1-Market Mechanics
Summary
TLDRThis script delves into market structure and order flow, emphasizing the role of speculators and their emotional impact on market dynamics. It outlines how technical analysis is used to identify trading opportunities through price movement and volume. The script also discusses various market participants, including commercial companies and financial institutions, and their influence on currency exchange rates. It explains the concepts of supply and demand and how they drive price changes in a free market. Additionally, it touches on the manipulative aspects of financial markets and the importance of recognizing patterns in price action to make informed trading decisions.
Takeaways
- 📈 Market structure is used as a framework to understand the order flow of the market.
- 🌊 The collective behavior of speculators can lead to herd mentality, influencing market movements.
- 📊 Technical analysis is a tool to identify trading opportunities through the study of price movement and volume.
- 🏦 Large commercial companies and financial institutions contribute to market order flow through significant transactions.
- 🔄 Speculators, including retail traders, aim to profit from exchange rate movements, contributing to market dynamics.
- 💵 Market participants are influenced by human emotions, which drive order flow and price action.
- 🔄 Price action on charts reflects the patterns formed by the interaction of buyers and sellers.
- 🌐 Currency exchange rates fluctuate due to supply and demand from various market participants.
- 💹 The meeting point of buyers and sellers is at the price level, where demand and supply interact to set market prices.
- 📉 In a free market, price movements should reflect a balance between supply and demand, but financial markets can be manipulated by large players.
- 📚 Understanding the basics of supply and demand, as well as the mechanics of order flow, is crucial for successful trading.
Q & A
What is the role of market structure in guiding order flow?
-Market structure serves as a mechanical framework that helps understand the order flow of the market by analyzing the interactions between buyers and sellers.
How do speculators contribute to market behavior?
-Speculators, being emotionally charged, often exhibit herd mentality, which influences the order flow and market structure through their collective actions driven by fear, greed, and uncertainty.
What is the significance of technical analysis in trading?
-Technical analysis is a framework used to identify trading opportunities by studying price movement and volume, reflecting the battle between buyers and sellers.
How do commercial companies impact the forex market?
-Commercial companies, such as large corporations needing to exchange currencies for international transactions, influence the forex market by placing significant orders through banks, affecting currency supply and demand.
What are the different types of market participants mentioned in the script?
-The script mentions commercial companies, banks and financial institutions (BFIs), speculators, and retail traders as key market participants.
How do emotions affect the market order flow?
-Emotions such as fear, greed, and uncertainty, when involved with large sums of money, drive the order flow as they influence the behavior of market participants.
What is the relationship between currency exchange rates and market speculators?
-Currency exchange rates fluctuate based on the supply and demand from market speculators, which includes both institutional and private investors.
How does the price of a currency pair reflect the interaction of buyers and sellers?
-The price of a currency pair is determined by the meeting point of buyers and sellers, where they agree on a price, creating demand and supply pressures that influence price movement.
What is the concept of a 'perfect free market' in the context of financial markets?
-In a perfect free market, prices would move smoothly to match demand and supply without manipulation. However, financial markets often experience price manipulation by large players due to the volume they control.
How do aggressive and passive orders contribute to order flow?
-Aggressive orders are executed instantly at the current market price, affecting the market immediately, while passive orders wait for the market price to reach a specified level, contributing to future order flow.
What is the purpose of a price ladder in the context of order flow?
-A price ladder, also known as the depth of market (DOM), visualizes the order book by showing bids and offers at different price levels, indicating the volume of passive orders waiting to be filled.
How does the imbalance between supply and demand manifest on a price chart?
-An imbalance between supply and demand causes rapid price movements to a new equilibrium. On a price chart, this can appear as a breakout from a range or a significant price spike, followed by a return to fill remaining orders.
Outlines
📈 Understanding Market Mechanics and Emotional Herd Behavior
This paragraph introduces the concept of market structure as a framework for understanding the flow of orders in the market. It emphasizes the role of speculators, who are often driven by emotions like fear, greed, and uncertainty, leading to herd-like behavior. The paragraph also explains how technical analysis is used to identify trading opportunities through the study of price movement and volume, reflecting the battle between buyers and sellers. It mentions various market participants, including commercial companies, banks, financial institutions, and retail traders, all of whom are influenced by human emotions and contribute to the order flow that shapes market prices. The paragraph concludes by discussing how these market dynamics create patterns that can be used for forecasting future price movements.
📉 The Impact of Supply and Demand on Market Prices
The second paragraph delves into the basic economic principles of supply and demand, using a diagram to illustrate how the quantity of a product demanded by consumers changes with price levels. It explains how a decrease in price typically increases demand, while an increase in price can激励 suppliers to offer more of the product. The paragraph then explores what happens when there is a significant imbalance between supply and demand, causing prices to adjust to reach a new equilibrium. It applies these principles to the forex market, explaining how currency exchange rates are influenced by the actions of various market participants, including institutional and private investors. The paragraph also touches on the idea that financial markets can be manipulated by large players, who can influence price movements through their substantial orders.
💼 Order Flow and Its Components in the Market
Paragraph three discusses order flow, which is the interaction between passive and aggressive orders in the market. Passive orders, such as limit and stop orders, are pending orders that wait for the market price to reach a specified level. Aggressive orders, on the other hand, are executed immediately at the current market price. The paragraph explains how these orders contribute to the supply and demand dynamics in the market. It also introduces the concept of a price ladder, or depth of market, which visualizes the order book and shows the volume of bids and offers at different price levels. The paragraph uses an example of a company needing to exchange currencies to illustrate how large orders can significantly impact market prices and discusses the strategies that banks might use to manage such orders to avoid negative slippage.
🌐 The Role of Large Institutions in Shaping Market Prices
This paragraph provides an example of how a large order, such as one from a bank's dealing desk, can affect market prices. It explains that banks may choose to split large orders into smaller parts to avoid significant price slippage and to average out a better price for their clients. The paragraph describes how the immediate execution of a large order can cause a rapid increase in price due to an imbalance between supply and demand. It also discusses how banks might leave the remaining part of an order as a passive order, hoping that the market will return to a certain price level to fill the order. The paragraph concludes by emphasizing the importance of understanding these dynamics for traders looking to time their entries and exits in the market.
📊 Translating Order Book Theory to Price Charts
The final paragraph explains how the concepts discussed, such as order flow and market imbalances, can be observed on price charts. It suggests that by looking for large imbalances between supply and demand, traders can identify opportunities to enter the market. The paragraph describes how price movements can be analyzed on different time frames to gain a better understanding of market trends and to refine trading strategies. It also mentions that the forex market, being an OTC (over-the-counter) market, does not have a central exchange, making it difficult to view a complete order book. Instead, traders rely on price charts and candlestick patterns to interpret market activity. The paragraph concludes by encouraging traders to look for patterns on price charts that indicate significant shifts in supply and demand, which can signal potential trading opportunities.
Mindmap
Keywords
💡Market Structure
💡Order Flow
💡Speculators
💡Technical Analysis
💡Commercial Companies
💡Banks and Financial Institutions (BFI)
💡Retail Traders
💡Human Emotion
💡Currency Exchange Rates
💡Supply and Demand
💡Price Action
💡Passive and Aggressive Orders
Highlights
Market structure serves as a framework for understanding order flow dynamics.
Speculators often exhibit herd mentality due to emotional involvement in market activities.
Technical analysis is used to identify trading opportunities through the study of price movement and volume.
Commercial companies and financial institutions play significant roles in market order flow.
Human emotions significantly influence the behavior of market participants.
Price action on charts is a result of the interaction between buyers and sellers in the market.
Currency exchange rates are influenced by the supply and demand from market speculators.
The meeting point of buyers and sellers is determined by price, which is influenced by demand and supply.
Financial markets can be manipulated by large players due to the volume they introduce.
Economics 101 provides a basic understanding of how price levels are determined by supply and demand.
The demand for a product increases as its price decreases, attracting more buyers.
Supply increases as the price of a product rises, incentivizing sellers to provide more of the product.
The intersection of supply and demand curves determines the market price.
Imbalances in supply and demand can lead to significant price shifts to reach a new equilibrium.
The forex market operates on the same principles of supply and demand as other markets.
Liquidity in a market allows for smoother price movements, whereas imbalances cause aggressive shifts.
Order flow is the result of the interaction between passive and aggressive orders in the market.
Passive orders wait for the market price to reach them, while aggressive orders execute immediately.
A price ladder visualizes the order book, showing bids, offers, and the volume at each price level.
The forex market, being an OTC market, does not have a central exchange, making it decentralized.
Price charts and candlestick charts provide valuable information on past and current prices and market movements.
Identifying large imbalances between supply and demand is key to understanding market shifts.
Combining market structure with supply and demand analysis refines trading entries and exits.
Transcripts
So now we should have a very solid understanding of market structure and how we essentially use
market structure as a mechanical framework to guide us through the order flow of the market.
But now we are ready to start to look at the actual mechanics of the market as in what is
actually behind the production and the interaction of that order flow that then generates the market
structure that we have just been spending time analyzing. Now as history has repeatedly shown
speculators as an aggregate they are often a very very emotionally charged group. Now when you get
millions of them together in a highly emotional money game of fear greed and uncertainty their
combined behavior kind of takes on a kind of you know herd mentality. So technical analysis is the
framework that we use to identify trading opportunities through the study of price
movement and volume from that battle between buyers and sellers that is then reflected on
a price chart. So you have big commercial companies you know putting huge orders through the market
say the Japanese construction company maybe they need to buy thousands of tons of timber from
Canada for example then they're going to need to exchange a large amount of Japanese yen
for Canadian dollars in order to make that purchase. So they approach the dealing desks
at large banks to facilitate that transaction on their behalf so BFI's banks and financial
institutions those are the other big players who are putting you know massive orders through the
market for various reasons. Then we also have speculators who are purely trading to try and
extract the profit from the movement and exchange rates right and this also includes large financial
institutions as well as independent retail traders such as us. Now that is of course not an
exhaustive list of market participants just kind of some of the main ones that we can think about.
Now all of those are affected by the forces of human emotion that come into play when sums of
money are involved and all of this behavior and participation is what drives the order flow that
is put through the market. So that interaction of buyers and sellers with that order flow then
prints the price action that we actually see on our charts and that price action then creates
patterns and it's these patterns that repeat themselves over and over time and time again.
You know crowd psychology has been reflected in the prices of stocks indices commodities futures
and currencies since the beginning of the free market and that interaction of you know millions
of different participants for as many reasons all with their own emotions and agendas that forms
price patterns that stretch over extended periods of time and can be used to make high probability
forecasts of where price may potentially move in the future. Now currency exchange rates they move
up and down as a result of supply and demand from market speculators so every day investors and
traders both institutional and private individuals all buy and sell currencies and the numerous
types of market participants that we just discussed they are buying or selling for their own unique
reasons with their own unique views ideas and beliefs around what the currency pairs they are
trading are actually worth. Now the meeting point of those buyers and sellers for whatever reason
that they are acting is price so no trades can take place unless both the buyer and the seller
actually agree on a price so this drives the price of currency pairs with buyers bringing with them
demand for the pair applying that upward pressure on prices while sellers bring supply applying
downward pressure on prices and the market runs like a continuous auction throughout the day
with buyers and sellers constantly competing with each other to get the best possible price.
Now in a perfect kind of free market this would be a pretty smooth and fair process
however in the financial markets this can often be quite a heavily manipulated process
so let me explain. First we need to have a quick and very very basic lesson on economics 101.
So on this diagram on the y-axis on the left hand side we have the price level for the cost of
product x right and then down along the bottom on the x-axis we have the quantity of product x
that is available to buy from sellers of product x so now what we do is we plot on this line here
and this line represents the demand from people for the product so obviously at the start of the
curve where price is at its highest the amount of quantity demanded for product x will be near its
lowest because not everyone really wants to pay or maybe can afford such an expensive price for
product x but as the price falls the demand for it will increase and increase and increase
more people will want to buy or will be able to buy the product as 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 expensive that they are but generally
when something is cheaper more people want and demand it so at the lower price p2 more quantity
of the product is demanded at q2 so demand increases as the price falls now let's just
remove the demand curve for a second and we'll bring it back in a minute so this line here
represents the supply of product x so down at the start of the curve on the bottom left hand corner
where price is at its lowest the amount of quantity that is supplied to the market
for it will be at its lowest but as the price rises the supply of the product will increase
and increase and increase because suppliers so sellers of the product they will then be more
heavily incentivized to supply and sell the product because they are going to receive more
money right in exchange for actually supplying it so hopefully this also makes logical sense
because the higher the price that you can get for selling something generally the more of it you're
going to want to sell or you know more people will then enter into the market and they will also start
to sell it so the total supply of product x will increase that the higher the price is so supply
increases as the price rises but we can't just only have sellers in the market and we can't just
only have buyers in the market we need both a buyer who demands the product and a seller who
supplies the product because it takes two to make a market so when you plot both the demand curve
and you plot both the supply curve over each other you can then see where the market price
will be so where buyers and sellers meet is where they agree to exchange money for their goods or
service and that determines the market price so that price where the supply meets demand that
is the fair market value but what happens if there is a lot of demand for a product
what if there is so much demand that the product completely sells out and there are no more sellers
left at that price level but people are still demanding it people still want to buy it but
there's no one there to sell it to them well the price is going to increase right because there
needs to be an incentive for new suppliers to enter the market to fulfill that increase in demand
or people you know who still have the product left to sell they're simply just going to increase
their prices because they know that they can get away with charging a higher price right
because there is so much demand that people will be willing to potentially pay a higher price
so what happens is the demand curve shifts up like 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 everyone wants
to buy a product but nobody wants to sell it at the price p1 then the only way to either fulfill
or reduce the demand is to increase the price to p2 so then you'll get the increase in the quantity
supplied from q1 to q2 so if the price goes up then the amount of supply will go up and the market
reaches a new higher equilibrium price from that increase in demand and this is the new fair market
value so the exchange rate in the forex market it works by the exact same principle this mechanism
is going on continuously every single second that the market is open and price is constantly moving
pip by pip to match the price perfectly between the demand and supply between both buyers and
sellers and that is how a free market works now the more liquid a market is the easier that price
can slowly you know move slowly and smoothly up and down but when there is an overwhelming
imbalance between the supply and demand so when there is a lot more quantity demanded then there
are actually sellers supplying it or maybe a lot more sellers supplying the product then there are
actually people willing to buy it at the current market price then there is an aggressive change
in the price level because either the supply or the demand right it has to shift a significant
amount to find the new market equilibrium price so in an ideal situation you know if markets are
absolutely perfect this would be quite a natural process where buyers and sellers can freely agree
on price however in the financial markets this movement of price is often quite a manipulative
process so the big players that we mentioned earlier you know the banks the head funds and
any sort of large institution they have the ability to control movements of price to a degree
due to the huge amounts of volume that they put out into the market you know using all sorts of
tactics to trick traders into potentially taking the other side of their positions
in order to utilize them for liquidity now being able to recognize this is going to bring you one
step closer to joining them because what have I told you that on the price charts they actually
leave footprints and clues indicating their manipulative actions see these institutions
they just have no way to actually hide the overwhelming imbalance in the supply demand
that they create to cause price to move in their favor because their order flow is just so large
because when they put their orders through it creates those huge shifts and imbalances
in the supply and demand in the market now every time frame shows the same patterns again and again
where you can literally see where this is happening so using all of the time frames together
you know it's going to provide a clear picture on where the big players are entering and exiting the
markets so that we can time our entries and exit with extreme precision using a mechanical edge
but before we look at how we can you see these imbalances being caused between supply and demand
by those big players on our price charts first we must understand a little bit more about the
mechanics behind that order flow in the market so order flow is the interplay between both passive
and aggressive orders in the market in more simple terms it essentially just means the interaction
between buyers and sellers so the supply and demand that they bring into the market
via their orders right that they are putting through the market now a passive order is an order
in which the price is different from the current market bid and ask price so this is typically
limit and stop orders so orders which are waiting for price to either come up or come down to them
to hit them so kind of a really simple way to think about this is passive orders are essentially
just pending orders sitting in the order book waiting to be filled when price eventually reaches
them so remember a limit order is one where you buy or sell at a specified price or better
below or above the current market price now the other type of passive order is called a stop order
and a stop order is where you buy or sell at a specified price or worse above or below the
current market price now if you haven't done so already please watch the module on brokers
where we discuss the different order types in much more depth so both of those stop and limit
orders are classified as passive orders so essentially they're just pending orders that
are sitting in the order book waiting to be hit right but the other type of order is called an
aggressive order and aggressive orders are when a trader executes the order instantly so that they
buy or sell at the current best market ask or bid price so it's generally an at market order
so if you just want to instantly buy an instrument right you will get filled at the best current ask
price and if you instantly want to sell an instrument then you will get filled at the best
current bid price so order flow as a whole it is essentially just the interaction so the interplay
between all of these types of orders so you have the passive orders those pending orders that are
just sitting there in the order book waiting to be hit and then these passive orders are actually
visible in the order book you can see them you know just sitting there but then you have the
aggressive orders where traders just step in and instantly hit either the current best bid or ask
price so what does that actually look like well something that is commonly used in the markets
which trade through a central exchange such as the futures market and most stock markets
is a price ladder which essentially visualizes the order book so it's otherwise known as the
dom or the depth of market and it shows all of the bids and offers you know those passive orders
that are sitting in the market those limit and stop orders and it shows the amount of volume
so the amount of supply and demand that is sitting at each individual price level so on
the left hand side you have the bids so the amount of demand that is willing to buy at each price
level and then you have the offers on the right hand side so commonly referred to as the ask prices
which shows the amount of supply at each price level so the top green level is the current
best market bid and the bottom red level is the current best market ask and the blue price in the
middle that represents that last price level that was traded at so in this case the last trade that
was executed was someone buying at the ask price of one spot one five three zero because remember
you have to buy at the ask on the right and you sell on the bid price on the left so if you want
to sell then you have to sell to the highest bidder and if you want to buy then you can buy from
whoever is asking for the lowest price for the product right now when you go and look at your
own forex broker what you will see is just the current best bids and the current best ask and
then the difference between those two prices is the spread right so in this case the spread would
be one point one five three zero minus one point one five two nine which essentially means a spread
of one pip so if you wanted to instantly buy an instrument that would be an aggressive order and
you would buy at the current best ask price meaning you would hit that passive order at one
point one five three zero and you pay the spread of one pip so let's take a look at a very very
oversimplified you know a theoretical example of what can happen on the order book in the live
market so imagine that this was the order book for euro dollar now let's say that a company over in
america they want to buy an innovative tech company that is doing really really well in europe
now that american company is going to need euros in order to buy that european company right so they
will call up their bank's dealing desk and they will say that let's say they need to buy 20 000
lots of euro dollar because they're going to need to sell their us dollars to buy euros right and
they tell the bank's dealing desk that they need this transaction completed within 48 hours and
please give us the best possible price now the bank's traders you know sitting on that dealing
desk they may not want to put through all of those 20 000 lots all in one go because there
may not be enough liquidity to fill that huge order without experiencing massive slippage
because if we look at this current example if you look on the right hand side we can see the amount
of supply that is sitting there on all of those different ask prices now if the bank was to
instantly buy at market with those 20 000 lots price will absorb all of the supply on the right
hand side you know that huge demand that the bank would be entering into the market
it's going to eat up all of that supply and price will just keep going up and up and up until every
single one of those 20 000 lots have been filled you know if they were to enter that with an
aggressive order so an out market order so what they may do instead is split up the order into
smaller parts to hedge the risk of experiencing that negative slippage and see if they can average
out a better price for their client so let's keep it simple and let's just say that they enter half
of the position now so they press buy on 10 000 lots for an app market execution so they hit the
best current ask price and what will happen is the 10 000 total lots sitting on those ask prices
will instantly get absorbed and the price will shoot straight up to 1.1539 due to that huge
imbalance between supply and demand right because there was an overwhelming amount of demand at
that current market level so what did price have to do price had to rapidly shoot up in order to
fulfill that huge shift in demand until there was enough supply at a higher price level to balance
price back out to you know balance both supply and demand and now the market is sitting at what
is deemed to be fair value between buyers and sellers so half of their order has now been filled
but the bank doesn't want to you know keep chasing the market higher and higher
and get filled at an even worse price for their remaining volume right for those remaining 10 000
lots so what they do is they leave the remaining 10 000 lots as a passive order so as a buy limit
order back down around that original price level of 1.1529 as this is where they hope that the
market will eventually trade back down to fill them within the next 48 hours for their client
now if price eventually gets back down to that level of 1.1529 what do you think are the odds
that there will be more supply than demand to absorb all of that demand of that huge buy order
of 10 000 lots and the rest right to keep pushing price down past that level to keep pushing price
down past 1.1529 i would say the probability is that price is more likely to see a bullish move
from that price level right the very minimum there will be a bullish bounce right there'll be a bit
of a reaction as the market experiences that imbalance between supply and demand at that level
so essentially what this does is it gives you a really great edge to look to be buying around
that level right with this huge demand and then surf on the coattails of that order flow right
of the order flow of the whales of those large institutions in the market now because the spot
forex market is an otc market which means it's traded over the counter this means it is a
decentralized market so there isn't one central exchange where all of the total volume and all
of the total trading activity goes through so you can't really look at an order book of just one
liquidity provider and get a super accurate view of what the true total order book looks like
for the entire forex market as a whole but we don't need to and also in reality you know reading
a price ladder can be very very complicated as all of this buying and selling activity
so the interaction between supply and demand is extremely dynamic especially when you throw in
the aggressive orders that are hitting the bids and the asks that are sitting there so it can be
very hard to read so instead what we use is a price chart and the price chart gives us tons
of information on the current and the past prices that have been traded and in the chronological
order in which those levels were traded so essentially we just see that middle column here
of how price moves up and down those levels but also how quickly price moves up and down those
levels and that's where multi-time frame analysis comes into play and that's why we use candlestick
charts because they give us a lot of information but you just need to know how to be able to read
it effectively so with this example on this order book here of what we just went through
how could that example possibly look like on a price chart well how we may potentially see you
know something similar to that and the order book theory that we just looked at obviously a very
sort of you know oversimplified theory of how it really goes on in the market where we have you
know millions of different participants but generally you'll see price kind of chopping
around sort of you know ranging sideways moving up and down not really going anywhere with real
conviction right just some even distribution between buyers and sellers and then boom what
happens we get that overwhelming imbalance between supply and demand right where demand has clearly
overpowered supply and we have initiated out that range and broken to the upside right so imagine
you know 10 000 the order has just been filled and pushes price all the way up to the upside
to try and find as much supply in order to fill all of those those lots that that you know the
bank firm or institution wants to buy so price then shoots up to the upside but it's very likely
that there's still going to be a lot of sitting demand back within those initial price levels
of where there'll be orders and liquidity that price wants to then fill so we will very often
see as in price start to make its way back down towards that level back down towards that level
pick up those orders and then boom you'll see another imbalance between that supply and demand
again as those remaining orders are filled and demand is now fully in control and yeah we just
see the same thing happen again and 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 exact same thing happen again where
if you have price ranging price initiates out as we get that imbalance between supply and demand
price comes back into that demand and it fills the next orders right we get that range price
initiates out price comes back in to fill those orders right we get a range pricing initiates
out right the origin of that move price comes in to fill more orders and then we move away right
we initiate out that range price comes back into full those orders where the demand stepped in
and we initiate out that range right we come here break up those highs price comes back in
to fill the remaining demand right it just happens again and again and again right price range in
We initiate out price comes back in to fill those orders right same thing original range down here, right?
That was the origin of the move price comes in a little bit lower to fill those orders, right?
It needed more demand to then continue that move and the same thing will just continue to happen
Right, just get rid of all that price action and play it forward a bit
No, it's on every single time frame, right time doesn't know price present no time
It's just orders going through the market that we can then see on those candles right as price continues to move up
Right pulls back it ranges demand steps in again to take control
Boom, right pull back into demand to then continue to fuel the move
Right, and we have this range here demand steps in price comes back in to fill those remaining orders
And then we come off right demand steps in price comes back into that demand to then make another move here
All right again and again and again
So obviously we'll cover this a lot more depth in the charts in a bit
But now you can kind of just see how a simple example like that actually is translated onto the candles on the charts
So if you're a little bit confused potentially about some of the things that we just discussed in this lesson
You know, don't worry too much watch it a few times if you need to just to kind of you know
Really make it sink in but when it comes to supply and demand the following is literally all you really need to think about
So literally all we're doing is we're just looking for where there are large imbalances between supply and demand
That cause those huge shifts in the market. So we are trying to identify the charts
You know where an overwhelming amount of demand entered the market to cause price to rapidly move to the upside
But then we'll look to buy it when price returns to those areas of demand
And then we'll also look for where there was an overwhelming amount of supply that entered the market
To cause prices to rapidly move to the downside and we'll look to sell when price returns to those areas of supply
Now when we combine this with everything that we already now know about market structure
So when we've identified the exact high-value areas of the trend in which we want to position ourselves in
Right, we've used multi timeframe analysis to wait for all of those timeframes to sync to give us as much confirmation as possible
Then we over overlay that and overlap that with supply and demand that then becomes another
Extremely powerful tool to help us with timing and refining our positions and our exits
And this is what we're going to dive really deep into over the next few lessons
you
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