Video Transcript:
Hello everyone, it’s Dale here. Welcome to a new video from the Trade of the Week series. The goal of this series is to simply show you how I trade using the principles I teach in all my videos. I want to walk you through a trade from A to Z so you can see how I apply everything I teach in live trading with my own trades. Today, I want to show you a trade I took on the ES last week, and the reason I want to show you this one is that it’s based on my favorite trading setup. So, let’s check it out.
What you see before you is a 30-minute chart of the ES, and the setup goes like this. First, there needs to be an opening gap. It’s not too common on forex or indices, but sometimes there is an opening gap, like this one from Friday to Monday. So, there was this opening gap — that’s requirement number one. Requirement number two is that there needs to be a heavy-volume zone behind the gap. You need to use the Volume Profile to identify this heavy-volume zone, and as you can see here, it stands out very nicely. This is the heavy-volume zone behind the gap.
Those are the two requirements. Then you trade from the level right here — where the gap opened — the start of the gap and the beginning of the heavy-volume zone. That’s where you place the trade. Once you have that level, you wait for a pullback. The price often fills the gap soon after it forms. In this case, it happened on Tuesday, the next day after the gap formed. You want to see the gap fill like this, and when the price hits the beginning of the heavy-volume zone, that’s your long trade entry. You go long from there. That’s how you trade this setup.
You can trade this on currencies as well as on indices. It has a very high win rate. The downside is that there isn’t an opening gap every day, so you simply need to wait for this setup to form. But when it does, I really like to trade it because the win rate is very high. So, this was the long I took from here. Let me now show you the take-profit and stop-loss placement.
Let’s start with the stop-loss placement. I like to place my stop loss behind a barrier — the barrier being the heavy-volume zone. So, it’s this heavy-volume zone, and the stop loss goes behind it, behind that barrier. That’s the stop. The take profit goes before a barrier. You need to look for it around the place where the price is reaching your level. You use the Volume Profile around that area to identify the barrier. As you can see in this case, it’s very clear — there’s a heavy-volume zone representing a barrier. That’s your take-profit level because the barrier could cause the price to react and turn against you. Obviously, when you’re in a long trade, you don’t want a barrier standing in your way, so you close the trade there.
This is how the trade went. By the way, I publish all the levels I’m trading for members of our trading course. Let me show you real quick — this is our backend, where I post my levels. Here’s the table from that day: this is the level on the ES 6606 long. That’s the level published for members, so everyone could have traded it alongside me.
If you want to join us, you’re very welcome to do so. Just go to Trader-Dale.com and click the “Trading Course and Tools” button. Scroll down a bit, and you can get one of my packs — the Volume Profile Pack, the Order Flow Pack, the VWAP Pack, or the Smart Money Pack. You can get them separately or scroll further down and get all four together at a discounted price. Right now, we’re running a special Halloween Sale, which means you can get this with a huge discount. The sale ends at the end of the month.
That’s about it. I hope you guys found the video useful, and I’ll be looking forward to seeing you next time. Until then, happy trading.
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