Video Transcript:
Hello everyone, it’s Dale here. Welcome to the new video from the Trade of the Week series. The goal of this series is to show you how I apply the things which I teach you in my other videos in my real trading and how I apply that from A to Z, including trade entries, take-profit placement, stop-loss placement, decisions which I make during the trade, and so on. So today we are going to look at the ES. I know you guys like trading the ES. This is going to be a trade which I took last week on the ES. What you see before you is the NinjaTrader 8 platform with my custom-made Volume Profile and VWAP indicators.
On this 30-minute chart of the ES, I wanted to trade a short from here, from this red line, and the reasoning behind this short was that there was a weekly Point of Control. If you look at this grey profile on the left, this is the weekly profile. It shows how volumes were distributed throughout that whole week. Let me zoom out a bit so you can see it better. This is the whole week, and this is how the volumes were distributed throughout that week, right? And this place is the weekly Point of Control. From this place, there was a strong sell-off. So the narrative here is that sellers were accumulating their short positions here in this area, where that Point of Control was formed, mostly in here, because this is where the heaviest volumes were, and from there they started that strong sell-off, right? And that heavy volume zone represents a place where the sellers were active. Especially important is that weekly Point of Control right here.
So I wanted to trade from that area. I used my Flexible Volume Profile to make this even more precise, like this, because I’m not only interested in trading the weekly Point of Control but also the heavy volume zone which formed right before the sell-off started, which is this heavy volume zone. And the exact placement of the level was right here. The reason is that there was a beginning of a huge Fair Value Gap. If I zoom this in, then you might see it better. This was the beginning of this big Fair Value Gap zone, right? This is the beginning, and I like to trade from the beginning of Fair Value Gaps, right? Markets like to make reactions there.
So that was the logic: the heavy volume zone, the weekly Point of Control, and the beginning of the Fair Value Gap. That’s why I wanted to go short from there. So I waited. I waited for a pullback, and when that finally occurred, I went short from there. So that was the trade entry.
Now let’s talk about the stop-loss placement and take-profit placement. I always want to place my stop-loss behind a barrier. Usually, it’s a heavy volume zone. So if you look at the profile here, this is a heavy volume zone, and I wanted to place the stop behind this barrier. And ideally, I also want to place a stop behind a little swing point, like this one. This is a little swing point. So that’s why I placed the stop in here. This was my stop. The price shouldn’t go past this barrier. If it does, then I quit the trade and the trade is done, right? I don’t really want to hold the trade past that point because at that point it’s clear that my trading idea simply failed, right? So that’s the stop-loss.
Now, regarding the take-profit, this was a little bit more tricky because I usually like to quit my trades when the trade reaches a strong barrier. In this case, I initially planned to quit the trade in here because there was a Fair Value Gap. This was the beginning of the Fair Value Gap right here, and this was the whole Fair Value Gap, and it was a bullish Fair Value Gap. So there was a chance that the price would turn here, right? So I wanted to quit the trade before that happened. That’s reason number one why I wanted to quit the trade there.
And also, the price made this high here in the past. That means that in the past this worked as resistance, right? Because of this reaction. And potentially this resistance could have turned into a new support, right? And the price could simply react there, and I didn’t really want to risk that. So that’s why I wanted to take the profit here. That was the plan.
But I had to adjust the plan a little bit because what happened here was that another trade got triggered. And that trade was a short on the NQ, and ES and NQ are heavily correlated. So at the same time I was in a short on the ES from here, and if I switch to the NQ, I was also in a short trade at a very similar level, based on the volumes here and the sell-off here. I was short from this level on the NQ at the same time. And because those two markets are heavily correlated, there was a huge risk that both those trades would end up the same way — either both winners or both losers. So I was basically risking double the amount on whether the indices would go up or down, right? So my risk exposure was doubled at that time, and that’s why I decided not to follow the original plan.
Let me switch back to the ES — not to follow the original plan of quitting the trade here, but to quit the trade sooner. And what I did is I quit the trade somewhere around here. As you can see, there was a VWAP line, so I quit somewhere around the VWAP here. The risk-reward was still positive, which is important. If I move the chart a little bit more to the left and print the stop-loss line here and the take-profit line here, you can see that this was a risk-reward one trade. And in the end, I was able to take the profit both on the ES here as well as on the NQ. On the NQ, I was taking the profit somewhere in here. All right.
But if I wasn’t in two heavily correlated trades, I would try to get more out of this trade on the ES. As I was saying, I was going for this take-profit here. So if there wasn’t that trade on the NQ, I would go for this. All right. So that’s about it. That’s how the trade went.
By the way, I’m publishing those levels in advance for traders in our trading group. You can join us if you want. This is how our back end looks like. This is that table where I published that short on the ES. As you can see, there’s the ES. This is the level: 67.84, it is a short, and this is the prediction. And everybody in the members area saw that in advance. So those guys could trade that level alongside me.
If you want to join us, then you want to go to the Trader-Dale.com website. This is it, Trader-Dale.com. And if you click this button “Trading Course and Tools” then it will take you to this page where you can browse my trading education here — those four packs — and you can join our trading community here. As I was saying, you can get those four packs here separately — those are education and indicator packs — or scroll down a bit and get all of them together: the Volume Profile Pack, Order Flow Pack, VWAP Pack, and Smart Money Pack. You can get that together for a discounted price which we currently have at $697, which is a special Halloween sale that will be ending by the end of this month.
All right, so that’s about that. Thanks for watching the video, and I’ll see you next time. Until then — happy trading.
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