I Lost This Trade – Here’s Why I’d Take It Again!

Video Transcript:

Hello everyone, it’s Dale here. Welcome to the next video in the Recent Trades section. In these Recent Trade videos, I want to show you the reality of my trading—the reality of the trades I take on a daily basis. As I promised, I won’t be cherry-picking only the best trades; I will also be showing you losing trades. And today is the day I’ll show you a losing trade that I closed yesterday. It was a swing trade on USD/CAD.

So, let’s check the trade. First, let me start by showing you the reasoning behind this trade and why I entered it. What you see before you is the daily chart of USD/CAD. This is where I do my swing trading analysis. The trade I took was a short, and it was from here.

I’ve moved the chart like this so you don’t see the outcome of the trade yet. Right now, you see exactly what I saw when I entered the trade, so you can imagine what it was like when I was deciding whether to take the trade or not. This was the short trade entry.

Now, the reasoning behind this trade—actually, there were a couple of reasons. Reason number one, for me, is always volume—Volume Profile. I looked at this strong sell-off zone using the Volume Profile, and there was a heavy volume zone. This was a sign of sellers accumulating short positions in this circled area. From there, the price moved downward. For that reason, I was waiting for a pullback into the heavy volume zone, specifically to the beginning of that heavy volume zone. That was my resistance level, from which I went short. That’s the Volume Profile setup that I like to trade.

Reason number two for entering this short trade was that the price had previously reacted to this level. You can see those reactions right here. In the past, this level acted as support. When the price broke below that support, it turned into resistance. This is a price action setup—the second setup this trade was based on.

There was also a third setup: a VWAP setup. If you look at this gray line here, this is the first deviation of the yearly VWAP. The price hit it from below, which signaled a short trade. This is one of the VWAP setups that I like to trade, and in this case, it confirmed the short.

So, what we have here are actually three very good reasons to enter a short trade from this level. A perfect scenario, I would say.

Now, there was one risky factor here, and I mentioned it in the live room. The issue was that if I moved the profile to analyze the entire area, it showed that the heaviest volume was right here—exactly where I placed my stop-loss. My stop-loss was above the wick of this candle—the highest candle in this area. I based my stop-loss placement on the fact that it was behind this heavy volume zone, so I had a very good reason to place it there.

However, as you can see, the Point of Control of this whole zone was just slightly above my stop-loss. That was the risky part of this trade. I was aware of it, but there were so many factors supporting this short level that I weighed the pros and cons and decided to take the trade despite the risk. A heavy volume zone above a stop-loss can sometimes act as a magnet, pulling the price toward it before reversing.

And that’s exactly what happened.

Now, let me move the chart and show you how this trade played out. As you can see, the price moved past my short entry and continued toward the Point of Control—this massive heavy volume zone—to test the liquidity there. So, yeah, I took the risk, I lost, and that’s that.

But if you ask me now, I would still say this was a good trade. I would enter it again. There’s never a perfect trade—there is always some risk. In this case, the risk was that the price might want to test the Point of Control, and that’s exactly what happened.

As you can see, I wrote a note on the chart: “The trade had bad stop-loss placement.” I actually noted that before even entering the trade! But I also wrote that the level was too good to miss. I liked it so much because of the combination of the three trading setups.

So, this is how it played out. I still consider it a good trade. As traders, we need to weigh the pros and cons of every trade. That’s exactly what I always do. And I try not to be upset if I take a trade like this and it ends up being a losing trade. Every trader has losing trades—it’s part of the game. The important thing is that we win more often than we lose.

And that’s how we play.

Thanks for watching the video! I hope you liked it, and I look forward to seeing you in the next one. Until then—happy trading!