📈 How to Improve Price Action Trading with Volume Profile

Hello everyone, it’s Dale here, and in this video, I’ll show you how you can improve your price action trading with Volume Profile. When I first started trading, I was using so many indicators that my charts were completely cluttered. So what I did next was delete all of them and focus purely on trading with price action. My charts were finally clean, and I definitely made progress with simple price action, but I was still far from my goal of being a consistently profitable trader. Sure, I had some winners, but I also had plenty of losers, and overall it wasn’t consistent. That wasn’t enough. So I added just one indicator — the Volume Profile. That was the breakthrough for me because what Volume Profile does is show the big institutions, the big players, and their volumes — the actual levels where they are active in the market. This gave me a huge edge in trading and still does today. That’s why I want to show you how you can add Volume Profile to your price action strategies to improve both your consistency and your win rate.

So here’s the plan. I’m going to show you two simple price action strategies, and then I’ll show you how to add Volume Profile to them and how that will improve your results. Let’s cut to the chase and start with the first one: the Fair Value Gap.

A Fair Value Gap isn’t new. It comes from Smart Money Concepts and has been around for a long time. Let me explain how to trade it. A Fair Value Gap is basically a three-candle formation. In the bullish case, the key point is that there’s a gap between the high of the first candle and the low of the third candle. It doesn’t matter if those candles are bullish or bearish — what matters is that there’s space between them. That space is the Fair Value Gap, and it shows the aggressiveness of buyers pushing the price upward. The bigger the gap, the stronger the buyers were. I personally like to trade from the beginning of the gap. In a bullish scenario, I wait for a pullback to the start of the gap and go long from there.

In the bearish case, again we have three candles. The gap is between the low of the first candle and the high of the third candle. That area is the bearish Fair Value Gap. I trade it the same way — wait for a pullback to the start of the gap and then go short. This is a very simple and common formation. You’ll see it many times every day, so there are plenty of opportunities.

Let me show you on an actual chart. Suppose this is candle one, candle two, and candle three. The high of candle one and the low of candle three form the space that creates a Fair Value Gap. I wait for the pullback to the start of the gap and go long. In the bearish scenario, it’s the low of candle one and the high of candle three. That’s the Fair Value Gap, and I short from the beginning of it.

Now, if you just trade every Fair Value Gap you see blindly, you won’t get good results. But if you add Volume Profile, things change dramatically. With a simple price action chart, I add a Volume Profile and look at the rotation before the gap forms. I want to see a significant volume cluster there. Why? Because that tells me institutions were active, building positions before aggressively moving the price. They’re likely to defend that level when price returns. This combination — Fair Value Gap plus heavy volume zone — is what gives the edge.

For example, if I see a bearish Fair Value Gap and behind it a strong volume cluster, I know that’s a strong resistance zone. Same for bullish gaps combined with heavy volumes below. The bigger the Fair Value Gap and the stronger the volume zone, the better. Even if it forms during macro news, I don’t discard it — often those setups work best.

Now let’s move on to the second setup: the Support-Resistance Flip. This is another very simple strategy. It says that a broken support becomes a resistance, and a broken resistance becomes a support.

Here’s how it looks. Suppose the price reacts strongly twice to a certain level. That means it’s a resistance zone. Then price breaks through it — now that old resistance has turned into a new support. When price returns, you go long from there. It works the same in reverse: if a support is broken, it becomes a resistance. You wait for the pullback and short from there.

That’s the plain price action version. Now let’s add Volume Profile. If I see that an old support has turned into resistance, that’s requirement one. Requirement two is a strong volume cluster at that area. When both line up, I wait for the pullback and trade from there. The logic is simple: institutions needed huge volume to break through support or resistance, and that means it’s an important level for them. When price comes back, they’ll likely defend it again.

Sometimes, I also refine the level placement using Fair Value Gaps. If a Fair Value Gap aligns with the Support-Resistance Flip and a volume cluster, then that combo makes the level even stronger.

So those are the two setups. Combine them with Volume Profile and you’ll see a big improvement in consistency.

Thanks for sticking with me until the end of the video. If you want to trade with me every day, get access to my trading courses, or use my custom indicators, visit my website trader-dale.com. Under “Trading Course and Tools” you can purchase my programs and indicators, or get them all together in a discounted bundle. If you want to trade live alongside me and other professional traders, go to the Funded Trader Academy page. The best way is to click the “Talk to a Mentor” button to book a call with me or one of our mentors. We’ll walk you through the whole service, show you around, and you can decide if it’s right for you.

Thanks for watching, and I’ll see you in the next video. Until then, happy trading!