 Hi, my name is Leon Roeb currency trader and trading coach at trading 180.com and in this video I'm going to be answering a very common question I get which is can you trade supply and demand zones on day trading time frame? So can I plot is the question can I plot? My supply zones on one hour 15 minute five minute, you know time frames and will they work and Really the answer is drumroll, please. Yes But there is a big but there are some things that you need to consider When you're looking at intraday time frames One of them is pretty much basically a time frame significance. So Intraday traders will generally observe daily time frame levels, right and daily time frame traders do not really observe intraday Charts and levels because they see it as noise so you got to think about the forex market and how much Supply and demand goes through or is is is is Transacted on a on a price chart throughout a certain time frame. So on a daily. It's obviously going to be around You know a lot more supply and demand is going to go through the market and is printed in the market There's moving the market then for example a five-minute chart, right? So it's obvious that a daily time frame is going to have way more significance going to be a lot more powerful when it comes to You know plotting the zone and understanding why there was demand or supply there the markets are also manipulated a lot more manipulated on lower time frames so what you see on the lower time frames is You know, I mean this kind of gets into advanced stuff, but things like the financial institutions avoiding slippage and Basically stop hunting and and searching for liquidity. Yeah, so You know that the higher time frames are a lot more Significant and ready to kind of illustrate, you know the point is When you look at this price chart and you're looking at for example, you know these these demand zones all you're getting is You know is five minutes of demand and I'm not saying I'm not showing this to basically show why this fails But it's just a you know to look at you know because traders will look at you know rally-based drop drop base rally By the way, I don't subscribe to that theory You know and they would plot their their levels of you know demand for example On a five-minute chart and then wonder why it doesn't work. I'm not saying it doesn't whether it does or it doesn't There are certain zones, and I want to maybe show you at the end You know if I was trading these Supply of demand zones on a lower time frame, which ones I would actually look to trade, but um You know, you've only got five minutes of of demand coming into the market This may represent only maybe you know 10 15 20 pips. This may only represent maybe about 20 30 pips Why is that significant when you look when you're looking at you know an exchange rate? You know, why is that significant? Why is that five minute? You know, what was it rally-based rally? You know demand zone significant in any way shape or form. So Again looking at the bigger picture and understanding the bigger picture Yeah Is is really what you should I can't say that you should but you know what I look at Yeah, and it's a lot more significant the higher the dailies and the weeklies and I understand why traders You know look for intraday because they want, you know a lot more trades, but One of the things that we need to do right is define Supply and demand on a candlestick price chart. So I spoke about rally-based drop-drop base rally and well That doesn't really tell me much. Yeah in a sense that and believe me I've watched the videos What makes sense to me is this what is higher highs and higher lows? H. H. H. H. H. L. High highs higher lows and lower highs and lower loads. Yeah, so let's for example Define this so what we're looking for is strong area of demand Now this is a price chart and this is obviously, you know price and this is time Then and this was for example zero It started at absolute zero then We've definitely got demand here Yeah, 100% got demand here and there was strong demand because buyers came into the market And pushing prices up and all of a sudden, you know demand starts to wane Yeah, this now becomes an expensive area once prices start to pull back Yeah, there's no really demand at that price which price may be something like 10 for example Yeah, whatever is 10 pounds 10 dollars, etc. Right. So this now becomes an expensive area because buyers Yeah, are no longer willing to push prices higher. This was a bargain area Yeah, strong demand came in because you can it's proven by what price did at that price zone now Once we're in a in between a bargain area and an expensive area We know that this is obviously a strong area of demand now If prices make a new high like that and they push past this previous expensive price Then This has to be a bargain again. This has to be a bargain Because buyers were buying and buying and buying up until the point where there was You know 10 pounds was previously You know expensive but buyers still decided that this is an absolute bargain Or still a bargain anyway and continued to buy and push prices higher So if prices were a bargain here past this expensive here area and this expensive price What do you think this is this isn't this is this is black friday, you know, this is uh, January sales, for example, this is uh, you know, um 80 90 percent off if you know, I mean And it's just how it goes, right? So higher highs and higher lows And you have to wait for price to prove the higher high. Yeah, so this movement here Yeah is What we define Yeah, this area here is defined as You know where demand is this is demand. This is you know strongest area of demand Whereas if you have for example a move that does something like this right high low For example, I said low, but you know an expensive area a bargain area expensive area And then you get a bit of demand, but it doesn't really pull, you know It doesn't really go past that expensive area and starts to you know Drift away, etc. Then Could this considered be considered demand of course this demand, but is it a strong area of demand? That's the question. This is the question. Is it a strong area of demand and the answer my answer would be well No, it can't be strong can't be that strong because Buyers were still not willing to buy at that price zone. Yeah This was still considered expensive And when price is going to a ranging market, that's pretty much what expensive is Yeah Or cheap is cheap or a bargain price Yeah proven by The market and the same thing for lower highs and lower lows. It's exactly the same thing Lower highs lower lows are what we would consider Areas of supply Yeah, and the strongest areas of supply are when prices You know break through a Potential area of demand. Yeah, so it's basically the same exact principles Now how's that represented on a price chart now? This is represented on a price chart. We're doing at higher highs higher lows From a daily timeframe perspective what you're looking at is this is you know that move there And you're looking for bearish candle And then you're looking for another bullish candlestick as you guys can see This represents Higher highs and higher lows so high low And then a new high so this area now becomes An area of demand at some point. Yeah, so this is would be Demand Now on a lower time frame Yeah, so this is obviously, you know, if we go down to the hourly time frame, this whole move up would be made up of 24 bullish and bearish candles obviously more bullish candles than bearish candles um making obviously new highs Um or at least a move up etc And then you've got obviously this pullback would be more bearish candles than bullish candles and vice versa So at every intraday You know Time frame candlesticks whether it's the hourly 15 minute 5 minute This on a daily would represent A trend. Yeah, so when we're looking at pullbacks and using daily time frames for our entries as far as understanding Why we're looking at daily zones? I'm taking advantage of pretty much the daily time frame takes advantage of all intraday Trending environments and as we know this is has to be, you know, the area that we want to get Long on. Yeah. Now imagine this. Yeah. Now, this is now a Let's say for example, this isn't a daily time frame. This is now the one hour time frame Yeah, it's the one hour. So If we're now going down into um, you know, maybe something like the uh, the five minute time frames Right or the one minute time frame. For example, you're going to have 60 candles Yeah, we've been this hourly time frame here Yeah, or if you're doing a 10 minute time frame, then obviously you're going to have, you know, uh, six candles, etc Right, we're going to make up this move up. Let's move down with this move up, right? Now again, the question you have to ask yourself is is six 10 minute candles Yeah, six 10 minute candles within this hourly time frame enough Uh And six here and no, sorry the end and six here and six here Is that enough for to make up, you know, any kind of major and significant demand? How much demand Is going through and being made up. So six 10 minute candles. Yeah, four Five six, however it is done That For me is not significant enough for a trend. Yeah um, like I said hourly time frame traders You have to look down on the lower time frames in order to understand You know, what what? how much Supply or demand is being produced volume wise within this higher high high low whereas on a daily time frame You know that you've got the whole day's volume You've got all the one hour traders all the four hour traders all the 10 minute traders, etc. You've got the whole day So this is why This is, you know, the the higher time frames are more significant and more powerful when it comes to understanding time frame. So obviously the lower that you go and let's go back to for example, the previous slide Yeah, when you when we look at the Oh a bit too far Yeah, when we go back to this and we look at the euro dollar on a five minute time frame Yeah We were actually seeing in, you know, this area And if that is, you know, as traders, you know, put a drop-based rally So I should say, you know, rally base rally rate base rally, etc. Right, which I don't subscribe to that that method of thinking but If this is higher highs and higher lows Yeah, and this is a but this is a five minute chart. Is there any wonder Why Something like this Doesn't work out because all you've really got On a micro trend level are just one minute traders if this was an hourly time frame It would, you know, probably be the same thing Everybody looks at daily time frame charts Not every not, you know, not daily time frame traders Yeah, uh, and not looking at in weekly time frame traders the high time frame traders are not looking At, uh, you know, the lower time frames. I just look at that as a noise and mess And you're just not going to get the volume that you do now Now Is there a way to trade lower time frames if I was a zones and if I was trading lower time frame zones this these two Ways of trading lower time frame zones are the only way that I would and I'm going to give you guys Give you guys something to To have a look at right. So let's look at for example demand zones. So let's go create a demand zone Yeah, there there And then let's say for example, we've got Strong demand Strong demand right there. Yeah, now this becomes our demand zone Right there Now this is represented for example on a daily time frame chart So this is the one day Now if you get something similar to this on for example a one hour time frame Chart where you've got move down move down and then there And that obviously is demand Something similar doesn't necessarily have to be the same. Um, it's really the same but something where You can look to see that there is a demand zone and it's at an area or the lowest area of The daily demand zone and then you zoom in and then you see something like that that creates Obviously this whole area here. I should say This this this hourly demand zone Yeah, and this is the swing low here and this is represents a swing low here then I would say That is an area that potentially I would trade if I were trading, you know one hour Demand zones or even supply zones. Yeah, it's because The lowest area Here, I mean remember this is this is price and time. We're looking at, you know understanding price Let me uh, let's you draw in black. Yeah, so we've got price here The strongest area of demand is going to be where Where traders were buying in such volume that it pushed prices here, you know up up above a previously Potentially expensive area So it only makes sense that And again, this is being price if this Represents, you know five and this represents four And this represents maybe six, etc. Yeah Where are you? Where is the best, you know place to buy if prices come back? Are you going to be buying at the top of the zone? Or you want to be buying at the bottom of the zone I'm not saying that prices are always going to reach there because prices don't always reach there if you know I mean, but if I were to trade This daily zone as far as you know zoom in and look for hourly zones This hourly zone here would have to be the absolute low of the daily zone And then I'm looking for hourly zones before looking at obviously prices to come back within that hourly zone and then There because you're buying at potentially the strongest area of Demand if you don't want to necessarily because this could represent for example This whole area could represent You know 50 pips for example on the daily, you know, or 100 pips. Whereas this one hour zone could maybe represent um, you know, maybe I don't know 15 pips for example Yeah, and I know traders like cute entries, you know, you want smaller risk and massive rewards Like I said, I'm not saying that you can't take these zones and what I'm saying is is that marry it with the With with the strongest area within this You know daily demand zone And then what you want to do is go down into something like the hourly and then look for those demand zones and then look to trade that If prices do come down into that area because there's pros and cons of everything Prices may not prices may come to the top of this area here yeah and then That's off here and you may never get an entry at the absolute lows So again, there's pros and cons with everything the second thing would be if the hourly Zone that you're looking at or you know intraday zone. It could be a 15 minute. It could be a 10 minute 5 minute If that zone was created by a news event Yeah, so you're looking at, you know, say for example, this is a 15 minute chart and then you see that the That that the the zone is created and you go back in time and you look at for example forex factory And you think to yourself. Oh, that was that was created by you know some some news that was you know gdp fomc jobs report, etc right and You get this created via A massive and in the end and an important and impactful news event Then I would trade This zone if I if I look back right and then I see a demand zone or a supply zone And it wasn't created by really anything other than potential profit taking Then that's not An area that I would ever look for or to trade any kind of intraday Zones it has to be You know an area that traders were definitely trading Fundamentals in the fundamentals were the cause of the move and if you want to actually You know go back you can go back to forex factory for example And just go back in the calendar and look for you know marry it with for example some some price action go back to the day and see when the If the price was caused and then say all right then well this was caused by this all that or whatever it is and then You were You go back to your demand zone and say all right then that's what we want to that's what we want to trade so Intraday highs and lows which basically marries up with the daily You know swings and highs and lows if I'm trading any intraday time frames and also news as well If there is news that caused that supply or caused that demand zone Then that's where I would be trading any intraday Supply and demand zones So never confuse activity with accomplishment And what I mean by that is just because you get more trades on a lower time frame Doesn't mean that you're going to be accomplishing more than anybody who is taking daily or weekly zones As we know daily and weekly zones are the most significant and more high probability than your lower time frames So with that being said no one is better than the other But just understand that each one each higher time frame and lower time frame has pros and cons Higher time frames you may have to wait a little bit more for a trade But you know it's going to be more of a significant zone and obviously on the lower time frames You're going to have supply and demand zones everywhere, but you're never going to know which one Is really that significant and I say never but it's going to be harder to Identify the more significant zones where it should be a lot easier now after watching this video So if you do have any questions Just email me at info at trading 180.com also as well Supply and demand isn't just about technicals. It's about the fundamental analysis And understanding value and why the banks trade and identify value and what the reason why the banks trade as they do Is really an integral part to supply and demand And if you want to Watch that course, it's absolutely free. The link is in the description box below trading 180. I think forward slash Fundamental and sentiment analysis or something like that. Anyway, it's in the description box below All right guys, we'll take care and until the next video