Original subtitles

then when we over overlay that and overlap that with supply

in which we want to position ourselves in right we've used

multi-time frame analysis to wait for all of those time

when we've identified the exact high value areas of the trend

everything that we already now know about market structure so

to those areas of supply now when we combine this with

to the downside and we will look to sell when price returns

buy when price returns to those areas of demand and then we

price to rapidly move to the upside but then we'll look to

to think about so literally all we are doing is we're just

cover this a lot more depth in the charts in a bit but now you

steps in again to take control boom right pull back into

that we can then see on those candles right as price

price and no time it's just orders going through the market

on every single time frame right time doesn't know price

price comes in a little bit lower to fill those orders

same thing would just continue to happen right if it's get rid

remaining demand, right? It just happens again and again

here, break up those highs, price comes back in to fill the

stepped in and we initiate out that range, right? We come

price comes back in to fill those orders where the demand

again and again right if you just go and look on any single

price chart and you just scroll back right you'll just see the

those remaining orders are filled and demand is now fully

that level pick up those orders and then boom you'll see

wants to buy so price then shoots up to the upside but

supply and we have initiated out that range and broken to

it's very likely that there's still going to be a lot of

frames to sync to give us as much confirmation as possible

provider and get a super accurate view of what the true

so essentially just see that middle column here of how price

and all of the total trading activity goes through. So, you

total order book looks like for the entire Forex market as a

isn't one central exchange where all of the total volume

also look for where there was an overwhelming amount of

overwhelming amount of demand entered the market to cause

are trying to identify in the charts you know where an

know really make it sink in but when it comes to supply and

demand the following is literally all you really need

things that we just discussed in this lesson don't worry too

much watch it a few times if you need to just to kind of you

you're a little bit confused potentially about some of the

in price comes back into that demand to then make another

demand to then continue to fuel the move right and we have this

Forex market is an OTC market which means it's traded over

price down past 1. 1529 I would say the probability is that

price is more likely to see a bullish move from that price

comes back in, fill those orders right same thing

right it needed more demand to then continue that move and the

the next orders, right? We get that range, price initiates

ranging price initiates out as we get that imbalance supply

another imbalance between that supply and demand again as

demand of that huge buy order of ten knots and the rest right

lots have been filled you know if they were to enter that with

there may not be enough liquidity to fill that huge

sitting demand back within those initial price levels of

where there'll be orders and the quality that price wants to

being filled and pushes priced all the way up to the upside to

try and find as much supply in order to fill all of those

the upside right so imagine you know 10, 000 the orders just

supply and demand right where demand has clearly overpowered

distribution between buyers and sellers and then boom what

euros right? And they tell the bank dealing desk that they

need euros in order to buy that European company right? So they

Euro dollar. Now let's say that a company over in America they

of what we just went through how could that example possibly

participants but generally you will see price kind of chopping

but you just need to know how to be able to read it

look like on a price chart well how we may potentially see you

candlestick charts because they give us a lot of information

current best ask price meaning you would hit that passive

current best ask and then the difference between those two

right now when you go and look at your own Forex broker what

price level so on the left hand side you have the bids so the

hitting the bids and the asks that are sitting there so it

can't really look at an order book of just one liquidity

reading a price ladder can be very very complicated as all of

large institutions in the market. Now, because the Spot

order flow, right? Of the order flow of the whales of those

that level so essentially what this does is it gives you a

really great edge to look to be buying around that level right

And this is what we're going to dive really deep into over the

shows all of the bids and offers you know those passive

as the future's market and most stock markets is a price ladder

orders, those pending orders that are just sitting there in

to help us with and refining our positions and our exits.

supply that entered the market to cause prices to rapidly move

and demand that cause those huge shifts in the market so we

that level of 1. 1529 what do you think are the odds that

to keep pushing price down past that level to keep pushing

their client now if price eventually gets back down to

if you instantly want to sell an instrument then you will get

market ask or bid price. So it's generally an app market

order. So if you just want to instantly buy an instrument

order an aggressive order or when a trader executes the

looking for where there are large imbalances between supply

can kind of just see how a simple example like that

those remaining orders and then we come off right demand steps

range here demand steps in price comes back in to fill

keep chasing the market higher and higher and get filled at an

value between buyers and sellers so half of their order

and now the market is sitting out what is deemed to be fair

price back out to you know balance both supply and demand

of all that price action and play it forward a bit you know

and again, right? Price range in, we initiate out, price

and then we move away, right? We initiate out that range,

on those ask prices will instantly get absorbed and the

imbalance between supply and demand right because there was

hedge the risk of experiencing that negative slippage and see

specified price or better below or above the current market

the supply and demand that they bring into the market via their

order book waiting to be filled when price eventually reaches

a passive order is an order in which the price is different

its way back down towards that alert level back down towards

and demand, price comes back into that demand and it fills

exact same thing happen again where which you have price

those lots that that you know the bank firmer institution

and up and up until every single one of those 20, 000

order without experiencing massive slippage because if we

eat up all of that supply and price will just keep going up

those different ask prices now if the bank was to instantly

and demand that then becomes another extremely powerful tool

move here right again and again and again so obviously we'll

actually is translated onto the candles on the charts so if

really going anywhere with real conviction right just some even

happens we get that overwhelming imbalance between

market where we have you know millions of different

orders in the market in more simple terms it essentially

just means the interaction between buyers and sellers so

mechanics behind that order flow in the market so order

original range down here right that was the origin of the move

continues to move up right it pulls back it ranges demand

origin of that move, price comes in to fill more orders

that let's say they need to buy 20, 000 lots of Euro dollar

need this transaction completed within 48 hours and please give

because they're going to need to sell their US dollars to buy

know something similar to that and the the order book theory

frame analysis comes into play and that's why we use

moved up and down those levels and that's where multi-time

can be very hard to read so instead what we use is a price

chart and a price chart gives us tons of information on the

get a range, price then initiates out, right? The

out, price comes back in to fill those orders, right? We

around sort of you know ranging sideways moving up and down not

in control and yeah we just see the same thing happen again and

then fill so we will very often see is in price start to make

know over simplified theory of how it really goes on in the

really well in Europe. Now that American company is going to

one pip so if you wanted to instantly buy an instrument

prices is the spread right so in this case the spread would

you will see is just the current best bid and the

when you throw in the aggressive orders that are

whole. But we don't need and also in reality you know

shows the same patterns again and again where you can

literally see where this is happening so using all of the

hide the overwhelming imbalance in the supply demand that they

orders through it creates those huge shifts and imbalances in

that we just looked at obviously a very sort of you

effectively so with this example on this order book here

moved up and down those levels but also how quickly price

the chronological order in which those levels were traded

experiences that imbalance between supply and demand at

right there will be a bit of a reaction as the market

as this is where they hope that the market will eventually

there will be more supply than demand to absorb all of that

from whoever is asking for the lowest price for the product

represents last price level that was traded at so in this

the left so if you want to sell then you have to sell to the

current best market ask and the blue price in the middle that

current and the past prices that have been traded and in

between supply and demand is extremely dynamic especially

this buying and selling activity so the interaction

price and what will happen is the 10, 000 total lots sitting

there was enough supply at a higher price level to balance

for an at market execution so they hit the best current ask

level so what did price have to do price had to rapidly shoot

told you that on the price charts, they actually leave

bring you one step closer to joining them because what if I

create to cause price to move in their favor because their

liquidity. Now, being able to recognize this is going to

the counter, this means it is a decentralized market. So, there

with this huge demand and then surf on the cottails of that

level right the very minimum there will be a bullish bounce

amount of demands that is willing to buy at each price

an aggressive order so an app market order so what they may

orders that are sitting in the market those limit and stop

in the markets which trade through a central exchange such

trade back down to fill them within the next 48 hours for

remaining 10, 000 knots as a passive order so as a buy limit

order back down around that original price level of 1. 1529

those remaining 10, 000 lots so what they do is they leave the

order are actually visible in the order book. You can see

your order book waiting to be hit and then these passive

between all of these types of orders. So you have the passive

right you will get filled at the best current ask price. And

side of their positions in order to utilize them for

ideal situation you know markets are absolutely perfect

this would be quite a natural process where buyers and

even worse price for their remaining volume right for

has now been filled but the bank doesn't want to you know

up in order to fulfill that huge shift in demand until

an overwhelming amount of demand at that current market

half of the position now so they press buy on 10, 000 lots

price will shoot straight up to 1. 1539 due to that huge

so let's keep it simple and let's just say that they enter

if they can average out a better price for their client

buy at market with those 20, 000 lots price will absorb all

through all of those 20, 000 lots all in one go because

we can see the amount of supply that is sitting there on all of

sitting on that dealing desk they may not want to put

order instantly so that they buy or sell at the current best

price or worse above or below the current market price now if

price. Now the other type of passive order is called a stop

orders are essentially just pending orders sitting in the

do instead is split up the order into smaller parts to

that the bank would be entering into the market it's going to

of the supply on the right hand side you know that huge demand

will call up their bank's dealing desk and they will say

want to buy an innovative tech company that is doing really

take a look at a very very oversimplified you know a

order at 1. 1530 and you pay the spread of one pip so let's

kind of a a really simple way to think about this is passive

from the current market bid and ask price. So this is typically

charts first we must understand a little bit more about the

look at this current example if you look on the right hand side

us the best possible price now the bank's traders you know

live market. So imagine that this was the order book for

move slowly and smoothly up and down but when there is an

actually sellers supplying it or maybe a lot more sellers

liquid the market is the easier that price can slowly you know

be 1. 1530 minus 1. 1529, which essentially means a spread of

buy at the ask on the right and you sell on the bid price on

case the last trade that was executed was someone buying at

theoretical example of what can happen on the order book in the

that would be an aggressive order and you would buy at the

the ask price of one spot 1530 because remember you have to

highest bidder and if you want to buy then you can buy

at how we can you know see these imbalances being caused

footprints and clues indicating their manipulative actions.

supplying the product then there are actually people

willing to buy it at the current market price then there

aggressive orders where traders just step in and instantly hit

amount of supply at each price level so the top green level is

it is essentially just the interaction so the interplay

filled at the best current bid price. So order flow as a whole

the current best market bid and the bottom red level is the

so commonly referred to as the ask prices which shows the

supply and demand that is sitting at each individual

level and then you have the offers on the right hand side

increase in demand. And this is the new fair market value. So

the exchange rate in the Forex market, it works by the exact

the market reaches a new higher equilibrium price from that

demand is to increase the price to Ptwo. So then you will get

classified as passive orders so essentially they're just

brokers where we discuss the different order types in much

you haven't done so already please watch the module on

there is a lot more quantity demanded than there are

continuously every single second that the market is open,

if the price goes up, then the amount of supply will go up and

orders and it shows the amount of volume so the amount of

which essentially visualizes the order book. So, it's

otherwise known as the dom or the depth of market and it

actually look like? Well, something that is commonly used

either the current best bid or ask price. So, what does that

them. So remember a limit order is one way you buy or sell at a

orders right that they are putting through the market. Now

between supply and demand by those big players on our price

exiting the markets so that we can tire my entries and exit

with extreme precision using a mechanical edge but before we

the increase in the quantity supplied from Q one to Q 2. So

this so now the price goes up in order to increase the supply

of the product to meet that increase in demand for it so if

them, you know, just sitting there but then you have the

get away with charging a higher price right because there is so

higher price so what happens is the demand curve shifts up like

market to fulfill that increase in demand. Or people you know

picture on where the big players are entering and

the supply and demand in the market now every time frame

hit right but the other type of order is called an aggressive

pending orders that are sitting in the order book waiting to be

more depth so both of those stop and limit orders are

order and a stop order is where you buy or sell at a specified

still have the product left to sell they're simply just

much demand that people will be willing to potentially pay a

what happens if there is a lot of demand for a product? What

level. But people are still demanding it. People still

price to a degree due to the huge amounts of volume that

to trick traders into potentially taking the other

process so the big players that we mentioned earlier you know

sellers can freely agree on price however in the financial

time frames together you know it's going to provide a clear

price to either come up or come down to them to hit them. So

limit and stop orders. So orders which are waiting for

flow is the interplay between both passive and aggressive

meet is where they agree to exchange money for their goods

something generally the more of it you're going to want to sell

if there is so much demand that the product completely sells

quantity that is supplied to the market for it will be at

its lowest. But as the price rises the supply of the product

and a seller who supplies the product because it takes two to

or you know more people will then enter into the market and

because the higher the price that you can get for selling

is an aggressive change in the price level because either the

overwhelming imbalance between the supply and demand so when

and sellers and that is how a free market works now the more

order flow is just so large because when they put their

institution they have the ability to control movements of

See, these institutions, they just have no way to actually

they put out into the market you know using also of tactics

markets this movement of price is often quite a manipulative

going to increase their prices because they know that they can

everyone wants to buy a product but nobody wants to sell it at

Well the price is going to increase right? Because there

want to buy it but there's noone there to sell it to them.

out and there are no more sellers left at that price

will increase and increase and increase because supply so

remove the demand code for a second and we'll bring it back

hand corner where price is at its lowest the amount of

So demand increases as the price falls. Now let's just

amount to find the new market equilibrium price so in an

the banks the head funds and any any sort of large

supply or the demand right it has to shift a significant

cheaper more people want and demand it so at the lower price

P two more quantity of the product is demanded at Q two.

expensive that they are but generally when something is

a price is constantly moving pit by pip to match the price

perfectly between the demand and supply between both buyers

or service. And that determines the price. So that price where

where the market price will be. So where buyers and sellers

the market. We need both a buyer who demands the product

everyone really wants to pay or maybe can afford such an

curve where price is at its highest the amount of quantity

demand for it will increase and increase and increase more

line here and this line represents the the demand from

needs to be an incentive for new suppliers to enter the

same principle. If this mechanism is going on

plot both the supply curve over each other you can then see

the price P-1 then only way to either fulfill or reduce the

the supply meets demand, that is the fair market value. But

people will want to buy or will be able to buy the product as

expensive price for product X but as the price falls the

auction throughout the day with buyers and sellers constantly

sellers in the market and we can't just only have buyers in

supplying it so hopefully this also makes logical sense

going to receive more money right in exchange for actually

incentivized to supply and sell the product because they're

in a perfect kind of free market this would be a pretty

now the meeting point of those buyers and sellers for whatever

bringing with them demand for the applying that upward

place unless both the buyer and the seller actually agree on a

reasons with their own unique views ideas and beliefs around

make a market. So when you plot both the demand curve and you

increases as the price rises. But we can't just only have

X will increase that the higher the price is so supply

product X. So down at the start of the curve on the bottom left

people for the product so obviously at the start of the

demanded for product X will be near its low because not

they will also start to sell it so the total supply of product

sellers of the product they will then be more heavily

in a minute. So this line here represents the supply of

numerous types of market participants that we just

over extended periods of time and can be used to make high

of the free market and that interact of you know millions

discussed they are buying or selling for their own unique

private individuals all buy and sell currencies and the

down as a result of supply and demand from market speculators

emotions and agendas that forms price patterns that stretch

sellers of product X so now what we do is we plot on this

right and then down along the bottom on the X axis we have

hand side we have the price level for the cost of product X

explain first we need to have a quick and very very basic

it gets cheaper that makes logical sense right of course

there are some exceptions you know like designer clothes for

example where more people actually desire them the more

themselves over and over time and time again you know crowd

that we actually see on our charts and that price action

can often be quite a heavily manipulated process so let me

what the currency pairs they are trading are actually worth

reason that they are acting is price so no trades can take

so everyday investors and traders both institutional and

the quantity of product X that is available to buy from

smooth and fair process however in the financial markets this

lesson on economics 101 so in this on the Y axis on the left

competing with each other to get the best possible price now

participation is what drives the order flow that is put

that we can think about. Now all of those are affected by

as us. Now that is of course not an exhaustive list of

then creates patterns and it's these patterns that repeat

probability forecasts of where price may potentially move in

the future our currency exchange rates they move up and

psychology is being reflected in the prices of stocks indices

through the market so that interaction of buyers and

market participants which is kind of some of the main ones

financial institutions those are the other big players who

various reasons Then we also have speculators who are purely

of different participants for as many reasons or of their own

pressure on prices or sellers bring supply applying downward

pressure on prices and the market runs like a continuous

price so this drives the price of currency pairs with buyers

commodities futures and currencies since the beginning

sellers with that order flow then prints the price action

the forces of human emotion that come into play when sums

of money are involved. And all of this behavior and

institutions as well as independent retail traders such

thousands of tons of timber from Canada for example then

takes on a kind of you know herd mentality. So technical

reflected on a price chart. So you have big commercial

trading to try and extract the profit from the movement in

companies you know putting huge orders through the market save

Japanese yen for Canadian dollars in order to make that

opportunities through the study of price movement and volume

purchase so they approach the dealing desks at large banks to

are putting you know massive orders through the market for

they're going to need to exchange a large amount of

from that battle between buyers and sellers that is then

order flow that then generates the market structure that we

the order flow of the market. But now we are ready to start

fear, greed and uncertainty, their combined behavior kind of

exchange rates, right? And this also includes large financial

structure as a mechanical framework to guide us through

repeatedly shown speculators as an aggregate they are often a

facilitate that transaction on their behalf so BFIs banks and

very very emotionally charged group. Now when you get

have just been spending time analyzing. Now as history has

a Japanese construction company maybe they need to buy

millions of them together in a highly emotional money game of

analysis is the framework that we use to identify training

structure and how we essentially use market

So now we should have a very solid understanding of market

actually behind the production and the interaction of that

to look at the actual mechanics of the market as in what is

next few lessons.