Video Transcript:
Hello everyone, it’s Dale here. In this video, I want to show you my best trade from this week. It was a trade on EUR/JPY. I got over 200 pips on this trade, so let me show you from A to Z how it went. What you see before you is the NinjaTrader 8 platform with my custom-made Volume Profile and VWAP indicators. This is a daily chart of EUR/JPY. This trade was a swing trade, and I trade my swing setups on the daily chart, so that’s why we are looking at the daily chart now.
Let me start with the reasoning behind this trading level on EUR/JPY. There was a rather strong uptrend here. But after this structure formed, it started to look like the uptrend could be over. There were a couple of signals suggesting that the uptrend might be ending. The first signal was in this area, which is where I was doing my analysis. The volumes in this area were shaped like the letter B. That’s called a B-shaped Volume Profile. When you see a B-shaped Volume Profile after an uptrend, it can mean two things: either the uptrend has stopped and the market will rotate, or the uptrend has stopped and the price will go down. That’s what a B-shaped Volume Profile after an uptrend tells us. So that was the first reason why I was comfortable starting to look for short trades.
The second reason, if I zoom in a bit, was that there was a huge bearish Fair Value Gap here. This big candle formed the gap. This was the Fair Value Gap, a concept from Smart Money trading. When you have a bearish gap after an uptrend, it again suggests that the uptrend could be over, because a bearish gap signals aggressive sellers. That’s why I was quite comfortable looking for shorts, as I believed the uptrend was at least temporarily over.
What I then found was this heavy volume cluster. Most of the volumes were formed in this area. If I move the profile like this, you can see that the volumes are clearly visible, and the beginning of that heavy volume zone is right here. That was my short level, marked by this red line at 184.78. When this heavy volume zone formed, followed by the bearish Fair Value Gap, I waited for a pullback and went short from that level. Initially, the price moved against me, which was a bit frustrating, but when you’re swing trading, you need to be patient. After that, the market finally started to react to this heavy volume cluster and moved as intended. So this was the reasoning behind the short entry.
Now let me talk about the stop-loss and take-profit placement. I placed the stop here. With swing trades, you need to let the trade breathe. I placed the stop at the top of this rejection. Also, my stop is always behind a heavy volume zone like this one, because the heavy volume zone should act as a barrier. That’s why the stop was placed there.
This blue line you see here represents a take-profit at a risk-reward ratio of one. When I’m trading, the minimum take-profit I accept is at least a 1:1 risk-reward ratio. That’s why I have this blue line here. I actually exited the trade a little below that level because I wasn’t sure whether the market would go into a rotation or continue into a new downtrend. If the market had rotated, taking profit at the bottom of the new rotation would have made sense. I didn’t know whether the price would start a new downtrend or just rotate, so I decided to exit slightly below that blue line.
That’s how the trade went. It was over 200 pips. I hope you found this helpful and that you can apply it in your own trading.
If you’d like to join us and trade with me using my indicators, visit my website at trader-dale.com. Click “Trading Course and Tools” and it will take you to the page where you can browse my educational and indicator packs. We are currently running a special sale that ends tomorrow, February 14th. Until then, you can get a discount on all my educational and indicator packs. If you’re interested in Volume Profile, you can get that pack, or you can scroll down and get all four packs together in a special combo for $697 until February 14th.
Thanks for watching. I’ll see you next time, and until then, happy trading.
Comments
Post a Comment