Market timing with Sam Seiden: April 29th, 2021

hey everyone sam here good to see everybody let's get started so if you have uh any other questions or or thoughts and want more information beyond what we go over today you can always join one of the workshops if you're trading already you're probably better off in the advanced workshop if you are brand new the introductory workshop is the better choice what we're going to talk about today is really a just pure supply and demand uh basics and we'll get into that in just a moment here but again great to uh see everyone okay just reading a little bit back in the chat yep good good to see everyone and and look um you know what we cover here and what i talk about is just how the markets really work and uh it is all about supply and demand and again what we're going to dive into today is the very basic foundation of that all right if you have any questions along the way just ask you might want to pay close attention because we are going to have a small little quiz at the end and we'll see how you do there so let's uh let's really dive into the basics and if you think about it mastering any skill in life is all about mastering the basics isn't it and typically you don't really need to get far beyond the basics individuals who are free to pursue pursue their self-interest will produce goods and services that others want at prices others are willing to pay right this is the basic foundation of uh of how it all works if you really think about it think of anything in life the financial markets any other markets out there um you know you name it this is how it works when individuals are free to pursue their self-interests right they'll produce goods and services others want at prices others will be willing to pay in other words supply and demand all regulates itself if left to uh just the freedom of a market right now we know these days there's manipulation here and and cheating over there and and all this other stuff that we could talk about for hours but in the end supply and demand still makes it all right in the end right supply and demand forces prices right back to where they should be at all times even with the cheating and manipulation and everything else so what we need is a razor sharp focused on pure supply and demand for those that are brand new to this we're gonna we're gonna dive into uh into the basics the two most important questions when it comes to trading and investing in any financial market for any financial purpose day trading and sweden trading for income longer term investing for wealth hedging portfolio risk bonds when it comes to interest rates it doesn't matter really doesn't matter we're talking about one rule-based strategy any market any financial purpose so in other words anything we talk about during this session applies equally to any and all markets stocks futures forex bonds crypto options you name it uh day trading swing trading longer term investing doesn't matter but with all this the two most important questions are where will price turn and where will it move to answering those questions based on purely objective objective information is what we're going to focus on during this session we understand when it comes to the first question where will price turn okay a significant supply and demand imbalance causes prices to turn okay the second question where will price move to a lack of a significant supply and demand and balance facilitates price movement so if a significant supply demand and balance cause prices to turn the lack of that imbalance makes it easy for price to move make sense okay so now where did this come from and you know all these all the screen you know screenshots and webinars and youtube stuff uh all this supply demand stuff well i developed the strategy many many years ago um while spending time on the trading floor of the chicago mercantile exchange i've told this story before um so i'll i'll give you the kind of the short version but uh and the only reason why i'll give it to you is because it'll help you understand how this all works as we dive into the charts in a moment so when i was on the training floor like i've said many times i started out on the trade desk right my job was to facilitate institutional order flow this was at the chicago berkeley exchange so what i had access to in front of me right were the real buy and sell orders from banks financial institutions money managers um you name it hedge funds and some retail accounts right some average uh trader and investor retail accounts so every day come in and take those orders and create piles of orders buy orders sell orders all according to price so what you had in what i had in front of me back then this is back in the 90s was you know stacks of buy orders stacks of sell orders uh big significant orders right from the professionals and mainly professionals and um that was the market's real supply and demand if i wanted to figure out where the market was going to stop falling and turn higher all i'd have to do is look down into my left and find the largest stack of buy orders below current price if i wanted to know where the market was going to stop rallying and turn lower all i'd have to do is look down to my right and find the largest stack of sell orders above current price that was the market's real supply and all that would happen every day every week every month is prices would you know go move from demand to supply and back again and it had to right that's how markets work so um you know what i did after that was start to print out price charts and bring them over to the trade desk and uh once i knew where these orders were where the market was likely to turn or was likely to move to i would put lines on those areas on a price chart that represented supply and demand where those orders were and sure enough prices would turn from uh one stack of buy orders move to the next stack of sell orders and back again until all those orders were gone and then price would move to the next uh level and uh and as i did that my goal was to leave and start trading from home and that's what i did right i know again i know i've told that story a million times but um just to help paint that picture as we get into what all this looks like on a price chart next okay but one thing that really hooked me into this business and it's important that you understand this because it really is a big part of the mindset that you really need to have whether you're day trading swing trading longer term investing doesn't matter and it's understanding this you know i noticed that banks financial institutions you know money manager just your your the professionals right tended to be right in their decision-making process most of the time and as a whole tended to make quite a bit of money at the same time your average retail trader or investor either lost money or never came close to achieving their financial goals and i saw this at the level of of the orders right the buy and sell orders because i was i was facilitating those that was my job and and i thought to myself wow how could one group be so good at this and how could the other group be so bad at this yet they're both buying and selling in the same market and that the gap in performance between the two groups was so wide and i thought wow if i could just figure out what this group is doing maybe i can do that well right okay so um let's dive into this basic concept a little bit more and we're gonna go over it in a way that maybe we haven't gone over it before and then we're going to learn to see what this looks like on a price chart so we can apply this to whatever type of trading you're investing you're doing today so i developed so you know back in the 2000s you know just i was i was uh most of my most of my time after the trading floor was just you know trading from home that's what i did and um [Music] then all of a sudden the rest of the world started a lot of people you know the masses out there started to get wanted to get involved in this in the early 2000s right late 90s with the market boom and and all of a sudden you know this whole online trading thing comes about and everyone wanted to get involved so um someone i know i knew said hey sam you should put a course together i said i don't know anything about teaching or courses or any of that or powerpoint they said well i'll help you so i did and that was back in 2004 is when i put a supply demand course together and i say that because i pulled a section out of that course to to give it to you here to go over with you here today um this is how markets work back then this is how they work today this is how they work 100 years from now it's just all about supply and demand okay uh stephen yeah the i see your uh some questions in the comments in the chat yeah the 2020 the covid the covet crash first of all any um anyone in our group here uh i was delivering morning sessions during all that anyone here um were you uh were you in those sessions uh with us uh jasmine and i back then uh or it was actually just me back in the uh covid uh the covet market meltdown anyone in those sessions with us we delivered uh morning sessions every day during that time and um yeah it was uh we just applied strategy uh you were there akash okay yep yep so um yes you can you remember all that then so do you remember what we did during that time right what did we focus on as soon as it was literally the the evening that the nba cancelled games as soon as that happened we said okay this is a very big deal there's a lot of supply coming into this market now right so what we did was okay we immediately said all right we're only focusing on fresh demand zones on larger time frames in the equity index markets right akash was there you you kind of remember what we did so that took us right down to in the s p and dao and russell that took us below the december lows at that point and the nasdaq was the only one that had a demand zone above the december lows and that's and those are that's where the market turned right the reason why we did that immediately went into applied strategy and went to uh larger time frame fresh demand zones is because there was so much supply coming into the market we had to find the price levels in these markets where there was enough demand to meet all that supply because when you find that that's where the market's going to bottom and that's where the market's going to turn right once all those sell orders are filled then the market's going to go higher right and if you uh if you remember back then in those sessions we're also saying look this this issue this covet issue is very real and will probably be with us for a while however the market decline on this is likely to be very very short-lived okay so and we have a whole i've tons of examples uh from positions and trading opportunities from then we can go over not not during this session uh i almost put some in here but i didn't but we can go over that next time okay um yeah kryptonite uh we i don't know if we'll have time to look at all those charts today but we can do that in a next session yeah we we we um we apply strategy to the cryptos bitcoin and the others is the same way we do here and actually in the morning sessions that i deliver we we cover bitcoin and and any others ethereum whenever they come into our community getting close to zones so everything we're going to go over here uh kryptonite just just apply it to uh to those crypto markets and akash yeah we i i don't have charts in the nifty here today but we can do that we just really do that in our time but let's dive in and let's and again for people that are brand new with this and even brand new to trading let's let's dive into the basics let's go over the three laws of price movement number one price movement in any free market is a function of an ongoing supply and demand relationship within that market we're gonna dive into each of these number two any ending all influences on price are already reflected in price and last but not least the origin of motion of change in price or anything is an equation where one of two competing forces in our case today buyers and sellers demand and supply becomes zero at a specific price just like those demand zones back in march of 2020 that you're asking about let's dive into to those two things and what we're quantifying here is the two competing forces of demand and supply it's not that hard to see on a price chart if you know what you're looking for so the first one again price movement in any market is a function of an ongoing supply and demand relationship within that market notice here price is trading sideways for a short period of time and all of a sudden it moves higher away from this price level why does that happen because demand and supply and demand are out of balance here in a big way demand exceeds supply how do we know that to be true because if that statement was not true and supply and demand were equal here price would just keep trading sideways but it couldn't in fact it only stayed here for a short period of time suggesting a big imbalance and price moves higher remember we don't try to predict that price is going to move higher out of this level we let that happen and once it does that gives us all the information we need to know about this level we follow our rules and wrap our two lines around this level to create a demand zone or buy zone another word for demand wholesale prices and we carry that level forward okay if and when prices come back to this zone we now know that prices are at wholesale levels where we want to be a buyer okay they're at a price level where demand exceeds supply where professionals are buying the chart already told us that buying at demand as long as you have a profit zone above and you're okay with the risk is the lowest risk highest reward and highest probability time to buy into a market same thing is true up here okay price is trading sideways for a period of time all of a sudden it can't stay there price declines once the decline happens that's we could say aha we now know where supply exceeds demand where professionals are selling again we know that because if if supply and demand were equal up here price would just keep trading sideways it couldn't it fell telling us that the last buyer right bought right here and you had a certain amount of supply left over anytime that equation is true price is going to decline so we follow our rules wrap our lines around this letter level creating our uh cell zone right supply zone another word for supply retail prices okay once all these sell orders are filled price will move to the next supply zone once all the buy orders are filled at demand price moves to the next man zone this is all a function of an ongoing supply and demand relationship within that market any and all influences in price are reflected in price we can have a conversation all day around all these items here earnings reports analysts opinions technical indicators a fed announcement there was you know there was one yesterday uh it doesn't matter and we can add to this list if we make this very interactive but at the end of the day all of these reports all of this news all this information leads to thoughts and perceptions and everyone has slightly different thoughts and perceptions around all this stuff right think about it all day long 24 7 on the internet on tv you have two you know ivy league economists arguing an economic report and they're one is saying it's good the other one is saying it isn't good and they both give their reasons at the end of the day these create thoughts and perceptions thoughts and perceptions end up as one of three things on a price chart a buy a sell or nothing we don't care about the nothing what we care about is the buy or the sell and that ends up on the price chart right we see that for example here this is tesla this is a it's going back a little ways in tesla but it's a great example down here goldman sachs cut tesla's price target and with it with a news announcement uh in a statement saying downward path for shares will resume they did that when price was down here okay so that statement the news right uh is real and um that drives people into sell but it but you have to understand as soon as the last seller sells at a price level where demand exceeds supply there's only one place for price to move and at that point price moved from about 200 to about 900 a share people will say well how can that happen right the news was bad yeah the news was bad enough people listened to it to push the sell button and that drove price down until it got to a price level where there was enough demand to fill all those sell orders all that supply once that happens uh there's only one price place for price to go and it's higher okay it's like your question about 2020 with covid right as soon as the last seller sold at our demand zones price has gone up you know ever since uh in a ton of stocks uh all the major markets right and some people say well how can that be the news was so bad the news was so real that's why it happened right because it drove a ton of people in to sell which brought price down to deep discount fresh demand zones and once again the last sell order is filled there's only one place for price to go let's move on to number three the origin of motion or change in price is an equation where one of two competing forces buyers and sellers demand and supply becomes zero at a specific price okay so even though you don't see it in the candlesticks or lines or whatever type of chart you have even though price is moving sideways not really moving up or down too much it's never really a balanced equation behind the scenes so you can see here even though the equation is unbalanced it takes a certain period of time for that unbalanced equation to play out but once one side of the two competing forces becomes zero in this case sellers are supply and there's and you have demand left over this competition to buy forces price higher does everybody understand that there can be no other outcome when this equation is that all right that's what drives price higher so it's very important to understand the governing dynamics behind the scenes right all the buying and selling that's going on that's responsible for the creation of the candles that you see on the screen and whether we're taught if you really think about it and i think this may help some people understand this here we're talking about the two competing forces of supply and demand but but really it isn't isn't when you're when you're quantifying motion or change in anything in life whether you're predicting weather patterns or predicting an earthquake or how hard you need to throw the bowling ball or anything right when you when you when car companies are testing cars for you know how safe are they getting getting an accident and i'm just you know i'm kind of all over the place but motion or change in anything isn't it at the end of the day isn't it all the same underlying equation it's not like there's two or three or four different equations to quantify that it's all the same one and here we're just talking about buyers and sellers demand and supply okay don't over complicate it right occam's razor absolutely applies here a scientific principle that says the simplest answer is usually the right one and that is absolutely the case here so to sum all that up a market can be in one of three states and we're going to take things to another level here it can be in a state where um prices are out at supply at price levels where supply greatly exceeds demand okay all of these screenshots by the way are screenshots of our live sessions that we do in the morning okay a good one there augustus good good to hear that okay so a market can be in one of three states and it's important that you are able to look at a price chart and know when you look at current price where that what state of the market that's in so it can be a price level where supply exceeds demand that means there's competition to sell which always pushes price lower price can be at a level where demand exceeds supply which means there's competition to buy that competition to buy pushes price higher or most of the time price is at or near fair value fair value is where the majority of buyers and sellers in the market agree to buy and sell okay fair value pulls price to that area so supply and demand right it's a push price towards fair value right because you have that competition the competition eliminates itself and then that fair value area in the middle which we also call the novice space because you don't want to buy and sell in there most people do but you don't want to do that right favorite value pulls price back to it right because the evidence shows us that that's where the majority of buyers and sellers agree to buy and sell you can see on the price chart here look at all of the trading activity here in the middle this is where the majority of it is we're going to dive deeper into this in a moment demand supplied for value here we're talking about the financial markets but this whole youtube session could be on you know the cost or or supply and demand for i don't know jelly beans or jump ropes or light bulbs or cars it doesn't matter all right okay let's keep going so when we have this razor sharp focus a lot of peers here's a mistake a lot of people make they'll they'll say okay show me what the picture of supply looks like in the picture of demand and they'll they'll learn that and pick it up real quick then they'll start go looking at price charts and say oh there's a supply zone there's a demand zone um i hope there's a lot of supply there or i wonder if there's a lot of demand in that demand zone be very careful thinking like that that's a mistake instead of thinking of demand you know and or supply it needs to be both because what we're really focused on quantifying and identifying is the imbalance this is the key word right here it's not supply or demand it's both we want to identify the price levels on a chart that look like we're supply and demand look like this this is where we want to buy this is where we want to sell in here where yes supply and demand is out of balance but not in a big way okay this is where price moves quickly through areas like this there's plenty of supply and demand here okay lots of orders get get executed but there's not a big imbalance out here right at this level of imbalance this is where you have the highest potential for volume but you don't get it because all that volumes on all that potential potentials on one side of the market so starting now going forward let's focus on identifying the imbalance and thinking of terms of supply and demand imbalance because really think about it for a second if um you know supply and demand is everywhere right every time you see price in any market stocks futures forex whatever move up a minimum price point down a minimum price point maybe the euro moves up two pips maybe the uh i don't know the the uh um oil futures moves down 50 cents maybe the s p moves up you know 25 points whatever maybe it's two points every price movement even a minimum tick is still because of a supply demand imbalance isn't it i mean really think about it when a stock moves up a penny it's because of a supply demand imbalance it's literally everywhere so but most of those imbalances are supply and demand is not out of balance at a level where where um you know price turning there the next time it comes back is high probability we want to find the big imbalances where the where the or the probability is just overwhelming that price is going to turn when it comes back there does that make sense so to do that we really have to know where price is when it comes to location it's all about structure and location those are the only two things we think about structure location does the picture represent a supply demand zone okay once you find that uh almost the more important question is where is it right where is it location wise that's the most important thing and a lot of people make a very big mistake that we're going to go over in just a little bit here but let's keep going with the governing dynamics here so again you've got supply where the supply demand imbalance is big on the supply side demand where the imbalance is big on the demand side and then we've got this big area in the middle that we call the novice space or fair value where we have lots of trading volume in fact that's where the majority of trading volume is in any market but we call that the novice space because you don't have a big imbalance in there right you have a lot of trading activity going on in there we color code at the pinnacle institute in all of our sessions and all of our uh picking services we color code our supply demand levels based on probability or location does that make sense okay demand zones that are really out near demand and not in fair value or the novice space are yellow just like on the supply side sometimes we'll find supply demand zones that will that are acceptable inside the novice space but never right in the middle okay yeah we're going to look in just a minute location is so important because in fair value or the novice space in the middle probability and profit zone are low while it's supply and demand probability and profit zone are large that's what we want but it's all about the imbalance so the most important question with all this is once you understand the logic right now the question is okay what does all this look like on a price chart so let's dive into that okay in fair value or the novice space in the middle here right this is where you have the majority of trading activity notice all of the trading activity that took place in here notice the wide and whippy uh price action in here this is clearly where the majority agree to buy and sell we know that there's a lack of a significant supply and demand and balance inside here because price is able because so much trading happens in here and prices it's so easy for price to move up and down through this range if there was a significant supply and demand imbalance inside this range you would never have this range the picture would look nothing like this right you'd have very little trading and price would shoot away and not come back but we have the opposite picture in here so this is fair value this is novice space and we call it again novice space because only novices enter in the middle out it's supply right the picture looks more like this very little trading price drops away and can't come back supply exceeds demand here on the demand side we already went over this very little trading price rallies away can't come back okay because there's there's too big of a supply demand and balance here on the demand side so let's look at some opportunities from uh from today the last uh the last few days right out of our sessions okay so um we had a demand zone here and we'll look at multiple markets also i think going to the live market in a minute i think we'll have a little bit of time okay uh good question about algos what about algos dark pools all that stuff doesn't matter all that does is speed up the whole supply demand process anything that brings more volume into the market we like that okay so take a look so here in facebook uh price was trading sideways all of a sudden it gapped up away from this area see that little gap there that happens because demand greatly exceeds supply right here price comes back down to the demand zone and just touches it notice it gaps up and rallies pretty strong that can only happen because demand exceeds supply so much at this at this price point right here okay a little bit later price comes all the way back to uh the demand zone down here now when it does this is where if you're new to this you want to ask yourself a very important question if the rules which they do suggest that you should we should be a buyer here because the risk is lowest the reward is highest right the distance of supply is highest and the probability of price turning here is as high as high as it ever will be in this uh in this in in this area right but at the the question you want to ask yourself is if you're buying here who are you buying from are you buying from a novice trader or are you buying for are you buying from a professional trader are you buying from someone who likely loses money and doesn't know what they're doing or are you buying from a professional who makes money and doesn't know what they're doing wouldn't it be important to have a good idea of the answer to that question well there's two things to look at number one is the seller on the other side of your trade here as the buyer right is the seller down here that you're buying from selling after a drop in price number one yes right a smart buyer and seller of anything doesn't usually sell after a period of selling and that was the case here number two which is even worse is the seller here selling into a price level where the chart already told us demand exceeds supply yes right uh so therefore with those two answers we're probably buying from a novice seller another way to look at this prices is price has returned to wholesale levels and at wholesale levels when retail levels are higher we want to be the buyer facebook meets entry right here and uh and this morning today rallied pretty strong okay makes sense the goal is to stop thinking and executing like a novice retail trader investor and simply start thinking and executing like a professional uh mark stratton we apply all this equally to any of those trading styles let's look at the nasdaq and this is all from uh so this is um so far this has been this week's uh low in the nasdaq um this is um so coming into the i'm sorry this is last week's low last week so coming to last week we had our demand zone for one of our live sessions again very little trading here down here price rallies the way can't come back notice we have some secondary evidence again right just like in facebook price did sort of it did come back and try to trade into this level and couldn't so here we have some secondary evidence that demand exceeds supply here too price rallies away which is our first piece of evidence supply demand imbalance then it comes back barely touches the level and takes off now we have again secondary evidence that there's a significant supply demand imbalance here on the demand side once price rallies all the way up into here okay we have a nice big profit zone so you can see just last week uh price really declined strong in the nasdaq and any other major global equity index market uh traded right in and down into our demand zone novice traders selling professionals buying as soon as all those orders are exchanged and filled price rallies as it should okay another way to say this we're able to just buy at wholesale prices from people who are selling at wholesale prices let me ask you this question isn't this how you make money buying and selling anything in life why shouldn't it be the same thing here the financial markets are no different and that's the big secret that you know the wall street professional knows and understands that the average trader and investor does it is that how you make money buying and selling anything in life is exactly how you make money buying and selling in the markets um this week's low in the s p so far uh was right into our demand zone off our the pinnacle gallery pickle galleries where we have uh we cover uh many major markets stocks futures etfs forex spot forex forex futures everything um many markets supply demand zones and this is updated every day but you can see this week's low is again right into our uh demand zone right price couldn't stay here traded here for a short period of time rallies away because of a supply demand imbalance and um i think you get it all right so let's keep going i want to dive into uh another angle at this because i think it will help you but it's no secret that the majority of active traders out there lose money and if it is a secret it's not a secret anymore so we asked google a while back i asked google what percentage of traders lose money google says 96 percent so then i asked google what are the most popular trading strategies in other words what are these what is this you know what are all these what is this 96 of people what are they all doing and uh akash yeah absolutely this is the key to successful options trading and i can i'll try to explain that a little bit but one of the biggest advantages someone has this razor sharp focus on supply and demand has is in options is the strategy right so what's the number one thing that this large percentage of people are doing what do most what's the number one strategy that 96 of you know the 96 percent that lose money do well number one is following trend trend following strategies fibonacci all this other stuff right so think about it i want to share something with you here take a look so um when it comes to the pinnacle institute and pinnacle method right the supply and demand strategy right what we've talked about so far is buying demand or wholesale prices selling at supply or retail prices and doing nothing in the middle except getting paid or waiting to enter a high probability position right i think we're all on the same page with that but again if the logic is is this straightforward and simple why is it that most the majority of active traders lose money and most investors uh don't achieve their financial goals right well think about it what is what do the masters out there do what are the most popular trading strategies around the world it's important to ask yourself that and if you're uh um you know think about think about like you know big retail stores or really any company out there right microsoft costco goldman sachs carnival cruise lines i don't know i'm just randomly thinking of stuff starbucks you name it um they're all they all need to be good at buying at wholesale prices selling at retail prices and um and what else what else do they need to be good at if you're a company that's good at i don't know selling your products what do you need to be good at besides buying at wholesale and selling at retail what else do you have to really spend time on and not just talking about uh i'm not even talking about marketing obviously you have to be good at marketing but don't you really have to know a lot about the people you're selling to don't you have to know a lot about your clients i'm sure most a lot of you folks are in or at one time or another in your life had something to do with sales right if you were ever involved in sales in your life don't you know it's on about your customers right don't don't you really get to know them um how they think what they like all that stuff well why should it be any different here shouldn't you really understand you know who you're buying from and selling to believe me the the big banks and financial institutions know that they're well aware of that right and so should we especially because this is our hard-earned money so knowing that the majority of active traders lose money most investors don't achieve their financial goals why what's the reason well to know the answer let's dive into the strategies that people use okay so what are some popular trading strategies out there that people use and let's see what they have in common well we saw the first one was trend following what's the problem what's the problem with people that focus on trend at the pinnacle institute we don't ever talk about trend um trend has no no nothing to do with anything we do we're simply focused on buying it wholesale prices selling at retail prices period think about the trend trader or or the trader that incorporates trend into any part of what they're doing right they don't buy it demand here if you look at the screen they don't buy here at demand they wait for us for prices to get to demand they wait for prices to turn they wait for a series of higher highs and higher lows and then they buy they don't sell it supply they wait for prices to turn at supply they wait for a series of lower highs and lower lows and then they sell what's the problem or maybe the better question is where is the person that focuses on trend always buying and selling they're buying and selling right in the novice space the strategy forces them to do that and again what percentage of traders lose money right how about people that focus on news and i see we have some people from india here um india is fantastic and i've been to india a number of times and you know i'm well i i know the nifty really well and and all that um one thing that makes india a little bit different from other places in the world is at least from my experience i could be wrong so if you're from india and i'm wrong correct me but people seem to be so focused on news there when it comes to buying and selling in the market i mean the nifty gaps constantly right it's constantly gapping because you know when there's good news people rushing and buy when there's bad news people rush in and sell you know they jump in the market and sell well as we as we saw earlier and talked about remember remember law number two right um ending all influences on price are reflected in price so when good news comes out and people push the buy button because of that news all right where so now you have all this buying coming into the market um where where are you typically going to be buying right supply demand or fair value typically price is going to be right at supply okay uh yeah yeah i know the nifty it's uh it's crazy how how folk focused on news they're there when news is bad the majority of people rush in and sell well when they do that guess what by the time that news is out and everybody's selling price is almost down to demand or wholesale prices and unfortunately you're likely to be one of the last sellers and then price rallies okay so the news the news or fundamental trader typically buys at or near to supply and sells at or near demand not what you want to be doing what about indicators and oscillators moving averages all these tools macd and all these other things well there you know take a look at the screen here's two moving averages a lot of people use a moving average cross as a buy signal and you have a lot of these fancy tools now right where you know people claim they're you know you know 80 accurate and double your money and all this all this get-rich-quick stuff and a lot of it's indicator-based and you know 99 dollars a month for this tool well let me show you how this works um so here's the moving average cross right here's the demand zone price comes back to the demand zone which is where we want to be a buyer because the risk is low the reward is high and the probability is high however the moving averages will never give there's no indicator or oscillator that's going to tell you to buy here they're all pointing down at this point like this one is they all are remember indicators and oscillators are simply a derivative of price meaning they're only going to do what price has already done by therefore by adding any tool to your decision-making process that lags price as every indicator and oscillator does right by adding any one of those tools to your decision making process by definition you're only increasing risk and decreasing reward why would we want to do that you can see the moving average doesn't cross here so you don't actually buy until up here well now you've doubled or tripled your risk and your reward is cut down and certainly the probability is low that's why you don't see people making a low risk living with any of that now the the only thing that might be worse than uh trend trading right is the uh and the indicators and all that are the technical analysis chart patterns does anybody have a um does uh does anybody have a favorite chart pattern right here we have a a double bottom that we're going to look at as an example but uh maybe have another one head and shoulders or one of those anybody have a favorite anyway let's look at this one so here's the problem with all these chart patterns are the same now this is the stuff that's in like every trading book ever written right almost every trading book it's all this stuff so the chart patterns so the rule is right here in this one the double bottom so you have one low right then you have the next and once you have this kind of w then you draw a line right here called the neckline and when price goes through it you're supposed to buy what's the problem with that and they're all like this any chart pattern you could possibly put in the chat they all have the same problem the problem is you're buying way after a rally in price and you're selling way after a uh a decline in price you would never make consistent profits buying or selling like that anywhere else in life would you it's all way too late now again looking at all of these novice strategies right what percentage of traders out there do you think use at least one of these strategies and then match that against the percentage of active traders that lose money trading right i think you can connect the dots there the problem is with all of these you're buying and selling in the novice space which is very different you would never do that in any other part of life right every other part of life you're trying to buy things on sale and sell things at a high price that's all we want to do here we're just wrapping some rules around that based on the laws of supply and demand okay here we go you ready for a quiz so take a look at the screen and uh when you're ready just put your answer in the chat a b c d or e look at the chart let's test your skills and see uh see who's kind of getting this does this buying opportunity the demand zone there qualify right yes because a a large profit zone is present b no the rally from demand is too weak c uh yes there's little trading at the demand zone suggesting a strong imbalance d we do have a nice strong rally from demand or e because the training to the left is ideal what is your answer and make sure you're answering the specific question does this buying opportunity qualify all right so we've got some b's some c's okay all right correct it is b yes while we did have uh not too much training at the demand zone and that's good we had a nice strong rally away from the demand zone that's good we absolutely have to have a profit zone and we don't have that here because this supply zone which is this area up here i didn't mark it off for you because it's a quiz question okay the uh the supply zone was too close meaning while price did move from demand to supply and back again like it should the risk reward did not would not have met anyone's minimum criteria i don't think so you didn't have enough of a profit zone there the rally from demand does not take out the supply therefore there's not enough profit zone you can see on the bottom here okay one more which supply zone qualifies if we're looking for a three to one opportunity a b c or d i'll give you a few seconds to answer that good job on the last one to those that got that one right which supply zone qualifies if we're looking for a three to one opportunity all right the answer is c they both do why because for the first one we had plenty of room at we had about four or five to one down to at least fair value which is down here okay for supply zone one supply zone two was so uh small or narrow that even if we had some demand develop at supply zone one on the way up this still offered you at least three to one okay so second one's a little bit trickier and these can get much harder we go over these at the end of the courses and they do get much harder but but i think you get the point here good job to those that got this one right and if you didn't good job as well hopefully you learned something okay the reason why it wouldn't be b supply zone two if you're looking at the chart here because often by the time you get to supply zone two to get through supply zone one one eventually you're going to be left with a demand zone right here okay right but but i'm sorry so the reason why two still qualifies is because you still have about three to one down to here all right okay on that note um if you're new at this that's what the session is for and uh you can always go to the website if you want some more information i want to take this stuff deeper um in our in our workshops especially the advanced workshop uh this or both of these actually what we went over today has taken um it's taken much deeper so you can always um you can always attend there if you want and uh if you have any questions you can always ask in the chat they're very uh very helpful and we'll answer your questions um we do have also the um you know anyone that is interested in spending a a week in the um so you know how i do sessions in the in the morning they're called the forum uh the morning sessions are called the forum i think for example uh some of the like this is a screenshot out of this morning's forum so we were going over this with the and then we go into the live markets and plan out the day um if you want to be in these sessions with me for a week um where uh these are every morning anybody interested in that you can be in these sessions uh for a week um all you have to do is if you attend the workshop this right here just letting you know um all you have to do is attend the workshop and from there you can you can actually get into those sessions uh for the full week uh without you know becoming a full member or uh or any of that i wasn't sure if that was clear or not so i thought i would let you know because we do get a lot of questions about that all right great well good to be with you again and um oh yeah we were gonna i was gonna show you something too you know in the live markets here just for a minute um so i you know i think i've told you many times before so uh we do i developed an algorithm uh years back and so these are all automated supply demand zones here and we use these to identify opportunities for ourselves and for our members and but again you can see the algorithm is is doing exactly what i just went over with you right um nothing different it's quantifying supply and demand in any and all markets here we're looking at the dollar yen but we could be looking at uh at any market it really doesn't matter for example sitting below current price here the algorithm found a price level or demand likely seed supply again notice the little bit of trading in here and then price rallies away in strong fashion okay if and when price comes down to this zone we would have someone selling after a drop in price and into a price level where banks are likely buying this market right um but uh anyway the automated tool is simply doing you know exactly what we just uh we just went over here so um it's important not to get caught up in all that but really focus on diving into you know the logic behind the governing dynamics of supply and demand how it works in markets and then just simply learning to see that on a price chart okay uh all right on that note i know we're out of time but um so we'll see some of you maybe in those in that those sessions all you do is come to the workshop and then you can they'll show you how to get into the uh the forum sessions but anyway have a great day everyone and we'll see you next time you

Channel: Pinnacle Institute of Trading & Investing

Views: 9,544

Rating: 4.9331102 out of 5

Keywords: trading, markets, financial, investing, trade, trade of the week, market analysis, supply, demand

Id: ndoDtcFn3Sw

Length: 62min 33sec (3753 seconds)

Published: Thu Apr 29 2021