Video Transcript:
Hello everyone, it’s Dale here. A couple of days ago, I made a video where I explained one of my favorite cumulative Delta trading strategies. Today, I’d like to break down a real trade I took yesterday, which was based solely on this cumulative Delta strategy. So, let’s take a look at it.
The first step of the strategy was finding a strong Volume Profile level—a level where trading institutions were active in the past. Take a look at this chart. This is a chart I published on TradingView. Everyone could see it and trade it because I published it in advance and highlighted this heavy volume zone here on the USD/JPY 30-minute chart. This heavy volume zone shows significant interest from big trading institutions around this price level. So, as the price was dropping in this downtrend, sellers were actively adding to their short positions, making this a potentially strong resistance zone.
Alright, so that’s the first step: identifying potential resistance or support zones with the Volume Profile. The second step of the strategy is using cumulative Delta around that resistance zone to look for divergence. Let me switch over to the NinjaTrader 8 platform where I have my cumulative Delta indicator.
What you see here is the NinjaTrader platform with two charts. The first one is a one-minute chart of USD/JPY Futures, and below it is the cumulative Delta chart, where I look for divergences between price and cumulative Delta.
Now, there’s one tricky thing with Japanese Yen Futures: the charts are actually reversed. This means that if USD/JPY goes up, the Futures chart goes down. So, on Forex, this is a resistance zone where the price should drop, but on the Futures chart, it’s reversed, so I’m actually looking for a long position here.
With this support level identified using the Volume Profile, I look for divergence. Here’s where the price was dropping towards that support level. At the same time, while the price was dropping, cumulative Delta was rising, and that’s exactly the divergence we want to see. This tells us that, even though the price is moving downwards, buyers are stepping in, which significantly increases the likelihood that this support level will hold and the price will bounce.
As I mentioned in the original strategy video, the price often follows Delta—in other words, Delta indicates where the price might be heading. So, when you spot divergence, with the price going down and Delta moving up, it suggests that the price should follow Delta and turn upwards. I don’t trade this blindly; I look for divergence around strong Volume Profile zones like this one.
In this case, there was around two hours of divergence leading up to the moment the price hit the level. Here’s how the price reacted: I actually exited the trade here, taking only this part of the reaction. The reason was a heavy volume zone—I’ll merge this profile to show you. These are four-hour profiles, and as you can see, the Point of Control for this merged profile was here, so that’s where I exited.
On TradingView, on the 30-minute chart, this was the point where the price reacted to that resistance. Remember, the charts are reversed, so this was a support zone on Futures.
That’s the breakdown of the cumulative Delta strategy trade. I hope you enjoyed it! If you haven’t seen the original video where I explain the strategy in detail, I’ll drop a link so you can watch it. If you’re interested in learning more and accessing my custom-made trading indicators, you can visit my website, Trader-Dale.com. By clicking on “Trading Courses and Tools” you’ll find my trading courses and custom indicators.
If you’re interested in day trading with me and other funded prop firm traders daily, I recommend checking out the FTA page, which stands for the Funded Trader Academy. You can watch a video there where I explain everything we offer, and if you think it’s the right choice, you can book a one-on-one call to see if it’s a good fit.
