Video Transcript:
Hello everyone, it’s Dale here. Welcome to this video from the trade of the week series. In those videos, I want to walk you through my trades from A to Z, so you can see how I trade and how I apply all the things that I teach in my other YouTube videos and in my trading courses. Mainly, it is Volume Profile setups, VWAP setups, price action, and all that stuff put together in my real trades. So today I want to talk about a trade on EUR/USD which I took this week, and on the chart you can see the NinjaTrader 8 platform, and this is a 30-minute chart of the EUR/USD. The trade that I want to talk about here is this line, this resistance at 1.1577. It is a level from which I went short, and let me first talk about the trade entry.
All right. So, let me zoom out a bit. The trade entry was basically based on the daily Point of Control. If you look in here, we have a strong daily Point of Control. That means that this is a place where the heaviest volumes were traded on this whole day. We had the daily Point of Control from which strong trend activity initiated. That means that somebody was active in here accumulating their positions, and those guys pushed the price downwards. And because the price went down, it’s likely that those were sellers accumulating their short positions and afterwards manipulating the price to move downwards. All right. So this is what that trade was based on mostly. When I see a thing like this, I wait for a pullback to that level where that heavy volume zone started to form. It was roughly in here, the beginning of that heavy volume zone. So pullback to that place, and then I trade from there like this. Okay, this is a setup which I call the Volume Accumulation Setup. By the way, I teach all the details of this setup in my Volume Profile trading course. But in essence, you just want to see a heavy volume zone followed by a trend, then wait for a pullback and trade from the beginning of that heavy volume zone like this. All right. So this was the main reason for me taking that short trade from here.
Another thing was that there was a Fair Value Gap. A small Fair Value Gap in here. Fair Value Gap is a concept from Smart Money trading, and in the short-trade scenario I like to trade from the beginning of the Fair Value Gap, which was right here exactly at our level 1.1577. All right. Then we also had another Fair Value Gap. It was in here, another Fair Value Gap. And when you have two Fair Value Gaps on top of each other like in here we had this Fair Value Gap and then this Fair Value Gap when you have two or more on top of each other like this, I look at it as if this was one big Fair Value Gap and trade from the beginning of it, which is this line. All right. So we have a heavy volume zone nicely aligning with a big Fair Value Gap, and after a couple of days we had a pullback to that level. So that’s why I went short from there.
Now this was the trade entry. But what’s also important is the stop-loss placement and take-profit placement. So let me first talk about the stop placement. I have one very important rule that I follow in most cases. The stop needs to be behind the heavy volume zone. In this case, this is the heavy volume zone, and the stop needs to go behind it. That means in here this was the stop and it was also at the top of this candle here, of this little swing point. Right? So that was the stop-loss. And the reason it is behind the heavy volume zone is that the heavy volume zone should represent a barrier. Right? The price shouldn’t go past this barrier. So this whole area is a barrier, and the price shouldn’t go past it, and the stop needs to be above that barrier right here. Okay, so that’s the stop-loss.
Now, regarding the take-profit, what I always do is quit my trade before it reaches the nearest barrier. All right? So I went short from this place, and as the price reacted to that level and started to drop, I was searching for some barrier to stop the price from dropping. And I wanted to quit at the first barrier. Now let me show you what that barrier was. I noticed that there were those highs in the past almost exactly at the same level. That means that in the past, this was a resistance. When the price blew past the resistance in here, it turned into a new support, and because of that I quit the trade at that support. Right? So that was the take-profit, because I was simply afraid that the price would react to that support and go up which, as you can see, it did. It reacted to that support and went up.
Now there was also one additional thing, and that was the first deviation of VWAP that’s this gray line. As you can see, it aligned with that resistance-becoming-support setup, and when the price is moving above the VWAP line it likes to react to it, like in here, or like in here, or like in here. So I was afraid that this could be the case that the price could react to that VWAP in here. So it was another reason why I quit that trade here. All right. As you can see, it was the perfect exit for this trade because the price really reacted to that level to the VWAP and also to this level where those highs were. The price reacted there and made a rather significant move up. All right. So this is how I traded that trade.
Another thing I wanted to mention is that I always want to have a positive risk-reward ratio. In this case, I was risking this, and I gained this. So that’s a nice and positive risk-reward ratio of around two in this case. So yeah, I would call this a good trade. And I would say that the most important thing to take out from this trade for you could be the take-profit placement. People very often just focus on trade entries, but then don’t really think about how they want to exit the trade. And if you think about it in terms of support and resistances like, okay, I want to quit my trade before it reaches a strong support or resistance then if you think about it like that, I’m very confident that it will improve your trading.
Now this level that I was talking about, this resistance at 1.1577, this is a level that I also publish for members of my trading course. I publish all my trading levels in there, so all the members can trade those levels alongside me. They have those levels in advance, sometimes even a couple of days in advance like this level. Let me show you real quick. This is our members area, and this is that table where I was publishing that level EUR/USD short at 1.1577. If you guys want to join us, you are very welcome to do so. Just visit my website, which is trader-dale.com. So this is the website trader-dale.com.
Right now it’s actually a good time to join us, because we are running a massive Black Friday sale until the end of the month. If you click “Trading Course and Tools” in here, you can get the Black Friday discount. You can get my trading and educational packs separately, or scroll down a bit and get all of them together the Volume Profile pack, Order Flow pack, VWAP pack, and Smart Money pack all four together for a discounted price of $697, and that’s until the end of the month.
So thanks for watching the video. I hope you guys found it useful, and I’ll be looking forward to seeing you next time. And until then, happy trading.
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