you've got rally base rally so for example if you get a situation like this maybe rally base rally and then the imbalance in demand so there's more demand and supply here and then you'd wait for prices to come back down and then look for buy trade it's everything with drop base drop now what again I don't think there's necessarily a it's just a basically a way of or the way that I looked at supply and demand and what kind of made more sense to me in the context of things like fundamentals was higher highs higher lows and lower highs lower lows so what I realized was is that if you get a move up right this is going to be demand and this potentially when it's faster pulled back is going to be supply now we know this to be true because obviously buyers there was demand for price if this is a price chart self-evident now we know that this is going to be the cheap area and this has to be an expensive area simply because prices couldn't go any higher the you know buyers were no longer interested at whatever this price level was now from this low to this high it's expensive and this is cheap 50% of this has to be what I would call fair value so whenever we get pullbacks and this is basically what Fibonacci is Fibonacci is just you know discounts pretty much 32% 61% is just just a discount on what is cheap and what would be considered expensive and so what I realized was if prices start to come higher and this is going to be an expensive area this level here is an expensive area if prices continue to push past this what would be considered an expensive area then this has to be a strong level of demand this has to be considered an absolute bargain at this price because as prices were going higher and higher and higher this could have sold off but it didn't and it carried on going through so what I realized was that this has to be a strong level of demand right from a technical analysis from a fundamental you know perspective prices I guess you know are really kind of uncontrollable that's the reason why you know I guess inflation and the central banks try to control inflation try to control prices but if we get for example a sentiment you know play or gets this area pullback this has to be in my with my logical opinion if you're looking at this being the absolute bargain and this being the new expensive area the best place to buy is not at a previous supply zone now turned into supported to be considered resistance right that can't be the best area to buy yes we know as far as technical patterns are concerned this is what people do but from a higher probability perspective here has to be because it's proven to be an absolute bargain in the same way that this low to this high was proven to be a bargain expensive this is the low this breaks past the previous expensive area new expensive area so this from here to here has to be the strongest area of demand and this is going to be you know your supply level providing fundamentals are still in play and this is you know and I did a video on this on YouTube and you know it's called like the complex pullback and also as well with them if anybody's ever traded things like got the patterns and and butterflies and stuff like that or cypher patterns and what these really these patterns are for example with the complex pullback you know traders will get long here right thinking that this is past support sorry past resistance to should turn support and then what happens is they end up getting cream there because they see some price action and then they put their stop losses there and then what happens is they were buying at fair value or thereabouts maybe just above maybe just below but it wasn't the best place to buy which was a proven demand zone strongest area this is where the start of the move occurred and then what happens is they get lower highs lower lows and trend traders and everybody's taught to trench you know to chase the trend and what is you know a trend in definition lower highs lower lows is going to be a start of a new trend not realizing that the start of the move the best place to buy was actually right here so what happens is they end up waiting for a pullback right no idea about fundamentals either they end up getting short here stops above the high and then prices end up getting them twice and then they say trend trading doesn't work what's going on blah blah blah blah blah blah right we're buying at levels of demand we have to because it's proven remember that these this is where the banks were buying the banks to prove that this is where they were buying in the past and if the fundamentals are still the same negative sentiment can just push prices to where we want them we want to be a buyer and this is cheap this is value because it was proven value in the past yeah like when was the last time any of us created an engulfing candle yeah exactly right we just don't do it it's not us doing it so whoever was in charge of moving that price from that level yeah exactly there is obviously huge that's exactly it you know and that's why I did the Euro money because just to prove the point that it's like 10 banks that one you know that I have a 60% market share they're the ones they're not looking up they're not looking at price action yeah they're looking at something beyond the price what is it that they're looking at and it has to be you know things like fundamental sentiment whatever it is you know that they look at as far as the quiddity in that and then this is where we want to be buyers and traders you trade for example you know got the patterns and you know that x to a a to b leg and then they you know they draw that pattern there and then it's that a b to c c to d and it usually ends around here they just buying into a demand zone there's no reason there's no logical reason for you know these Fibonacci patterns it's got to hit this and it's got to hit that it's just when prices come down to this demand zone all they're taking advantage of is what would be known as the x leg which is the strongest area of demand proven in the same way that if this is supply now that is supply this has to be an expensive area right so when prices come up to here it's proven to be expensive because there are no buyers anymore again obviously depending on fundamentals etc but if we were looking to get sure on this and we went for prices to come back up right it's proven that this is an expensive area or for example a cheap area for for the for the for the quote currency you know this is where we would want to buy the quote currency because we know that this was an absolute bargain prices fell away something must have changed maybe sentiment wise or fundamental wise when prices come back up here this is where we want to be sellers because it's proven to be an expensive or you know in the case of you know forex I try to look at anything being expensive but just this is a cheap level for the for the quote currency everyone follow along yeah cheers mate make sense yeah interesting are you going off the daily chart with us just what's meant to be on sorry it's just meant to be the daily chart this yes I look at exactly I look at I look at daily levels I definitely look at daily levels so I'm looking for proof of value right proof of value is always in my mind when I'm looking at you know demand and supply zones and again with with rally-based drop drop base rally the emphasis is more on just looking for imbalances in supply and demand I'm looking for proof of value and higher highs and higher lows are proof of value expensive prices break through this is going to be the demand zone that's going to be the demand zone all right prices don't break through now in fact if prices fail to go higher then yes there is demand here but is it a strong level of demand can that be considered a strong level of demand if it can't push past the the expensive level it's a decent level of demand but you want the best areas of demand proof of definite one hundred percent value is if prices go past what would be considered a previous expensive level and this is where you want to get long so you're looking for levels where price puts in new highs and lows exactly I wouldn't say a hundred percent ignoring because there's always you know exceptions to the rule and you know depending on you know the fundamentals I will definitely still trade levels where you do get you know demand that will go up to probably the expensive area again depends on the risk rewards but the majority of time I'm looking for new highs and then pullbacks into demand