 Hi, my name is Leon Rowe currency trader and trading coach at trading 180.com and welcome to my fourth step supply and demand trading Strategy process and I'm gonna say right from the start. This is not your Simple technical analysis rally based drop drop base rally video that you're probably used to seeing You know 99.99 9% of other videos, you know go into You know these these typical supply and demand videos This is not your typical if you want to learn something and learn something from a very very advanced level Yeah, if you're looking for something simple, then click away if you're looking to really watch and learn something Yeah, then keep watching because this video is going to show you something that and concepts that you're probably not even You know aware of and in the forex market We need every single edge we can get in order for us to be successful This is what I do. We can week out, you know with the trading 180 community and Members so let's get into it before the technical setups what we look for what I look for is Fundamentals, yeah, and again, there's a debate out there that says fundamentals do work fundamentals don't work, etc You know price is not driven by technical analysis. I can tell you that now Yeah, price is not driven by technical analysis price does not indicate value and value is not indicated Always on price. Yeah, you know, there's a difference between The reasons why you enter and the reason why prices move Prices coming down to you know a demand zone or up into a supply zone And then you seeing some sort of pin bar and engulfing candle and then prices reversing, you know based off of you know a Supply zone or demand zone and price action is not the reason why prices moved It's not yeah, it might be a reason for entry But it's not the reason why prices move price moves based on for monetary policy Economic cycles risk sentiment and price manipulation Those are why price Those are the reasons why price on in the forex market moves, you know day to day Week to week, etc. Yeah, so forex factory a lot people think that forex factory You know is fundamental trading so they go to forex factory and then you know, they say all right and let's go to some sort of important data and then what we'll do is we'll see if The actual is better or worse than forecast if it's worse, then you know, I'll sell if it's better than I'll buy again It's that's not fundamental trading and that really is a fundamental trading and that's one of the reasons why traders Disillusioned with you know, the fundamentals fundamental trading is looking at the bigger picture So what I do is, you know, what's been compiled is a Fundamental analysis spreadsheet and I look at certain data certain really important macroeconomic data like GDP inflation and interest rates and every country Is given a score. Yeah in the cumulative ranking against each other. So The United States at the moment their cumulative score based off of the macroeconomic data, you know things like jobs, you know, etc. etc Is is actually given a Score of 17 which is basically the strongest. Yeah and then the best out of the Major eight economies the euro right based off of their GDP interest rates and inflation and other data Given a score of eight, which is basically the worst out of the the G8 and the major traded currency pairs because a country's economic standing and what the central bank is doing from a monetary policy perspective whether they're high king holding or cutting interest rates And what inflation is doing and where they are in their economic cycle Whether they're in a recession or whether they're in the expansion or boom phase determines a currency's strength or weakness. So This is what I look at, you know Weak in weak out and this allows me to choose the currency pairs that I would want to trade So an example of that is I would be shorting for example the euro dollar because the euro is number eight Which represents the weakest out of the The eight currencies and then United States is number one Right, so I'm buying one and I'm Shorting eight meaning I have to get shorter that currency pair. So then all I'm doing is Looking for what supply zones I don't need to concern myself with buying the euro. I'm not buying weakness I don't care if the euro is going higher We're looking for value We're looking for price of value and prices will pull back and when prices pull back to a nice level where you know prices are potentially, you know at a nice value area of Supply that's where I want to get short again. What I'm looking for is to trade one versus Seven or one versus six. So for example, we've got two sixes. So we've got the Swiss Frank Yeah, and we've also got the Japanese yen. So for the Swiss Right one versus six and the and I put that as the yen as well uj Yeah, that's six. I know that all I need to be doing is looking at what? Demand zones that's it. I'm waiting for pullbacks into demand and That's how I choose my pairs Right, and that's how we choose our pairs when we're in the group we trade the strongest currencies So ones twos and threes versus six sevens and eights and again this Fundamental analysis spreadsheet should keep us on the right side of the market. Yeah now what can go against? The fundamentals. Well, it's something called risk sentiment risk on and risk off Right. So risk on is when fundamentals are in play risk off is when we have a Bit of turmoil in the market and we have, you know a flight to safety. So There are currencies like the Japanese yen. Yeah, and the Swiss Frank, which is highlighted in red. Yeah, that will strengthen in a risk-off environment, yeah, so we understand that Not every single trade is going to work out if there's a risk of him if you know There's risk off and risk off would be something an event like for example Chinese trade war, which is what happened in 2019 or Brexit, you know or any kind of political uncertainty or war or anything like that anything where Things are not so great or things that there's a lot of uncertainty in The market, right? There's certain currencies that will strengthen in that and we're aware of that, right? But what we plan to do, you know, what we plan on doing is when prices pull back Let's say for example of trading the dollar Swiss or the dollar yen and in this period here, which might represent, you know Maybe a week or two of uncertainty. Yeah, where the Swiss Frank and Japanese yen may strengthen against the dollar when things start to potentially Sort themselves out. So for example with the trade deal China's and and America's trade deal. Let's say for example, they come to some sort of agreement. They come to an agreement Which currency do you think is gonna basically strengthen if prices come down here? It's going to be the dollar That's gonna be risk on again. Yeah, because the uncertainty is removed from the market Right and the dollar will do better in a risk-on environment and the Swiss Frank and the Japanese yen Won't do so well in a risk-on Environment and that's where we look to potentially take our trades So fundamentals first. Yeah, we look at the fundamental analysis spreadsheet and We update as it goes as we go along as the data comes out These change and as these change I'm not married to any currency pairs If the United States becomes, you know, four five six seven or eight It starts become weak in the euro then starts to move up the ranking then I'm gonna switch my positions That's basically how it works So number two is identifying value on a price chart and I've alluded to this already in the fundamental bit but What we don't want to do Yeah, is let's say for example, we have a buyer. So we want to be you know a buyer again of the you know dollar Swiss All right, so Swiss Now before looking at a price chart, yeah I've already made up my mind from the fundamentals and fundamental analysis spreadsheet What currency pairs I'm looking to buy and what currency pairs I'm looking to you know get short one But what I don't want to do is I don't want to be a buyer at the highs Do I don't want to be a buyer up here? Yeah, if prices are going higher. I want to be a buyer at is what is known as a Potential value zone right in a bargain price. So let me go into this quickly and This is nothing to do with value-based drop drop base Valley that you again that you typically hear from Supply and demand Traders this is you know proof of value This is higher highs and higher lows and then we just get into the concept quickly, right? So between this low and this high just imagine that you haven't had any didn't know what was coming You know in the future. Yeah, so ignore this so between this low and this high Yeah That is an absolute bargain We know that to be true because buyers push prices higher at this point when prices start to come down This is no longer seen as a bargain. This is what was known as an expensive area Yeah, because there's no more demand at this price zone. This is going to be you know Yaxes price and time Yeah, that's price So at this price Whatever this price is There is No demand. Yeah, it's not a profit-taking etc. But there is no strong demand prices pull back Yeah So once prices pull back to a certain area, we know that Boggin or cheap area Buyers go in and this is an expensive area buys are no longer willing to push the prices higher now between here and Here unless something happens, this is going to be you know What was known as a value range now between an expensive area and the bargain area 50% of that would be known as fair value Yeah, fair value so if I know I want to be a buyer of The dollar over Swiss franc, and I'm only looking for demand zones Where do you think the best area to buy would be between this? Boggin and its expensive area It wouldn't even be fair value the best Area best price to buy would be somewhere around the bargain area, wouldn't it? That's where because it was proven to be a bargain at this price and as long as the fundamentals haven't changed Sentiment may change. Yeah, it might be sentiment changes, but fundamentals and fundamentally Yeah, the fundamentals are still the same and this is going to be the best area to buy It's going to be the cheapest area because it was proven at this point in time to be a bargain And it may be bargain here now. Let's move forward So we got an expensive area right here, and we've got a bargain area here now if price goes past this Previously expensive area Then this is now a bargain area Yeah, this is an absolute bargain. Do you know why because? Price is proven it there are there are buyers buying and buying and buying and buying so much So even when they get to that previous expensive area, this is seen This is still seen as an as a cheap area So buyers are still buying here and buying and buying and buying and buying and then they get to a point where This becomes now expensive This becomes expensive and then we get profit-taking, etc. And again between this high and this low And 50% of that is what fair value Yeah, where would you want to be? Where's the best place to buy between this lowest absolute bargain area and this high? It would have to be around here, wouldn't it? It's not here Fair value doesn't represent. Yes, there's support and resistance there But you know potentially yeah or some sort of Fibonacci retracement But it's not the best area just because prices make their way higher Doesn't mean that it is the best area until proven otherwise proof of value Valley-based drop drop base rally doesn't take into account. You know this this, you know the Psychology behind why prices move again. We go through the same process. This is an expensive area Yeah, this isn't a bargain. This is not a bargain until prices break past Yeah, clearly go past an Expensive area if prices go up to here Then that may be demand, but that wouldn't be what we would classify a strong area of demand Yeah, we're looking for strong areas of demand strong areas if prices come up to here Yeah, and then start to fade away Then that wouldn't be considered a strong area of demand would it because it didn't go past What is known as the expensive area only when prices go past that area? This becomes now an absolute bargain and a strong area of potential value if prices come back to this area in the future and the fundamentals haven't changed or they haven't changed that much and we still have The dollar is potentially ranked, you know number one two or three against the Swiss franc, which is ranked maybe six seven you know or eight Because these moves depending on the data as long as ranked, you know one two and three versus six seven and eight Here and risk is on. Yeah, because obviously we know that if risk is off Then the Swiss franc will strengthen and this may not hold as long as risk is on That's where the bargain was in The past and this is where the potential bargain may be in the future So this is How supply and demand trading works All right, and this is how I view supply and demand trading is more to just you know technical patterns You have to think behind why prices are you know are doing what they're doing So we use supply and demand zones to determine potential value on a price chart and we filter our supply and demand bias Fire the fundamentals that I use daily and weekly time frames and traders constantly ask Can I use you know that the hourly in the 15 minute and the one hourly and I've made a video Which is going to be on the top right hand side the link will be There for you to you know that question is answered and again the short answer is you can do whatever you want The slightly longer answer would be well, you know, what's more Impactful 15 minutes of supply and demand or daily or weekly Supply and demand what is more significant? So the reason why I use daily and weekly time frame supply and demand zones is because They are more significant, right and also each Supply and demand zone we have odds enhancers Why not every supply and demand zone is you know the same So for example, one of the odds enhancers I have is fresh areas of supply or demand, right? We want to be the buyers of Fresh areas of supply and demand We don't want to be the person or the people that are buying on second and third touches Actually second touches are okay, but the higher probability trade is going to be the first touch of a Of a supply and demand zone another odds enhancer for example would be how far does price move? You know away from you know the from the demand zone How far has price gone when it created that demand or supply zone? So we have I have several, you know odds enhancers that I use to determine the strength of potential strength and potential bargain of Each supply and demand zone Now let's talk