Video Transcript:
Hello everyone, it’s Dale here. Welcome to the new video from the Trade of the Week series. In this video, I want to walk you through a trade I took last week. I want to show you everything about the trade — the entry, the logic behind it, the stop-loss placement, the take-profit placement, how the trade went — simply everything from A to Z. This way, you can see how I apply in real trading the things I teach you in my other videos.
Today, we’re going to take a look at a swing trade I took on NZD/USD. You’re looking at my swing trading workspace, which is a daily chart. I do all my swing trading on the daily chart, so I’m really focusing on the bigger picture here.
What I’ve done is cover the right part of the screen to create a sort of market replay for you, so you can see exactly what I saw when I identified the level. The first thing I noticed when looking at this chart was a strong downtrend. When I see a strong downtrend like this, I’m interested in how volumes are distributed over that area. For that, I use my Flexible Volume Profile, which you can apply to specific areas like this.
As you can see, there’s a significant heavy-volume zone that stands out. This is a place where sellers paused briefly and added to their short positions. So, we have a significant volume zone inside a strong trend. This is a Volume Profile setup that I call the Trend Setup because I look for it when there’s a strong trend.
What I usually do is trade from the beginning of that heavy-volume zone — meaning, I wait for a pullback and then go short from there. That’s how I trade the Trend Setup. I also like to look for confluences, because the more confluences you find, the stronger the level becomes. In this case, what I found were several reactions to that level. See how many times the price reacted to it before? There’s also one huge reaction here. That means that, in the past, this level (marked with a dotted line) worked as support — the price kept reacting to it. So, when the price broke below that support, it turned into resistance. This is a Price Action setup, and it aligns perfectly with the Volume Profile setup.
Let me delete that, and there’s one more thing — a small Fair Value Gap right here, which comes from Smart Money Concepts. When there’s a bearish Fair Value Gap, I like to trade from the beginning of it, which is right here.
All three setups aligned and pointed to this level at 0.5845. That’s why I wanted to wait for the pullback and go short from there.
Now, what I do with swing levels is simply place pending orders. I’m not afraid of any macro news or anything like that because this is trading on the daily chart. So, I placed a limit order here and waited for the short.
My stop-loss — let me delete the drawings — was behind this heavy-volume zone. I always place the stop-loss behind a barrier, and the barrier in most cases is a heavy-volume zone. In this case, I was deciding whether to place the stop behind this smaller cluster or behind the entire area. Placing it behind the first cluster would have been too tight for a swing trade, so I decided to go with a wider stop-loss, behind the entire resistance zone. That gives the trade some breathing room.
Regarding take-profit, I like to trade with at least a 1:1 risk-reward ratio. So, if your entry is here and your stop-loss is here, then to have a 1:1 ratio, your take-profit needs to be here. I prefer trading with 1:1 or better, so the take-profit should be at least here or even a bit lower.
Now let me show you how the trade played out. I’ll move this bit by bit so you can see how it developed day after day. The price started making a pullback toward the level. At this point, it wasn’t visible yet, but the price hadn’t touched the level, so I didn’t get filled. I got filled here, right at this point — short from this place. The next day, the price hit the take-profit level.
My initial plan was to take profit here, at the blue line, because I wanted a higher risk-reward ratio. But there was upcoming news — a rate decision from the New Zealand central bank. That’s the strongest macro event affecting NZD.
If you remember, I said I don’t care much about macro news when swing trading, and that’s true — except for one type: a cash rate decision. Those can cause very strong moves, trend reversals, and huge volatility. Because of that, I had to exit the trade before the news. So, I closed it here with a 1:1 risk-reward ratio, and that was it.
Let me show you what happened during the news. The price went down, so it would have hit my original take-profit, but it’s always better to avoid what I call “monster news.” The price then continued downward. So, as you can see, there was a huge reaction to that level — exactly the kind of move I look for when swing trading.
By the way, this level was also one of the levels I shared with members of our trading course. They get access to all these in advance, so they can trade alongside me every day.
Here’s our backend — this is the Swing Trading Table. If I open it, you can see NZD/USD at 0.5845, short entry, take-profit at 0.5799, and stop-loss at 0.5892.
If you want to join us, visit my website — Trader-Dale.com. Click the “Trading Course and Tools” button, and it’ll take you to a page where you can browse my trading education and indicator packs. You can get them separately or scroll down to get everything together at a discounted price.
That’s it for today. Thanks for watching, and I’ll see you next time. Until then — happy trading!
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