 Hi, my name is Leon Rowe, currency trader and trading coach at trading180.com and welcome to this video on trading the news using supply and demand and I'm going to show you my approach on how I trade the news and it's not trading the news using supply and demand zones per say, it's using supply and demand or understanding where the supply and demand order equation is when it comes to orders and liquidity and what you have to really grasp when you're trading and always keep in mind is that the market is a zero sum game, meaning for someone to win, someone else has to lose. So when you press buy on your broker, yeah, you press buy, someone is on the other side of that trade. So obviously your brokers on the other side of that trade sell, right? Buy is demand, yeah, and sell is supply. So where is the supply and where is the demand, right? And money is not made, it is taken, basically transfer from the buyer to seller or the seller to the buyer, you know, so the markets are manipulated, it's just a function of how the market has to work because everybody can't be long, yeah? Everybody can't be short, there has to be enough sell orders for buyers to fill the order and if you're getting short, right, and everyone's pressing sell, there has to be enough buy orders, yeah, in the market, you know, around for the other market to go higher. So there needs to be enough liquidity in the market and if there's not enough liquidity in the market and for the market, for example, to go up, yeah, and everyone's buying, there has to be enough sell orders to fill those buy orders and if there's not, then the market will search where these sell orders are and if the majority of the sell orders are below the market, yeah, i.e. stop losses and the market will go down, yeah, and take out the stop losses, right, filling buy orders before it goes higher and the edge when it comes to news trading is not trading the expected, right, it's trading the unexpected, right, so these are the scenarios that most people have, you know, maybe not necessarily, you know, written out, but these are the scenarios when news events come out, what can happen, right, so we have expected news result and then we have an expected price action. There is no edge in the expected news result being occurring, so if news trading was easy and, for example, you know, Forex Factory said that, you know, the Norm Farms is going to be this figure and it comes out as that figure and where's the edge, right, it's clear for everybody to see, right, everyone's going to be a buyer or everyone's going to be a seller, yeah, where we have an edge is the unexpected news result, yeah, we also have an edge when it comes to expected news results but unexpected price action, right, that is also an edge, I'm not going to really talk about that but it's to do with, you know, a term I've phrased as capture pain relief or CPR location, right, and this is how we can take advantage of unexpected, not necessarily just news but unexpected price action, yeah, and if you go to my YouTube channel, you'll be able to see the concepts there, members only Euro, USD analysis, right, FOMO, FIMC, sorry, capture pain relief trades, how to identify CPR location Forex trade zones, etc., right, and I go into it in a lot more detail on the course as well which you can access on the website but going back to news trading where the edge is is unexpected news results, yeah, and with unexpected news results we get an expected price action so let's give an example of this, this would be the unexpected news result for today, Fed cut would be for either no change because there's financial institutions are not expecting any type of change or we have a 21% or 22% chance of a 0.5% cut, 78 or say round up to 80%, 79% of the market financial institutions think there's going to be a 0.25% cut, right, it's going to be a cut regardless, you see what I'm saying, the world of probabilities anyway, right, Fed is expected to cut rates for the first time since the financial crisis, so my approach to this is not to trade this this this result if it comes out as 0.25 because it's expected it's already been priced into the market, so let me go back, let me get rid of some of this, so when it comes to abide the rumors of the facts, yeah, what we want to do is identify the market state before the news, so let's say for example the market has been trending and the news is supposed to be, you know, positive because it was probably known that and it's been known that the Fed may want to, you know, cut rates but let's just say for this example let's say they're hiking rates and you know it's about a month to go before they start hiking rates, the smart money, yeah, smart money, financial institutions, whatever you want to call them have already been buying in anticipation of potential rate hike, by the time the rate hike comes out, yeah, somewhere around here, retail traders have missed the move, yeah, the banks have already established a bargain price all the way down here with the expectation, yeah, by the rumors of the fact that they're going to hike rates and by the time they do hike rates on such and such date, yeah, this is being a date, then retail traders, there's no wage there, right, even if prices was to go higher, this is where the money was made, yeah, that's where the money was made, what you want to do is look for the edge when unexpected happens, the unexpected happens, so prices trend higher and then all of a sudden there is no rate hike, what do you think the market's going to do, the market thought there was a rate hike from here, all right, and it priced in, you know, what it thought was going to be the price, it's being a chart, yeah, if there was a rate hike, if there's no rate hike, what do you think is going to happen or what should happen, because we deal with probabilities when it comes to the markets, there's no certainties, yeah, the probability of a, you know, of the market being wrong footed is where the edge is, yeah, that's what we want to trade the unexpected news result, yeah, and the expected price action is for prices to go lower, so we need to identify market state before the news, yeah, is the market trending into them, into them in, you know, is price action trending or is it, you know, going sideways, why I'm meaning that, the market is unsure what's going to happen and then comes out and then obviously, breakouts tend to happen, right, and we need to understand where we're buying, if you're buying at market highs, you're buying at the highs, you know, who buys at highs, buy low, sell high as the mantra is the, you know, everyone knows this, yeah, all objectivity goes out of the window when, you know, we're looking to trade the news, we disregard what's happened in the past and we're just so focused on this, the money was made again on the way up, again, where is the liquidity, let's say for example, the market does want to go higher, yeah, let's say for example, the market wants to go higher, now, if everyone starts buying here, yeah, where are the sellers, as I previously pointed out, where is the sell, where is the supply, where is the supply, where is the supply, sorry, for the market to go higher, you know, where are the sell orders, if everyone is long, the market has to look for sell orders and that's where market manipulation is coming, this is where the liquidity is and as I explained before, if everyone is long, you need enough sell orders to fulfill those buy orders and if you don't have them, then the market will search for those sell orders, so I'm going to show you the example of this, matter of fact, I'm going to show you a couple of examples that's happened over the past couple of weeks and exactly what I'm talking about, so let's go to, for example, no, not the euro dollar yet, we'll go to the euro pound, euro pound, so it's a nice example of what I'm talking about, so in the lead up to pretty much the conservative election and Brexit, Theresa May stood down and the favourite to succeed her was Boris Johnson, alright, and you know, this was from the 13th of July, but in the lead up, everyone pretty much knew that Boris Johnson, I'll say knew, but the probability that Boris Johnson was going to, you know, was the favourite, right, the media kind of was trying to make it like it was, it was close with, you know, Jeremy Hunt and everyone else, but Boris was out and out of leader and the results pretty much showed that in the voting of the constituents, but Boris Johnson was the favourite, now there was a problem because Boris Johnson is, has been talking and he's been saying that he wants a Brexit, a hard Brexit or a no deal Brexit, he's more likely to take Britain out with a no deal Brexit, which isn't good for the market, the market wants a Brexit deal, yeah, or a deal basically, so the pound is weakening, the pound has been weakening and even again to lead up the pound could fall to parity with Dollar on hard Brexit concerns, a fear of hard line Boris and Jeremy Hunt could push sterling down to mid 80s, says Morgan Stanley, so again, traders were being primed by the news that Boris Johnson being potentially a hard Brexiter and taking the UK out of, you know, taking Britain out of the UK with no deal was most likely if he gets elected and the pound would sell off, right, meaning that, you know, the euro pound would go higher, now what actually happened on the day, so on the day we had Boris Johnson wins the race to be, to be Tory leader and he's now crowned the Prime Minister and this was around one o'clock, you know, 12 o'clock, one o'clock in the afternoon, so let's go back on the hourly time frame to what happened on that day, so we got an expected news result, yeah, expected news result and what we don't want to do is trade expected news results, right, that's not where the edge is, yeah, the edge is with, if you want to trade in real time, is with the unexpected news result, the market wanted to go higher, right, the market did want to go higher but everyone was pressing buy, so this is where market manipulations start to occur, all right, if you go to the chart, this is pretty much what happened, so one o'clock when the announcement came out, traders end up buying, putting their stop losses where if you buy your stop losses are sell and this is where there was no edge really in Boris Johnson winning the, sorry, winning the election, there was no edge, the market was searching for the liquidity, the sell orders, it eventually wanted to go higher which it did but there was no edge in pressing buy when Boris Johnson who was expected to win, you know, when it happened, the money was made all the way to the upside, a lot of traders ended up, you know, losing money, so you know, we sat out of this one and in fact, I've got a little something for you, this was our telegram group, you can have a look at the conversation that we had, you know, on the day, this is the 23rd of July, you can see at the top, right, where I was saying sort of Boris has always been the favourite and in reality there shouldn't be any major surprises, if price starts to get very volatile after Boris is selected then it's more likely to be a manipulation, so here we go, I have a chat with a trader who's in there, he's in the group named Drew and I'm sure Drew won't mind, you know, us having this conversation and being on YouTube but he rightly corrects, there is an opportunity to slam, stop hunts, etc. and I said 100% yeah, I said 100% and I said I've seen this time and time again, right, and Dien, he says basically that and it says short traders, I see the short traders are already in exactly, when he says short traders, he means they were shorting the pound, you know, he's going for a spike, wipe out their accounts, you know, right, and the market versus, right, everyone expecting Boris to win and the pound to drop, yeah, it's what everyone is expecting, when does the market do what everyone expects, exactly, if hunts, if hunts, if hunts get here and they'll be shocked and move forward, it's Jeremy Hunt, for me it's a stop hunting, manipulating opportunity, right, so and I said where's the liquidity, if everyone is anticipating Boris to win, liquidity is in them stops, yeah, so this isn't hindsight, this isn't something I'm just talking about, you know, as far as hindsight bias, this was on the day, you know, this is how we plan, this is how we, you know, we trade the news, so basically, long story short, the market took out all the stops, drew in short traders, which is also sell orders, new sell orders, and then the market went about its merry way, which is what it wanted to do and went higher, and again, the edge in the market was not the expected news result, right, the market did the other thing, the other way, yeah, it took out all the stops, went for the liquidity and then went on its way, another example of this, right, a slight variation on this would be, for example, recently, where we were talking about the Euro, right, and stimulus, so let's go to the chart in fact, let's go to the Euro dollar, Euro dollar, yeah, Euro dollar, let's go to the daily, so on the, this was dated 11th of July, right, 11th of July, go back to the chart again, 11th of July, which is this day here, yeah, there was a Reuters article and again, traders knew, if you understand fundamentals, we have a free fundamental analysis course as well, link is in the description box below, which basically explains everything about interest rates, inflation, stimulus, etc., and what the effects of those have on price, and the IMF sees prolonged dynamic growth in Eurozone, urges ECB stimulus, stimulus basically meaning that they want to, the bank will weaken their currency, they want a cheap Euro, an absolute cheap Euro, so the market knew this, and at the time, you know, this was, you know, the market was kind of coming down into supply zones, your traders getting, well, traders who knew were getting short by the rumor, sell the fact, right, so traders were shorting the Euro, yeah, in the lead up to the announcement, which was, which happened on the 25th of July, which was five days ago, yeah, so Euro hints, two-year low after ECB signals future stimulus, and this was where the 25th of July, this is where the potential announcement was supposed to be made, I mean, the market didn't expect it to happen on that day, but they were waiting for Mario Draghi to signal stimulus, it was a rumor here, right, and then they were waiting for confirmation of that, now, a lot of traders, we go down into, you know, maybe something like a one-hourly chart, a lot of traders were looking at selling based off of dovish comments from Mario Draghi and the ECB, if we go to replay, and in fact, what we'll do is we'll go down to even like a 30, as you know, we'll go down to something like the 15-minute chart, just to illustrate this point. Now, again, where was the money made in the lead up to the expected dovish announcement that, you know, Mario Draghi would introduce stimulus sometime in September, potentially October, right, the money was made all the way up here, and in fact, it's probably made even further back around here. What were retail traders looking to do, buying at where at the market lows into this demand zone? They're buying the dollar, I should say, buying and selling the euro, right, and they're saying buying the dollar at pretty much highs and selling the euro at lows, yeah. This is what they're doing. They're selling the euro at the low. There was no edge in this, and what price is done at the time is a drew traders in, yeah. So if you were looking to trade this news event, after 15 minutes, you would have seen a nice, you know, outside type candle, very, very bearish candle. Where are your stops? Where are your stops going to be? Your stops are going to be somewhere placed above the swing, and you're expecting prices to do drop and fall like a knife. If everyone is getting short, yeah, where are the buy orders? Where are the buy orders? The buy orders are going to be above there because if you're selling, if you're getting short, here, your stop loss is a buy order. Surely what happens is that the market starts to stop everybody out, yeah, stops everybody out, and then we are where we are. It searches for the liquidity, yeah, searches for liquidity. So with that being said, going back to how to trade the news using supply and demand, is understanding where the liquidity is, all right, buy and sell orders. We want to trade unexpected news results, yeah. That's what we're really looking to do if we're trading in real time. There's an opportunity and there's always opportunities to trade, you know, unexpected price action from an expected news result, but that's not going to be covered in this video. Understand that we want the market to be wrong-footed, yeah. Today, we want the market to be wrong-footed. The edge is either a 0.5 rate cut or no change. It's not at 0.25, yeah. In the same way that the edge was not in Mario Draghi announcing what everyone expected, because traders would end up getting stopped out. And not to say that prices can't go higher, tend to, you know, depending on liquidity and, you know, stop hunts can last for, you know, a day or two or even a week or so, right? We have no idea where, you know, when the market will reverse and what, if they've actually got enough liquidity. But when we're, that's a separate, I guess, different subjects and something maybe I might go into, you know, maybe another video. But when it comes to trading the news, the edge is not with expected results. Yeah, that's not where the edge is unless you get unexpected price action as a consequence of the expected results. Yeah. And again, that's through CPR. Or should I say we take advantage of that through CPR. So guys, hope that helps. Take care. And if you have any questions, if you can email me at info at Trading180.com, don't forget to like, subscribe, share and hope you guys have a great trading week.