Video Transcript
Hey everyone, it’s Dale here. In this video, I’ll show you how to read any chart, even if you have zero experience. You know, traders often overcomplicate things. But the truth is that any chart only consists of two things. And once you see it, you won’t be able to unsee it. So let me show you.
So what you see before you this is a 30-minute chart of EUR/USD. And what I want to show you is that every chart can be divided into two things. Either the price is rotating or the price is trending. So let me show you here. In this recent development, the price was trending. Before that, there was a rotation. Before that, there was a trend. Before that, a rotation. Before that, another rotation, and before that, a trend. See, this is how you can divide any chart into either rotation or a trend.
It doesn’t really matter what timeframe you use. This is a 30-minute timeframe, but you can also do this on a daily timeframe. For example, let me switch the timeframe real quick and go to daily. So here we have a downtrend. Before that, there was a rotation. Before that, a trend. Before that, a rotation. See, it’s only those two things either rotation or a trend.
Rotation takes place around 70% of the time, and trends around 30% of the time. Now what I want to show you in this video is that you need to use a different strategy for trading rotation and a different strategy for a trend. So let me start with a little drawing.
First, I’ll draw a rotation. This is how the market looks when it is rotating. And when it is rotating, you want to look for shorts in the upper area and longs in the bottom area of the sideways price action. So it’s longs from here and shorts from here. This is how you trade a rotation.
Now, when the market is trending, you need to use a different strategy. So let me draw a little uptrend here and show you how to trade it. When there’s a trend, you want to trade the pullbacks. So you enter long here, wait for another pullback, go long again, and then another pullback long again. You trade pullbacks in the direction of the trend.
So this is the difference between trading a rotating market and a trending market. You need to use different strategies. You can’t use one universal strategy for both because it would fail. Trading rotation is different from trading a trend. That’s the main idea.
Now I know what your next question is where do we enter the trades exactly? How do we go about this?
Well, I’m a firm believer that we retail traders need to follow the big players the institutions that move and manipulate the market. Studies show that roughly 70% of market activity comes from them, and about 30% from retail traders. This applies to most instruments. It’s a bit different in crypto, but for most markets, it’s about 70/30.
And I believe we need to know what those big players are doing. The best tool to track their activity is Volume Profile. That’s why I recommend using it to see where large volumes were traded and trade with the big players instead of against them.
Let me show you. I’ll draw a rotation again. When the market is rotating, you want to trade shorts from the top of the range and longs from the bottom. Now here’s where Volume Profile comes in. In those areas, you want to identify significant volume clusters places where big players were active.
Let’s say there is a significant volume cluster here. That means heavy volumes were traded there. You mark that level and wait for a pullback. When price returns to that level, you enter a short. The long scenario is the same, just reversed. If there is a volume cluster at the bottom, you mark it and go long when price revisits it.
That’s how you trade rotation using Volume Profile.
Now let me show you how to trade a trend. If the market is in an uptrend, and you identify a significant volume zone, you mark it and wait for a pullback. When price returns to that level, you go long. The short scenario is the same but reversed in a downtrend.
So you trade pullbacks to heavy volume zones.
Before we go into real examples, let me quickly tell you where to get a Volume Profile. If you want to use mine, just follow the link below the video. But you don’t have to TradingView has one as well if you have a subscription.
Now let’s go into examples.
Here we have a market that is clearly rotating. This is the top of the range where you look for shorts, and this is the bottom where you look for longs. Using Volume Profile, we identify where institutions were active and use those levels as entry points.
For example, here is a significant volume cluster. When price returns to it, you go short. Another cluster here again, short if retested. On the long side, we have clusters here and here both valid long entries when price revisits them.
That’s how you apply the concept in real trading.
Let me show you another rotation example. Again, shorts at the top, longs at the bottom. This volume cluster shows strong institutional activity so when price returns to it, you go long. Same with this one.
On the short side, we have a cluster here short on retest. But here, where volume is low, there’s no trade. No significant volume means no institutional activity so you skip it.
Now let’s look at a trend example. In this downtrend, we identify volume clusters where sellers were active. When price pulls back to those zones, we go short. Only the first test matters.
And finally, an uptrend example. Again, identify volume clusters and trade pullbacks to them. Each retest is a potential long.
So to sum it up: in a trend, you trade pullbacks. In a rotation, you trade the edges. And Volume Profile helps you find the exact entry points.
I hope you enjoyed the video. As a small gift, I’m giving away my Volume Profile book. If you’re in the US, just enter your address using the link below I’ll send you a physical copy and cover the shipping. No strings attached.
Thanks for watching, and I’ll see you next time. Happy trading.
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