Volume Profile & Price Action Setup Combo

In today’s trade analysis, I would like to show you my most favorite combination of two trading setups. It is a combination of a Volume Profile setup and Price Action setup.

Let me first talk about the volume-based setup.

Trend setup (Volume Profile setup)

The AUD/JPY went into a strong buying activity yesterday and the price continued to move upwards since then.

When there is an uptrend like this, then what interests me the most is how the volumes were distributed inside that uptrend.

The easiest way how to find out is to use my Flexible Volume Profile tool and move it over the whole uptrend area.

In this case, my Volume Profile revealed a significant volume cluster around the middle of the uptrend.

It is pretty likely that buyers who drove the price upwards were adding to their long positions there. It is a significant zone for them because it is the entry point of a lot of their positions.

For this reason, if the price makes it back into this area again, those buyers will want to defend their long positions.

They will do that by placing aggressive long Market orders and they will try to push the price upwards again.

That’s why I think this area (75.28) is likely to work as a strong day trading support zone.

AUD/JPY; 30 Minute chart:

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Resistance → Support (Price Action Setup)

The second piece to my favorite setup combo is a Price Action setup which says, that a breached resistance becomes a new support.

As you can see in the chart below, the AUD/JPY already reacted to the 75.28 zone in the past. This level worked as a strong resistance.

Then, when the price went through this level today, the resistance became a support.

It is as easy as that! If you would like to learn more about how to trade with this simple setup, you can do so here:

Support→Resistance Price Action strategy EXPLAINED

Below is AUD/JPY; 60 Minute chart:

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As you can see, there are two trading setups which both confirm the strong support around 75.28 area.

The first setup is called the Trend Setup and it is based on volumes, and the second setup is called Resistance→Support setup and it is based on Price Action.

You can learn more about both those setups in my FREE Volume Profile book which you can download by clicking the banner below.

Happy trading!


Beginners Guide to VWAP Part 3: Where to get VWAP & Setup Guide

A good quality VWAP

It is very important to have a good quality VWAP indicator which has all the functions you need.

The most important functions and features are:

  1.  VWAP (and its Deviations) are calculated correctly (there are many VWAPs around which have the calculation wrong).
  2.  VWAP is able to calculate the 1st and 2nd VWAP deviations.
  3.  You can switch between Daily/Weekly/Monthly and Yearly VWAP depending on your trading style (more about that later in the article).
  4.  Prints a line where the previous session of VWAP and Deviations ended.
  5.  You can use the VWAP for any trading instrument.
  6.  You can use the VWAP with any type of chart and with any time frame.

The VWAP indicator which I developed for NinjaTrader 8 platform has all those features.

Where to get a good VWAP?

You can get my VWAP indicator from my website, either as a part of The Elite pack (educational trading package) here: Dale’s Volume Profile Indicators and Education.

Or you can purchase it separately here: VWAP + VWAP Video Course.

My VWAP indicator has a lifetime license and you can use it on multiple computers.

Setting up your VWAP

With my VWAP indicator, you can choose between different calculation periods. This is especially useful because you can tailor the VWAP to fit exactly your needs.

You can can use those VWAP calculation periods: Daily, Weekly, Monthly, and Yearly.

Daily VWAP: Is ideal for scalpers and day traders. It’s calculation starts anew every day and it is very responsive to changes in price and volumes which occur during the day.

Weekly VWAP: This one is good for day traders as well as for more long-term swing traders. It is not as responsive to quick changes as the Daily VWAP, but it points you to the most important S/R zones which occur throughout the week.

Monthly VWAP: This one is best used for swing trading. It does not respond to sudden changes quickly, but rather points you to the big levels which you would miss with the more responsive VWAP.

Yearly VWAP: Is best used for swing trading and investment planning (for example with stocks). This one gives you the strongest VWAP levels of the year. It only responds to the most significant changes in price and volume which occur throughout the year.

A cool thing my software does is that you can combine those VWAPs. This way you can for example watch Daily VWAP but you won’t miss an opportunity on a Weekly VWAP.

You can combine them in one chart or in multiple charts. I personally prefer more charts – I will show you that below.

Intraday trading workspace

In my intraday trading workspace I use two VWAP charts.

The upper chart is a 60 Minute chart which shows the Weekly VWAP (= every week a new VWAP and Deviations start to calculate). I use this to see the bigger picture.

The lower chart on left is a 30 Minute chart with a Daily VWAP (= every day a new VWAP and Deviations start to calculate).

This way I can keep track of both VWAPs – Weekly and Daily. This gives me the full picture which I need to see in my intraday trading.

As you have probably noticed, I also have Volume Profile indicators in those charts. The upper chart is a Weekly Volume Profile (gets printed every week), and the lower left chart uses a Flexible Volume Profile.

This way, I can clearly see the confluences of VWAP and Volume Profile. I talked more about those confluences in my previous VWAP article here:

Beginners Guide to VWAP Part 2: VWAP Trading Setups

Swing trading workspace

My swing trading workspace is simple. I prefer to use only the Yearly VWAP (with Daily chart) which points me to the most important S/R areas that form during the whole year.

It looks like this:

I also have Volume Profile in this chart. I use Yearly Volume Profile (gets printed every year) and also a Flexible Volume Profile which I can move around the chart and look into specific areas to see how volumes were distributed there.

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Here is a recording of a VWAP webinar I had recently. Enjoy!

Here are important and interesting questions I got during the webinar:

VWAP Webinar Q/A

I hope you liked this VWAP series and that you learned something new!

Stay safe and happy trading,


Trading With Extremely High RRR (Risk Reward Ratio)

I would like to show you a trading method which combines intraday trading with swing trading.

It is a highly efficient method with an extremely high RRR (Risk Reward Ratio).

Strike rate is not that high, but the big RRR makes up for it.

I am going to show you the method now, but first a warning: you will need to have the guts for this as it requires you to hold intraday trades as if they were swing trades!

Feel like you have the guts for it? Good! Let’s have a look at it!

Intraday analysis

The core of this approach is finding a strong trading level, which makes sense both as an intraday trade as well as a swing trade.

As an example, I will use a trading level, which I published for members of my trading course.

This level was a short on EUR/USD. I published it as an intraday trading level at 1.1087.

The reasoning behind the level was this:

There was a heavy volume area created in a price rotation. Then the price went downwards from there aggressively. This gave me the indication, that there were strong sellers building up their selling positions there.

I marked this level and I waited until the price returned to this level again. My idea was that those sellers would become active again, defend their selling positions, and try to push the price downwards again.

I call this scenario the Volume Accumulation Setup. You can learn more about it for example in this free webinar:

WEBINAR: Volume Profile Setups

Below is the 30 Minute chart on EUR/USD with this intraday trading level.

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Swing trade analysis

Let’s now have a look at this level from a higher perspective using a 4 Hour chart

(*in NinjaTrader software you need to set your chart to 240 Minute chart to get the 4 Hour chart):

There are two very important things in the picture above.

The first one is the heavy volume area in the middle of the downtrend. You can notice that it points you exactly to the same level as the intraday trading analysis.

This does not happen that often, but more often than you would think.

Another cool thing to support this trading level is that it worked as a support in the past. The price bounced off this level really nicely (that’s how you tell it was a support).

When the price went past the support, it then became a resistance.

You can learn more about this setup here:

Support → Resistance Price Action Setup


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Trade management

Now, we have a level which makes sense both as an intraday trade as well as a swing trade!

This gives us a nice opportunity to enter a swing trade using a very tight Stop Loss.

In a situation like this, you can use the Stop Loss as if you were trading a standard intraday trade. For forex pairs, this could be for example 10-15 pips.

What you do next is to open a standard intraday trade, but divide it in two halves.

You close the first half of the trade as is you were trading a standard intraday trade (for example after you made 10-15 pips profit).

Then comes the hard part!

You need to hold the second half of the position as if it were a swing trade!

This means your Take Profit could be for example 50-100 pips!

In this particular case, the ideal Take Profit would be 60 pips.

The reason for that is that there is a significant Volume Cluster standing in the way at 1.1028.


If you would like to learn more about placing your Take Profits using volumes (like in this example), then you can watch this free webinar:

Swing Trading Webinar

To sum it up – If you used TP=10 pips and 60 pips, and SL 10 pips, then you had 1st half of the position RRR = 1 and the 2nd half RRR = 6.

That is, if you had the guts to hold it!

I hope you like this trading method and I hope you will give it a try!

Happy trading!


Trading The Volume Accumulation Setup – Weekly Trading Ideas – 3.2.2020

*Disclaimer: Presented opinions, trades and trading ideas on the markets and charts is not advice nor a trading recommendation. It is general information and it is for educational purposes only.

**You can learn more about my trading setups in my new book: VOLUME PROFILE: The insider’s guide to trading

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Gap Trading Setup – Examples

In yesterday’s post, I was talking about an opening gap that got created on JPY pairs. I also showed you a trading strategy that you can use in a situation like this.

If you missed it or if you would like to read the exact rules of the strategy again, then the yesterday’s post is here:

EXPLAINED: Gap Trading Setup

Different trading instruments

I got quite a lot of emails yesterday and many of you guys were asking, whether this strategy was also applicable to other trading instruments.

The good news is that the answer is – yes! You can apply this strategy to other trading instruments as well.

Apart from forex, you can also use this one for example on indices like S&P 500, energy like Crude Oil, metals like Gold and other…

I am not that sure about single stocks though. The thing with stocks is that opening gaps are quite normal there. It is not so rare as for example on forex. Those gaps also don’t get filled that often. So I personally don’t trade this strategy on stocks.

Where this strategy really shines, is instruments where initial gaps are not very common.


Let me now show you a few more examples on different trading instruments than forex (if you are interested in forex, then you can check out yesterday’s post, which was just about forex)

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EXAMPLE #1: Crude Oil

In this example, there is an opening gap from this Monday (27th January). The gap was a smaller one and it was followed by a quick movement down. This movement was a low liquidity move. Very low liquidity – almost a gap!

The gap was there for two whole days and then it got completely filled.

Above the gap, there was a heavy volume cluster (heavy volumes). This volume cluster works as a resistance.

As you can see from the picture below, the price reacted to it, and went downwards.

The chart below is CL 03-20; 30 Minute Time Frame:

EXAMPLE #2: ES (S&P 500 futures)

In this case, the opening gap was quite a big one. It formed on market open on the 27th January and got completely filled after two days.

The resistance which we use for trade entry was a bit higher though. It did not get hit for almost another whole day. Then the price very shyly touched it and sell-off started.

BTW what you see in the picture is not the whole selloff. It is just the start! Currently the price is 25 points lower than what you see there.

The chart below is ES 03-20; 30 Minute Time Frame

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EXAMPLE #3: Gold

The opening gap on Gold occurred at the same day as in the previous cases (27th January) and it was a pretty big one!

Also, the volumes which got accumulated below the gap on Friday, were pretty massive! Nothing a Volume Profile trader should miss!

On Monday, the gap got filled only partially, but not fully. The support was still there and ready to get tested.

On Tuesday, the price hit the Volume Cluster, and as soon as it touched it, the price shot upwards in a quick move creating a Pin bar (on 30 Minute Time Frame).

The chart below is XAUUSD (Gold); 30 Minute Time Frame. *The picture is from Mt4 platform because I had some issues with data for Gold in NT8):

As you can see, this strategy works pretty nicely on many trading instruments, not only forex.

It is not the main strategy which I trade (it is a bit rare to see a valid entry setup). But when I see it, I trade it!

I hope you guys like it!

Happy trading!


EXPLAINED: Gap Trading Setup

In a Weekly Ideas video, which I posted here on Monday, I was talking about gaps that got created on the market open on Monday.

In this post, I would like to follow up on this video and talk more about the gaps and most importantly about one cool trading setup!

Unlike for some other trading instruments (for example stocks) gaps are pretty rare on forex. Forex runs 24/5 so, the only time they can occur is when the market opens on Monday.

Gaps Tend to Get Filled

On forex, gaps tend to get filled. If there is a small gap and no major news that would have caused it, then the gap gets usually filled pretty soon (in a matter of hours).

If it is news-related and the gap is bigger, then it can stay not filled longer. Usually, max a few days. Then in most cases, the gap gets filled.

Gap Trading Setup – Explained

There is a nice trading setup you can trade when there is an opening gap.

If there are heavy volumes created before the gap, then the heavy volume area will work as a strong Support/Resistance.

What you want to see is this:

1. Opening gap

2. Heavy volumes before the gap

3. Price fills the gap and then hits the heavy volume area – which is the Support/Resistance. You enter your trade from there


In the Weekly Trading ideas video and also in my member’s area (members of Dale’s Trading course), I published some trading levels based on the opening gap which occurred on JPY forex pairs.

Let’s now have a look at few examples I published there and let’s see how price already reacted to some of them.

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USD/JPY Gap Example

Let’s start with USD/JPY.

There was an opening gap and it got fully filled in today’s asian session. There was a nice Volume cluster created before the gap on Friday (marked in blue rectangle).

So, gap got closed, price hit heavy volumes, filled my short pending order and went quickly downwards. A perfect trade!

The chart below is USD/JPY; 30 Minute Time frame.

CHF/JPY Gap Example

Another trade based on this setup was on CHF/JPY.

The scenario was the same as in the previous case. There was an opening gap and heavy volumes got created before it.

Those volumes were a strong Resistance. The gap completely closed on Monday and then the price reacted to the heavy volumes.

Another nice profit! BTW I published this trading level in the Weekly trading ideas video in advance on Monday. You can watch the video here:

Trading the Opening Gap on JPY Forex Pairs – Weekly Trading Ideas

The chart below is CHF/JPY; 30 Minute Time frame.

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CAD/JPY Gap Example

Now, there are still some JPY pairs, that haven’t closed the gap yet! Let’s first have a look at the CAD/JPY.

This pair closed the gap only partly. The way I look at it, is that the gap still is not properly closed and therefore I consider it a standard gap, which will need to get closed eventually.

In the picture I divided the gap into two parts. The first – green part already got filled. The red part is still not filled.

The resistance based on the heavy volumes before the gap is a little bit above the gap.

What I expect is that the price will eventually fully close the gap (the red area) and then react to the resistance I marked in blue.

The chart below is CAD/JPY; 30 Minute Time frame.

AUD/JPY – What if the gap does not get filled?

The last example is on the AUD/JPY.

In here, the gap did not get filled at all. It has already been two and a half days and still nothing!

I still expect this gap to get closed soon. My guess is that it will be filled until this week ends.

If it does not get filled and if it stays this way, then the market could go into a downtrend.

This is actually another phenomenon I wanted to show you!

If there is a gap which is not filled, then it means that one side of the market (buyers or sellers) is clearly much stronger than the other and they will push the price one way only – away from the gap.

In other words – market participants don’t even have the strength to push the price towards the gap to close it.

This in many cases starts a strong trend.

AUD/JPY Example

If the gap in the picture below does not get closed within the next couple of days, then it is likely that it will not get closed at all and a strong downtrend will start.

The chart below is AUD/JPY; 30 Minute Time frame.

I hope you guys found this useful! Feel free to let me know what you think in the comments below!


Happy trading!


How I Enter & Manage My Trade Setups – Trader Dale

In this article, I’m going to break down exactly how I trade my levels so you can start putting the rules to use in your trading. Some of the rules require a bit of practice, but the details below will point you in the right direction. Here we go!

How I Enter My Trades

Some time ago I used to enter only with market orders. When the price got near my level, I switched to one minute chart and watched the dynamics and behavior of the market. My goal was to get a slightly better entry than with a simple limit entry. Now I use both market and limit orders because limit orders are much more convenient than market orders for certain situations. Currently, my ratio between using market and limit orders is around 50/50.

Situations when I prefer MARKET order are:

  1. Entering a position against a strong spike move. The reason for this is that you can quickly abort the trade if it moves too quickly into the level and triggers the rules in the course for avoiding fast spikes into a level. If there is strong news causing the spike, I don’t enter the position. If the spike is not news driven, I will enter it.  The fastest way to see if the spike is news driven or not is via a service like Forex squawk. A slightly delayed version is ForexFactory. Quick spikes can allow you to enter for a slightly better price if they shoot a bit past the trading level. I provided an example of this below (1-minute chart). In this particular case, I was able to enter at an entry 6 pips better than the original level.
  2. Price rotates close to the level creating weak highs/lows. After such rotation (that I watch on 1-minute chart) there is likely to be a small spike move followed by a quick rejection (if the level works). The idea is to enter during the actual spike to achieve a better entry. Here is an example of a trade I took using this method:

Where to Place Your Stop Loss & Take Profit

My profit target is 10 pips, and my stop loss is 12 pips. I use this setting for all four major pairs that I trade intraday (EUR/USD, AUD/USD, USD/CAD, USDJPY). The reasons for this settings are:

  1. I like to be out of my trades quickly because the more you have your trade open, the higher the risk of something unexpected happening. It could be a change of market sentiment or some other market-moving event like unexpected (or expected) news.
  2. Another reason is that even if my trading level happens to be against a strong counter-trend move, a 10 pip correction is much more likely to occur than a 20 pip reaction (which would basically be the end of that short-term trend). Today’s long on the USD/JPY shows that perfectly:
  3. 10 pip reaction is from my experience adequate reaction to intraday levels that I create and trade. Sometimes there is a much bigger reaction, but 10 pip reactions happen very often. This reward to risk ratio allows me to maintain a 70 % strike rate as an average over the long term.
  4. I prefer to have Reward to Risk Ratio of close to 1:1. Having a small Reward to Risk ratio (losers are much bigger than winners) would mean devastating losses that are hard to come back from. On the other hand, having a very large Reward to Risk ratio (winners are much bigger than losers) means having a reduced strike rate. Also, there is the risk that you take all the losing trades and by mistake miss the one winner that would cover them all. This is Murphy’s law, and it works in trading more than anywhere else :).

Some of the members of my trading course did their own research and came up with quite different SL/PT setting. For example, Ziggy’s research shows that the best stop loss and take profit location would be achieved around the 20/20 mark. I can only say that this really is mostly about preference. 10/12 works for me and I am happy to trade that way. Other people might prefer something close to the 20/20 method. In my opinion, it is much more about YOUR consistent application of your trade management ruleset, than the specific stop and take profit size itself.

Trailing Your Stop Loss

The way that I protect profitable positions is rather straightforward and simple, as I believe this is the key to being able to repeat the rules of your trading plan consistently. I secure my position by moving my stop loss to the reaction point when I’m roughly 7 – 8 pips in profit. This is what I call a neutral trade management style.

I also adapt securing my position to the current market behaviour. It is a bit detailed but I want to give you the full description of how I do things, so here it is:

  • If I trade against a strong trend I am much more careful and I secure my position in a more conservative way. Generally speaking, I secure my position when I am 7 pips in open profit. The reason is that it is quite dangerous to go against a trend and it usually pays off to be really careful and secure your position soon.
  • If I trade in a direction of a trend I can be more aggressive with moving of my SL. In this case I usually move my SL when my open profit us around +7.5 to +8 pips.
  • When there is no apparent trend I usually secure my position when it is +7.5 pips in open profit.
  • If there is a really sharp and precise reaction – for example 5 pips reaction exactly at my level within the first 1-2 minutes, I usually secure my position sooner (when +7 pips in open profit). The reason is that this sharp reaction shows me that this is the reaction I was waiting for and the aggressive buyers/sellers that I wanted to see there really are there and now they made themselves apparent. If the price should go back to the reaction point of this strong rejection it would mean that the counter move is too strong and that my position most likely won’t end up in a profit – so for that reason I secure my position this way. Generally speaking – if strong reaction point gets breached – the counter move is too strong and you better quit your trade. Check out this illustration of strong reaction at 1.2715 short level:


Tested Levels

If the price comes close to a level and makes a strong reaction I consider the level already “tested” and I discard it. Like many aspects of trading that cannot be made 100% mechanical, determining whether or not a level is tested will take some time and practice. This is where have the help of the member’s forum is also a huge benefit as you’re able to go over trades as a group. For the sake of this article though, let’s go through some key points to determining whether or not a level is already tested.

1.) How far the price turned from the level and how big the reaction was: Usually if the price comes 0-3 pips close to the level and makes an 8 or more pip reaction then I discard it. There are times though when the level we’re looking to trade from is rather significant but we get a test of the level that is right on the border of being invalid. If the level is substantial though, I’m likely to still use it. This is where seeing the daily level commentary each day is super beneficial as you’re able to get a break down every time a situation like this occurs.

2.) What the level looks like: If the support/resistance area is a wider zone where the exact level isn’t that easy to pinpoint, it is generally safer not to take that level again if it was previously tested. For example, if the price turned 4 pips prior to reaching your level in the middle of wider support/resistance zone, it is better to discard the level because the price already tested the zone. If the zone isn’t too wide and you are able to pinpoint the exact support/resistance level, then you can be more aggressive and still take trades that didn’t quite make the level. To see if the support/resistance zone is wide or tight, check the volume profile of this area. If the volume cluster is narrow/tight, then the support/resistance zone is also tight. If the volume area is wide, then the support/resistance is also going to be wide. Check out the screenshot of a trade I took on the EUR/USD. There was a mediocre “test” when the price came close to the level and then made a strong and significant reaction away. However, the resistance zone was quite narrow and the volumes that I considered to be strong resistance still weren’t tested. For that reason, I decided not to discard that level and we took the trade:

3.) The strength of the reaction: If the price turns before the level slowly and without any energy or volatility, then I’m more inclined to still consider the level valid. If there is a sharp and swift reaction then I’m more careful about taking the trade on a future test.

4.) Trend/counter-trend: I’m more aggressive and benevolent when I trade pullbacks in the direction of a trend than when I have an older level that goes against a current trend. In other words, if I have a short level in a downtrend I’m more likely to trade it, even if it was tested 3 pips sooner and made an 8 pip rejection. If on the other hand the reaction it was for a counter-trend trade, I would most likely discard this level because of the greater risk.,

5.) Your own discretion: Like it or not, sometimes you need to make the decision based on what you think will happen. Having many hard rules is definitely a good thing but in some cases, you cannot rely solely on these. This is why trading is an extremely difficult skill to master, as all profitable trading strategies will require some level of discretion.

I need to add that I only use this tested/not tested approach when I am at the computer, which for me is during European and New York trading session. I don’t use it for the Asian session. During the Asian session, I prefer to use simple limit orders as the market is often much calmer and there aren’t as many macroeconomic events.

As a final point on this topic, my trading levels work even if you remove the tested/non-tested criteria from the level selection process. Especially for those still in the process of learning to trade, it is less stressful and less time-consuming. If you are new to trading, I would recommend using simple limit orders on all your trades and only consider whether a level is tested or not AFTER you are doing well with trading limit orders on all valid levels. Learning to trade forex successfully is much more about YOUR consistent application of the rule set, rather than a few small tweaks to the rule set itself.

Trading Macroeconomic News

I never* trade during, before, and immediately after the release of any strong macroeconomic news (news marked in red on ForexFactory). I usually don’t open a trade 15 or fewer minutes before the release either.

Still, there are some discretionary situations that need to be covered. For example when to close the position before the news, when it is okay to start trading after the release, or when it is possible to re-enter your position after the news volatility passes. Let’s have a look at those points one by one:

1.) Quitting a trade before the news: I prefer to quit my trades around 2-5 minutes before the release. I usually watch the 1-minute chart to see what is going on with the smaller perspective. For example, if I see that there is a channel on 1-minute chart, I try to end the trade at the extreme of the channel. In this case, it is not likely that the market will shoot out of the channel before the release. By closing in this manner, I can make the best of the situation I’m given. Sure you can wait and pray, but remember, time is running out so it’s best to take the first logical exit. Another example is when the price action doesn’t slow down into a small channel. In this case, I try to exit my position at the closest resistance that I can see on the 1-minute chart. This resistance is usually some type of price rotation (= small volume accumulation area) from which some buying or selling activity started.

It could look like this for example: Remember –  I close my positions like this only when there is an upcoming macroeconomic news event. In other cases, I stick to my 10/12 PT/SL method.

2.) Entering positions after the news release: In this case, it is the volatility that matters most, not the time. Because of that, I cannot give an exact time we must wait after news before entering a position. Strong macro news like CPI, GDP, and NFP can start new trends and I don’t want to enter my positions counter that trend. So when there is a strong macro event and it is followed by strong volatility and aggressive buying or selling activity (price moves rapidly in one direction), I am usually really careful and prefer to not enter any trades that would go against the move. There are also weaker pieces of (but still red) news, for example, consumer confidence, housing permits, oil inventories, and trade balance to name a few. After news releases like these, I just wait a bit until the spreads are back to normal and the dust settles down. Then I am willing and ready to trade again. This can happen within just a few short minutes. There are also special “red” news events that can cause extreme volatility. If there is such news I usually don’t trade the whole trading session and sometimes not even the next session. This would include news concerning central bank policy (FOMC, ECB, RBA, BOC and other central bank rate decision news). If you aren’t sure what volatility to expect from a certain macro event, go to this webpage and have a look at historical volatility that this particular macro caused in the past: NEWS IMPACT TOOL.

3.) Re-entering a trade: If I quit a trade before news and the news doesn’t cause a significant enough spike to have hit SL or PT, I try to re-enter the position if I get a chance to enter at the same or better price as before. I only re-enter if the volatility has settled down and if the price didn’t go near the profit target (let’s say around 75% or more). I also re-enter only when I still believe it could be a profit. How do I determine this? As an example if I have a level I’m looking to get long from, I want to see a sharp and fast rejection of lower prices (1-minute chart) if I am going to enter my position again. If there is just a weak low and the price only slowly rotates at the reaction point, I am usually a bit hesitant to re-enter and I may not re-enter it at all. In the two pictures below, you can see a short trade that I quit before the news and re-entered it after it. You can also see the sharp rejection of higher prices that assured me to re-enter the trade.

*Some news that is marked “red” (significant) isn’t really that significant. For example, Unemployment Claims. I don’t have a problem with trading through “Red” events like this that never move the market more than a few pips. Still, if you are not completely sure about the impact of some “red” news, then I would suggest that you don’t trade during it. It is better to be safe than sorry.

How Long Should You Hold A Position?

If there isn’t any upcoming macro news, I hold my position until I get full profit or a loss. It doesn’t matter if it takes hours, I just wait in the vast majority of cases. There are two particular cases that need clarification though:

1.) Close of the day: Before the Asian session starts, the futures market closes, and the spot Forex market has really wide spreads. Because of the spreads, I don’t really like to hold any intraday positions open through the rollover at 5:00 PM Eastern (also there is a swap). So, if I am close to Profit Target or Stop Loss I quit my position before the spreads widen. However, if my open trade is somewhere around the entry point, I usually hold it through the daily close. The reason is that widening of spreads probably won’t affect my position when I am around the entry point. Wide spreads could affect for example taking a Profit or a Stop Loss if the price was close to it during the spread widening but it is not so likely to hurt me when the current price is far from PT and SL.

2.) Close of the week: Now this is where you absolutely need to quit all your intraday trades. We are not position traders; we are short-term day traders. As such we have tighter stops which means a gap in the price could be far more devastating to us than someone position trading on the Daily chart or even those who are swing trading for that matter. In my opinion, there is never a reason for a day trader to take the risk of holding through the weekend.

Gap At Market Open

From time to time, you will see the market open with a gap and the price is exactly at my trading level (or very close to it). Even though it is a bit scary to enter the position like that, I actually like this scenario. The gap is actually another confirmation for me to enter. The reason is that the market usually tends to close the opening gaps. For that reason, a market open at my trading level is the best thing that can happen! I only need to wait a bit for the spreads to tighten before taking the position (they are usually quite wide at the market open). Check out a nice trade I took at the market open on the USD/JPY:

Old Trading Levels

I don’t change my trading levels after I have created them. If I create a level and the price goes many pips away from it, I still consider the level valid and don’t delete or modify it. Because of that, there are many old intraday levels on my charts. Sometimes it is a bit scary to trust a 30-day old intraday level. Still, it is quite unbelievable how the market “remembers” those levels and how it reacts even after such a long time. Here is a reaction to a 40 day old level on the Japenese Yen.

I Take All Valid Trade Setups

It doesn’t matter if my day started with 3 losses, 3 winners, or anything in between; I take trades from valid levels. If there are, for example, 6 levels hit in one day, I will take all 6 trade setups. I never say anything like, “I had enough profits today, so I can stop now,” or “Damn it, 3 losses – I can’t take the pain or another loss, so I’m done trading for the day.” Instead, I stick to my plan and trade all my levels. When there is a good start to the day, there really isn’t a reason to stop trading. Sometimes there are months where only a few days generate the majority of my monthly profits. While that is not the norm, you have to trade with the expectation that it could happen which means taking all valid trades during your trading hours.

The other case is starting a day with losing trades. No one likes starting the day like this, and it can feel like the best option would be to reduce your position size or stop trading all together for the day. I never do that! I trade despite the bad start, and I don’t lower the size of my positions. A few days back I started the day with 2 losses. After that, we had 3 winners which brought us to a profit for the day. I’m really glad I didn’t stop trading or reduce my position size after those two losses or the day would have ended up in the red.

Position Sizing

I mentioned this before but to be absolutely clear, I always use the same volume size (USD wise, not percent wise!). I don’t change it after bad period nor after a good period. It remains the same. From time to time I do a one-time rise of volumes, and from that point, I don’t change the size again for a long time. You have to understand that I’m at the point where I’m not really building my account as it is already at the size I’m comfortable with.

If you are like most people, and still working on building a trading account and becoming a full-time forex trader, then I would recommend doing things a bit differently. For this, I recommend setting a risk that is around 2% of your entire account balance. Therefore, if you have a $10,000 account, you would risk no more than $200 on any one trade. So many times I see people over complicate the position sizing process when it is really quite simple. While 2% risk might not be perfect for everyone, it is the simplest way to give someone a safe risk per trade that will still allow them to grow their trading account.

The key though is not to lower the risk during a drawdown. This will result in a much longer process of digging out from under the losses. I would recommend setting your position size based on 2% risk at the beginning of the month and only adjusting the number up when you set a new ‘high water mark’ for the ending account balance. As an example, if the account goes down to $9,000 then you would keep the risk the same. If however, you end the month with $11,000 in the account then you made a $1,000 profit. You would then set your 2% risk based on the new ‘high water mark.’

Learning to Trade With Market Profile

So this is the complete set of my rules, this is how I trade 🙂

If you want to know how I create my trading levels, you can check out my Market Profile webinar here:

Happy trading!


P.S – One of the things I get asked a lot is whether or not there is additional content in the member’s area. The answer to that question is obviously, YES! The course systematically goes through every aspect that we covered in great detail. This alone speeds up the learning process significantly. This isn’t the most important part though. In my opinion, the Daily Levels Commentary Video is by far the most important.

I equate this to learning to become a surgeon. No matter how long you go to school, no matter how many books you read on the subject, you still have to complete a multi-year residency program. Despite all of their training, it is still inadequate to perform their job. The ONLY thing that qualifies them to actually operate on a patient is that residency program and learning in a hands-on environment where they actually see how to apply what they were taught in the classroom.

The way I teach traders isn’t much different. I believe the course is hugely important, but just like in training a surgeon, book knowledge alone is not enough. In the Daily Levels Commentary, you see me pick the levels for the following day in ADVANCE. This does 2 things. It allows you to ‘earn while you learn,’ and it also allows you to see how the rules of the course should be applied to live market so you can do it on your own in the future.

As a final point, the member’s have access to a very active forum of like-minded traders. The forum is an awesome community that continues to grow by the day. This allows members to bounce trade idea’s off each other and get questions answered very quickly. Additionally, you’ll have whatever support and direction you require from me as well.

If you’d like to check out everything that is included in the Trader Dale’s Member Forum, you click here to learn more.