Video Transcript:
Hey everyone, it’s Dale here with a new Trade of the Week video. In these videos, I’m showing you the most interesting trade that I took that week. Not necessarily the trade that made the biggest profit, but the most interesting one. This week, it was a trade on USD/CAD. So, let me show you.
What you see before you is the NinjaTrader 8 platform with my custom-made Volume Profile and VWAP indicators. And this is a 30-minute chart of USD/CAD. The trade that I want to show you was a long. That’s the green dotted line at 1.3769. It was a long that I took yesterday. It looked like this.
Let me show you the reasoning behind this trade. Let me scroll back a bit. Here you can see what happened almost two weeks ago. This is an opening gap. On Monday, two weeks ago, the market opened with a gap. That’s always something that I’m interested in because if there’s a gap and there are heavy volumes behind the gap, like here, then I want to trade from this place, from the beginning of that heavy volume zone.
This is a setup that I like to trade when I see a gap like this. On Forex, that’s rather rare because Forex runs 24 hours a day. But on Mondays, sometimes there’s a gap, and sometimes there’s this setup.
So, anyways, back to the setup. You want to see a gap like this, and behind the gap, you need to see a heavy volume zone. What the price often does is fill the gap. Gaps tend to get filled, and then the price reacts to the heavy volume zone behind the gap like this. This is exactly what I was waiting for.
If I scroll forward a bit, this is what happened. The gap got filled, and the price reacted to that heavy volume zone. Right? So that was the reasoning behind this long level.
Now let me tell you how I approached the stop-loss and take-profit placement with this one. My main rule for stop-loss placement is that you want to place the stop behind a heavy volume zone. This was the heavy volume zone the level was based on, and because of this, I placed my stop behind it. If there is a possibility to place the stop below a swing low like this one, I do that. So, here was the stop. This was the stop, which was behind the heavy volume zone as well as below the swing low. Right? So that was the stop.
Regarding the take profit, I need to move forward again. Let me show you because I always want to take my profit before the price reaches the first barrier standing in the way. In this case, take a look at this area where the price was dropping toward the level. I always use my Volume Profile to see how volumes were distributed there.
The first barrier standing in the way was a weak barrier, but still, there was this volume cluster, and I quit the trade there. Not just because of the volume cluster, but also because the price reacted to this area here. See? That means that this was a support. When the price blew past the support here, the support turned into potential resistance. Right? So, for those two reasons, I thought that this was the first barrier standing in the way of this trade.
Also, one more thing. This trade was a bit risky because, as you can see, I was going against this strong sell-off. There was a strong downtrend here, and I was going long against it. So, I wasn’t too crazy about the take profit. I didn’t really want to risk it. I just wanted to quit at the first barrier, even though it wasn’t super strong. I just wanted to be out of the trade because I was trading against a very strong trend.
Okay, so this is the reason why I quit the trade here. This was the take profit.
I don’t know if you guys watched the video that I published on my website, but I talked about this level. Let me show you. This is my website, trader-dale.com. I talked about this level in a video that I published for everyone to see. Let me just go full screen here so you can see it better.
See? This is the prediction of that trade. There’s the heavy volume zone, there’s the gap, and there’s the long trade prediction at 1.3769. I waited almost two weeks before the level got hit, but it got hit yesterday, so all is good.
Now the level has been tested. It has been spent. It’s no longer valid, so I’m going to discard it. I’m not going to trade it for the second time since I only trade the first test.
By the way, those levels that you see, those lines, are available for members of our trading course, where they can see exactly what I’m trading every day. I’m publishing those levels every day.
So, if you guys want to join us, you can visit our website, which is trader-dale.com. If you click this button, Trading Course and Tools, it will bring you to a page where you can check out my trading education and custom indicators, and here you can join us.
By the way, we are currently running a special Back to School Sale. It’s until September 11th. Until then, you can get those educational and indicator packs for a discounted price here. You can get them separately on this page, or scroll down a bit, and here you can get all four packs for a discounted price until September 11th.
All right, so thanks for watching, and I’ll see you next time. Until then, happy trading.
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