welcome back to the supply and demand Pro Trader Series in this video I teach you how to master supply and demand like a pro this is lesson two today we are diving deep into the fascinating world of supply and demand but first let's take a trip down memory lane and explore how trading has evolved over the past two decades buckle up because this historical Journey will lay the foundation for our understanding of the inner workings of the financial market and of course we'll end with an exciting look at the market concept itself let's hit the
gas hey there if you haven't met yet I'm Bern I'm a full-time Trader with 10 years of experience I manage 2.4 million dollars in problem capital and legalized internet and consultancy based in Dubai we specialize in providing retraining education and the best part I get to travel the world while trading how do I do it well I rely on my two-step mechanical process but enough about me let's dive into the lesson alright everyone let's dive into little Floor Trader history lesson with fast paced excitement imagine trading three decades ago in the 80s and 90s when
we didn't have broadband internet for everyone it was the era of Floor Traders just like in the movies those Traders wearing those colorful and funny jackets stood on a noisy trading floor yelling screaming and waving papers like their lives depended on it all the different colors and different designs that you see down there was to make You Stand Out Among the crowd but wait there's more on the floor we had the clerks who handled all the orders coming in from people who wanted to trade who were these people well it's fascinating because it was a
mix of big Banks institutions and even the average Joe like you and me now picture this no broadband internet no instant buy and sell buttons like we have today how did the clerks receive those orders back then get ready for this they used fax machines imagine being a clerk arriving at work before the Market opens your heart races and you receive your first order through the passing fax machine it was a different world huh imagine this you've got to buy order for a thousand shares of meta priced at 150 dollars you place it on the
left side of the desk boom right after that a sell order for 500 shares of meta comes in priced at a cool 200 you put it on the right side of your desk before the market even opens your desk is flooded with orders to keep things off organized you saw them by Price whether it's a buy or sell order picture it stacks of orders all lined up ready to go but wait are these orders already filled or are they still waiting for a match of course they are unfilled they've just arrived and are waiting to
be snapped up by the Traders on the floor and then the Market opens the clerk takes those unfilled orders and hands them to the Traders they find the perfect match and voila failed orders now here's the interesting part when the price of meta dropped and crashes into a massive stack of unfit institutional buy orders what happens the price goes up my friend why well it's simple when demand exceeds Supply prices soar so who are all these guys yelling and screaming and what are they doing as the exchange grew in popularity at times there'd be more
sellers than buyers or a demand with no one there to meet it entrepreneurs saw an opportunity to take advantage of this imbalance working in the middle as both buyer and seller but hold on tight because this ride isn't over yet now imagine the price of meta skyrockets and collides with an enormous pile of Android sell orders what do you think happens now yes you're right when Supply is greater than demand prices take a nose dive back in the 80s and 90s stacks of paper orders ruled the trading floors you could touch them physically feel their
presence but guess what the trading game hasn't changed that much the only difference is swapping those old fax machines for Speedy broadband internet so here's a question for you my fellow retail Traders if you could place an order where would you want it on a measly little stag on a colossal mountain of unfit orders obviously the bigger the stack the better those big Stacks move the market my friend think about it your ultimate goal as a retail Trader is to find those massive stacks of unfit institutional orders that's where the real action happens now it's
time to jump into the slides okay so let's get one step deeper behind the scenes and have a look at meta as an example imagine you have meta trading at 201 US dollar a share exactly at 201 US dollars not at 200 not a 202 exactly at 201 US dollar at this specific price you have 96 billing sellers they're willing to sell they haven't sold yet and on the other side you have 60 willing buyers they haven't bought yet so they're they're willing buyers at this specific price since they are willing Sellers and willing buyers
have to filled their orders yet or are they still unfit and failed correct because they are willing to buy and sell and haven't bought and sold yet so what happens next as a Next Step we have 60 transactions taking place at this specific price willing buyers canceling out winning sellers what remains 36 willing Sellers and zero willing buyers and that's the important piece of information here we don't only have more billing sellers than building buyers but we also don't have any single billing buyer left at that specific price hence zero willing buyers based on that
information what ultimately has to happen with price it has to drop and what kind of candle do we get a red or green one a red one obviously and that's now crucial to understand price can only change when one force buyers or sellers in our example buyers becomes zero at a specific price the signs of trading is to identify the origin of this change because in this origin we find the unfilled orders in our example the unfilled sell orders what is the whole teaching Point here let's summarize it to that point unfilled orders cause price
to turn another word for unfilled orders is supply and demand if price is declining and it reaches a price point where there is greater demand price will stop falling and turn higher and vice versa on the supply side so unfilled orders cause price to turn or in other words a lack of significant supply and demand another way to say that is filled orders facilitate price movement all right so field orders facilitate price movement when you look at any price chart of any market for any Financial objective when you are seeing on the chart are those
two things and those two things only filled and unfilled orders because everything on the chart represents those two things but a chart by its nature is actually only made up of one thing it shows you where the field orders are that's a print on the screen again our goal as a Trader is to find the hidden unfilled institutional orders by identifying the footprints the institutions left on the chart this area we call the origin an area on a chart where one of the two forces became zero at a specific price so let's apply step by
step in a very basic form what we just learned let's look at the candidates in which direction does price go it's in a range or could we say it goes sideways since price goes sideways what does it imply in regard to the force that is in control it's supplier than modern control right here well since we cannot really identify who is in control does it imply that there's a huge imbalance or rather balance in the current price range it's balanced correct since price is rather balanced we cannot identify institutional activity at this stage since we
now see a big drop in price what does this job in price tells us about the force that is in control it's supplier demand and control it's without any doubt Supply and based on a drop you see instead of stair stepping drop with small red candles or big strong drop in price it's definitely a big drop so who caused that job you and me or big Banks and institutions it's clearly an Institutional activity we would have never been able to cause a chop in price take this into account and think about it logically the only
reason why price dropped is because of an imbalance one of the two forces so in this case the billing bias became zero in this area it was inevitable that price dropped since in this area we have zero willing buyers but still a significant amount of willing sellers left bottom line Supply exceeded demand we identified the origin we highlight the origin with the yellow box to visualize the area where price left with a very strong move we take this area of imbalance where Supply exceeded demand and draw two horizontal lines to the right so what do
we want to do when price comes back to that area we want to go short sell to enter we place our set and walk away because when price comes back what do we expect to happen and why we expect price to enter this Supply Zone since we have Zero billing buyers in the supply Zone and this is a significant amount of unfilled sell orders Supply will exceed demand and consequently we will see a drop in price so we expect price to enter these Supply zones and as I said since we have zero winning bars in
the supply Zone and a significant amount of unfilled sale orders Supply will exceed demand eventually and the price will drop let's make another example here again let's look at the candles in which direction does price go it's in a Range since price goes sideways what does it imply in regard to the force that is in control it's supplier demand and control right here again same story since we cannot really identify who is in control does it imply that there's a huge imbalance or rather balance in the current current price range since price is rather balanced
we cannot identify institutional activity at this stage since we now see a big rise in price what does the what does this rise in price tell us about the force that is in control the supply or demand and control it's without any doubt demand and based on the rise you see instead of stair stepping move with small green candles or big strong rise in price it's definitely big rise so who caused that rise is it again you and me or big Banks and institutions it's clearly an Institutional activity we would have never been able to
cause that rise in price take this into account and think about it logically the only reason why price Rose is because of an imbalance one of the two forces so in this case the Willing sellers became zero in this area it was inevitable that price moved up since in this area we have zero winning sellers but still a significant amount of winning buyers left bottom line demand exceeded Supply we identified the origin we highlighted the origin with the yellow box to visualize the area where price left with a very strong move we take this area
of imbalance where demand exceeded Supply and draw two horizontal lines to the right here we go now what do we want to do when price comes back to the area we want to go long by place our set and walk walk away 74 get and get a life basically so because when price comes back what do we want to do and what do we expect to happen we expect price to enter this demand Zone since we have zero winning sellers in the demand Zone and the significant amount of unfit buy orders demand will exceed Supply
and consequently we will see a rise in price that they're responsible for prices going up or down the supply and demand drives that if there's too little supply and demand is high well prices are going up if there's too much supply and demand is flat prices are going down in this lesson we've discovered a key takeaway we learned that market prices turn where Supply demand are out of balance meaning one party becomes zero at a specific price or actually better call it an area therefore a Trader needs to identify in advance the area where price
became out of balance these are the significant Market turning points this area of imbalance is where the trader can find unfaird orders from institutions generally the bigger the imbalance the higher the number of unfilled orders your goal as a professional Trader is to find the hidden institutional unfilled orders get ready for some thrilling Market moves I hope this video helped you craft the basic concept of supply and demand get ready to dive into the next lesson of my supply and demand Pro Trader series stay tuned for more exciting content see you next time on my
channel Wishing you happy and safe set and forget Trading foreign
