Video Transcript:
Hey everyone, it’s Dale here. Welcome to this video where I’ll show you my best trade of the week. Well, not necessarily the best trade where I made the most money, but the trade that I think is the most important. And this week, I chose to show you an AUD/USD trade where I want to show you a combo of a couple of trading setups that all aligned together and pointed to one strong level that I was trading. And I’ll show you exactly how I did this, including the stop-loss and take-profit placement, right now.
So, what you see here is the NinjaTrader 8 platform with my custom-made Volume Profile and VWAP indicators. And the trade that I want to talk about is right here, this long level on AUD/USD at 0.7207.
The first reason I chose to trade from this level and take the long from here was that there was a heavy volume zone. Let me first show you with my Flexible Volume Profile like this. What you can see here is a rotation where the price was rotating and forming those heavy volumes. Afterwards, the price moved away from that heavy volume zone. It was moving above it and then made this pullback, hitting the beginning of the heavy volume zone right here. And this is where I went long from.
This is reason number one why I entered this long trade from the beginning of the heavy volume zone. Right? I like to trade from the beginnings of heavy volume zones. By the way, not the center, but the beginning, like here.
Another thing that added strength to this level—and I need to zoom out a bit—was how the volumes looked for the whole previous week. This is a weekly Volume Profile, which shows the volume distribution over the whole previous week. Our level was based on this heavy volume zone. It was not the Point of Control of the week, which would mean the biggest volumes of the week, which were here. But still, from the bigger picture, this was a very, very important heavy volume zone—a big heavy volume zone starting here at our level.
From that heavy volume zone, the price moved away and then made the pullback. And when it hit it again, boom, reaction. The idea behind this, or the logic behind this, is that those volumes you can see here on the weekly profile were buyers who were adding to their long positions as the price was progressing upwards. And when the price made a pullback here, they defended this heavy volume zone and pushed the price up from there. Right?
So, those are the Volume Profile reasons why I entered this trade right here.
Now, let me zoom in a bit, and let’s not talk about Volume Profile now, but let’s talk about VWAP and its deviations. That yellow line you see on the chart is the weekly VWAP. Those gray lines here, this one and this one, are the first deviations of the weekly VWAP.
What I like to do is combine those deviations with volumes. So, if I see a place where there is a heavy volume zone as well as the first deviation of the VWAP, like here—this is the first deviation of the VWAP, and it meets with the beginning of the heavy volume zone. All right? See here? So, this is a place where the two meet.
The price tends to react to the first deviation of the VWAP as well as to the volumes, and that’s a combo of two independent setups. But both setups are pointing to the same place, telling me to go long from there.
So that’s why I went long from there, for all those reasons. I’m always looking for those combos. I rarely enter a trade without some kind of combo like this one, for example.
Okay, so this is the trade entry based on Volume Profile and VWAP. Now let’s talk about the stop-loss and take profit.
Usually, in most cases, I place my stop behind a heavy volume zone because a heavy volume zone like this one works as a barrier, right? So, it protects the trade. That’s why I placed the stop here, behind the heavy volume zone, behind the barrier.
Regarding the take profit, I like to quit my trades when they hit the first barrier standing in the way. And it’s usually a heavy volume zone that I look for. So, since I entered the trade here, the price started to move up, and the first barrier standing in the way was this heavy volume zone. Right? So that’s why I quit the trade here. This was my take profit at that heavy volume zone.
So, this was the take profit right here. This was the stop. And as you can see, this trade was more or less a 1:1 risk-reward trade, right? Because this was the trade entry. Okay, so trade entry, take profit, stop-loss.
As I was saying, this is not the biggest winner of the week, but I wanted to show it to you because of the combo. And the combo is something that I would like you to learn. It doesn’t necessarily need to be a combo of VWAP and Volume Profile. If you guys are trading different things than I do, you can use different combos. But the main thing behind the combo is that you are looking for multiple trading setups confirming each other and pointing to the same level. Right? That’s the whole trick. That’s how I trade, and this is what works for me.
Now, if you guys are interested in learning exactly how I trade from A to Z, then I recommend visiting my website, trader-dale.com, where you can browse my trading education and custom-made indicators.
By the way, I’m running a special Back to School Sale. It’s ending today, but if you guys hurry up, you can still get it. See, this is the Back to School Sale ending today. And what it’s all about is that you can get my educational and indicator packs for a discounted price here.
You can get them separately here: the Volume Profile Pack, Order Flow Pack, VWAP Pack, and Smart Money Pack. Or scroll down a bit, and here at the bottom of the page, you can get all four packs together for $697, massively discounted until the end of the day.
All right, so that’s about that. Thanks for watching the video. I hope you found it useful, and I’ll see you next time. Until then, happy trading.
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