Video Transcript:
Hey everyone, it’s Dale here and welcome to this Trade of the Week video. Today I want to show you two trades, two of the best trades of the week if you will. Well, I wouldn’t call them the best trades, but they were quite interesting. They were based on my predictions, which I post every day in the members area, and they were both on the ES, as you can see in this table right here. That’s where I publish my levels. There weren’t too many in this recent update, but there were two levels on the ES. There was a long at 6518 and a short at 6580. So those are the two levels that played out and that I want to talk about.
Let me go to the chart. This is the NinjaTrader 8 platform with my custom-made Volume Profile and VWAP indicators, and you are looking at a 30-minute chart of the ES. Now let me talk about the reasoning behind both trade entries. First, let’s talk about the long here. The long is represented by this green line. That’s the long level, and it is based on a heavy volume zone which was formed in this area right before this massive buying on the ES. This move was caused by unexpected news, and I expected there would be a bounce from this heavy volume zone because it represents a strong area where buyers were active before the move. The beginning of that heavy volume zone is essentially this long level.
There was also another reason why I thought this would work as a strong support. This was the beginning of a massive Fair Value Gap. This is the Fair Value Gap, a huge one caused by the news. As you guys probably know, I like to trade from the beginning of the Fair Value Gap. In a long trade scenario, it is here. This is the beginning of the Fair Value Gap, and it aligned nicely with the heavy volume zone. That’s why I thought this could work as a support, which as you can see, it did.
Now let me talk about the short trade entry. I’ll zoom in a bit so you can see it better. This short level was based on this heavy volume zone. This zone represented sellers who were active here before they pushed the price lower. Again, there was a nice Fair Value Gap here, which added strength to the level. What I especially liked was the combination with the first deviation of the weekly VWAP right here. So basically three setups aligned: the beginning of a heavy volume zone, the beginning of the Fair Value Gap, and the first deviation of the weekly VWAP. Everything aligned here, telling me it should work as a strong resistance.
Now let me talk about how the trades played out. As you can see, it was quite wild. I’ll switch to a one-minute chart so you can see it more clearly. What happened was that the price hit the support, immediately went long, then hit the resistance and immediately went short. So I had a profit from the long and, a couple of minutes later, a profit from the short. This was caused by unexpected macro news related to a ceasefire. It wasn’t scheduled news, and I didn’t know it would come out. I had limit orders in place because it was already evening and I wasn’t at the computer. Then I saw that both trades hit profit. It was quite crazy and unexpected, but that’s how it sometimes happens.
Now let me explain how I set up those trades. For the long trade, my stop-loss was here. The reason was that it was behind the heavy volume zone and also below this small swing point. That’s how I usually place my stops. For the short trade, I followed the same principle. The stop needs to be behind a heavy volume zone, so I placed it here, also above this candle. That was the stop for the short trade.
Regarding the take-profit, I usually place it before a heavy volume zone, before a barrier. In this case, I wasn’t at the computer, so I set both trades to risk-reward one. For the long trade, the take-profit was somewhere here, and for the short trade, somewhere here. If I had been at the computer, I would likely have managed the trades differently and placed take-profit at volume zones. But since I wasn’t there, I used a fixed risk-reward approach.
So that’s how it went. I would say there was a bit of luck involved. This week has been quite tough for traders due to unexpected news and market reactions. For me, it turned out well because my levels held despite the volatility. I’m not saying my levels are better than others, but this week worked out that way.
Anyway, I hope you liked the commentary and the Volume Profile approach I’m trying to teach. If you want a complete A-to-Z course on Volume Profile trading, along with my custom 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 courses and tools.
Thanks for watching, and I’ll see you next time. Until then, happy trading.
Comments
Post a Comment