Will there be a Sell-Off on Gold?

All eyes on GOLD!

Why is that? Because Gold is at its all-time highs! This is really an important event happening right now.

Gold has attracted many people because of its recent rapid growth – investors and also people who have never invested before. I think this situation could be potentially very dangerous for both of those groups.

In this article, I would like to present some of the facts and also my opinions regarding Gold.

$2.000 – Psychological level

First, I would like to have a look at technical analysis and start with a simple Price Action.

In my opinion, Gold has entered a critical area now. It has almost hit the $2.000 mark. This could work as a strong resistance based on a psychological standpoint.

The last time when price was around a similar level was in 2008 and 2014 when the price reacted to $1.000 mark.

Check it out in the Monthly Gold chart below:

I am not saying that the price will reverse now because it is at $2.000, but you should be aware of the possibility that it could.

Attacking historical high

Now, as the price has breached the historical high, it is very important that the price manages to stay there.

The risk here is that even though the price has made the breakout, if the higher prices are not accepted as “fair value prices” then the price would break and fall sharply down.

In order for the price to rise, there is a need for buyers who are willing to buy for those high prices! Ask yourself this: “If I was a financial institution, would I buy at historical highs after a crazy fast uptrend? Isn’t that too expensive?”

My own answer would be: Hell yes, it is expansive!! I am not paying $2.000 for this!

If I really wanted to buy some Gold, then I would wait until:

a) Higher prices got accepted – which means that price started to rotate above the $2.000 mark.

Or preferably:

b) I would wait until the price dropped and I would buy cheaper.

This brings me to another point – How deep does the price need to drop in order to get me interested?

Strong support at 1710 – Volume Profile analysis

In my opinion, the best place to jump in a long trade is around 1710 mark.

Why is that?

If you use my Volume Profile indicator and look at how the volumes were distributed throughout the last couple of months, then you will see that a lot of trading positions got placed around the 1710 area.

What I think this means, is that in this area, buyers were entering their long positions slowly. The big institutions were getting ready for a big push.

When they have slowly and unnoticed accumulated their long positions, they started an aggressive buying activity. This activity snowballed, everybody started to join in the new buying, and the price started to rise sharply.

Now, if the price drops back into the 1710 zone again, those institutions will become active again. This zone is important for them, because they placed a lot of their volumes there!

This is why I expect they will try and drive the price upwards from there again. In my opinion, this is the place to buy cheap.

Below is a Gold chart on Daily time frame with Volume Profile:

How important is Gold actually?

Have you ever asked yourself how important Gold is? Why is it so precious, or why investors like to invest in it?

Let me ask you a question. What do you think would actually happen if somebody just stole all the Gold there is and just shot it into space?

The answer is pretty funny. You know what would happen? Almost nothing, really…

Here are the hard numbers to back this up. Below is a chart which shows usage of Gold worldwide:

As you can see, people are mostly buying Gold in the form of jewelry and also as an investment. Funny thing is, that majority of the investment gold is not actually gold in its physical form, but just a “paper Gold”! Are you getting where I am going with this?

Buy a golden brick, not a paper

To me, buying the “paper Gold” makes almost no sense. Gold is considered a safe heaven – a place where investors put their money to reduce risk.

If you want to reduce risk by buying Gold, then be my guest, but buy PHYSICAL gold! Buy a golden brick and hide it so nobody knows you have it and where you have it!

You don’t reduce risk by buying paper Gold! Paper Gold is not really backed by real Gold. There is not enough real physical Gold in the world to back up the paper Gold!

So, if you want to make a long-term investment, think twice about the form!

Why are Gold prices rising now?

The reason Gold is gaining now is because of the COVID-19 pandemic. The world is scared, economy is endangered and investors are seeking the safe heaven. They want to put their money into Gold to reduce their risk exposure. What also helps is the low interest rates and USD weakening.

All those factors drive the price of Gold up. BUT, it can’t rise forever! There will be a point where it will be so expensive nobody would consider it a good investment anymore.

Could it be now? In my opinion yes.

Does that mean that you should short Gold now? No, it does not.

The world could go crazy and people could drive the prices of Gold even higher – to a point where it becomes a bubble (which will burst afterwards).

Similarity with Bitcoin?

Remember when Bitcoin was close to the $20.000 mark? A scenario like this could actually happen to Gold too! Let me remind you, I hope this picture is not too painful for you to look at 🙂

Bitcoin, Daily time frame:

What do you guys think? Are you trading Gold? What is your opinion about the current price development? Let me know in the comments below!

Happy trading!

-Dale

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CAD/JPY: Volume Profile & Price Action Analysis

Today, I will do an intraday analysis of CAD/JPY. There are quite a lot of interesting things to point out here!

There was a strong trend movement on CAD/JPY yesterday. If you are reading my Market Commentary articles from time to time, then you know that I like to look for significant “volume clusters” within such trends.

Trend analysis with Volume Profile

What I do is that I use my Flexible Volume Profile and I stretch it over the whole trend area. Then I look for places with heavy volumes within the trend (= volume clusters).

In this case, there was a strong volume cluster created around the middle of the trend movement.

A volume cluster in an uptrend tells us, that the buyers who were pushing the price upwards into the trend were adding to their long positions there – at the volume cluster.

How does this information help us? It helps us because when the price makes it back into this volume cluster area again, the buyers who entered their long positions there are likely to become active and to push the price upwards again.

This is why such a volume cluster represents strong support. In this case, the support is around 79.73.

CAD/JPY; 30 Minute chart:

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Price Action setup

There is also another piece of information that confirms this 79.73 support.

It is a simple Price Action setup which tells us that a breached resistance becomes a support. This is, in fact, my favorite Price Action setup.

As you can see from the picture below, the price already reacted to this 79.73 zone in the past. It worked as a resistance.

Now, when the price went through this resistance, it became a support.

CAD/JPY; 30 Minute chart:

A significant Volume Accumulation area

Another significant area on CAD/JPY is the place from which the new uptrend started.

Strong trends usually start from a rotation and in this case, it was also like that. The reason for this is that the big trading institutions need to get ready for a big move.

They don’t enter their positions like you and me with one click. They need to accumulate their massive positions without being noticed. The best place for this is in a rotation.

When the price makes is back into an area where they accumulated their longs, those big guys are likely to defend their longs. They do that by pushing the price upwards. That’s what makes this area (79.46) a strong support.

An ideal way to identify such an area is to use my Flexible Volume Profile to look for the volume accumulations within rotations which were followed by a trend.

I call this a “Volume Accumulation setup” and you can learn more about it in my Volume Profile book, which you can download for FREE by clicking the banner below:

Weekly Point of Control (POC)

Apart from the Volume Accumulation setup, there is also one more thing confirming this 79.46 support.

It is the Point of Control (POC) of the Week. A Weekly POC is best visible on a Fixed Weekly Volume Profile (you can get this as a part of any educational pack from HERE).

It shows where the heaviest volumes were traded throughout the whole week. In this case, it nicely aligns with our support at 79.46 as the support lies EXACTLY at the Weekly POC.

Whenever you see a strong trend starting from a Weekly Point of Control, you should pay attention to it. Such POC often works as an important place which the big trading institutions keep an eye on.

The reason is that this is usually the place where they entered most of their trading positions.

CAD/JPY, 60 Minute chart with Weekly Volume Profile:

I hope you guys liked today’s analysis. Let me know what you think in the comments below!

Happy trading!

-Dale

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EUR/USD: Volume Profile & Price Action Analysis

In my yesterday’s analysis, I talked about combining Volume Profile (the Trend Setup) with Price Action (Support→Resistance Setup) to create a powerful two setup combo.

If you missed it then you can read it here:

Volume Profile & Price Action Setup Combo

Today, I will show you a very similar example, because practice makes perfect.

This one is on my favorite trading instrument EUR/USD.

Volume Accumulation Setup

There was a very nice and tight price rotation yesterday. From that rotation, a strong buying activity started. This buying activity resulted in an aggressive 100 pip movement.

This strong up move indicates that there was some serious buying going on inside that rotation. Buyers were entering long positions there slowly and without being noticed.

After they had entered their longs, they started pushing the price upwards – which snowballed and resulted in a strong uptrend.

For me, the most important thing here is to know, where the buyers entered most of their longs.

I used my Flexible Volume Profile to look inside that rotation area. As you can see from the picture below, the heaviest volumes got accumulated at 1.1443.

When the price reaches this area again at some point in the future, I expect that the buyers from this area will become active again and that they will push the price upwards from there again. This is why I think the 1.1443 will work as strong support.

I call this the Volume Accumulation Setup and you can learn more about it for example in this recording of my webinar about trading with Volume Profile:

Volume Profile Webinar

EUR/USD, 30 Minute chart:

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Price Action

Apart from the volume-based setup, there is also the same setup I talked about in my yesterday’s article – the Resistance → Support setup (CLICK TO LEARN MORE)

As you can see from the picture below, the price reacted very nicely tho this 1.1443 area in the past. There were several reactions and every time the price bounced off this level. It worked as a strong resistance.

Now, when this resistance got breached, it became a support.

This is an old Price Action setup, and one of the few I like to use. I rarely trade it as a standalone setup but I really like to trade it when it is in confluence with Volume Profile, like in this case.

EUR/USD, 60 Minute chart:

I hope you guys liked today’s analysis. Let me know what you think in the comments below!

Happy trading,

-Dale

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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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Want to learn more?

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!

-Dale

CHF/JPY: Volume Accumulation Trading Setup

In my latest market analysis, I talked about an intraday resistance on CHF/JPY. There was a nice reaction to it on Friday. First, there was a quick +16 pip reaction, and then on the market open, the reaction continued and made +26 pips.

Still, it is always safest to close all your intraday positions before the weekend. There could be an opening gap which could cause your account a lot of harm if the market went the wrong way. So, in this case, it would be just best to close your position in green numbers before the market closed.

If you missed this level prediction and analyiss, you can read about it here:

CHF/JPY: Volume Profile analysis and prediction

You can see the reaction to the 114.06 resistance below:

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CHF/JPY – Volume Profile analysis

In today’s analysis, I will also comment on the CHF/JPY as there is another nice trading opportunity.

What I want to talk about is a newly formed support around 113.45.

On Friday, there was a rotation formed around the 113.45 area. If you use Volume Profile you can see that there were heavy volumes traded there, and most of them at 113.45.

From this place, a strong buying activity started. This means that there were buyers entering their long positions in that rotation. Then those buyers started aggressive buying and with Market orders pushed the price into a new uptrend.

When the price returns back to this area again in the future, then it is pretty likely that those buyers will become active again and they will try to push the price upwards from this support again.

Below is a CHF/JPY, 30 Minute chart with the highlighted 113.45 support:

Learn Volume Accumulation setup HERE

The setup I used in Friday’s analysis and also in today’s analysis is called the Volume Accumulation setup, and you can learn more about it for example in my Volume Profile Book which you can download for FREE by clicking the banner below.

Happy trading,

-Dale

Happy trading!

-Dale

CHF/JPY: Volume Profile and VWAP Analysis

In today’s analysis, I will have a closer look at CHF/JPY.

What caught my eye, at first sight, was yesterday’s price development.

First, there was a tight rotation, in which heavy volumes were accumulated. At that point, it was not really possible to tell who was getting ready for the big action – whether buyers or sellers.

Then a sell-off started. At that point, it was clear that it was the sellers who were getting into their short positions in the rotation.

Activity of sellers

They were building up their short positions unnoticed in the rotation and then they started aggressive selling activity using Market orders. With action like this, they wanted (and succeeded) to start a downtrend and use the “snowball effect” to also get other people to start selling aggressively. This helped to push the price even more downwards.

So, how to work with that information? We know that there were sellers around 114.06 and that they pushed the price down.

I am not a huge fan of jumping into a downtrend when it appears, because it could just be a false breakout or there could be a sharp reversal. I prefer to make sure the trend is “valid”.

Then I like to wait for the price to come back into the area where the trend started. Then I trade from the place where heavy volumes were created before the trend.

CHF/JPY, 30 Minute chart:

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The logic behind my approach

The logic behind this approach is that the Volume Profile revealed a place where the sellers placed lot of their positions and therefore they are likely to defend this area in the future again. It is an important zone for them.

When they defend this area at some point in the future then they will do so by selling again and trying to push the price downwards again.

That’s what I want to trade.

VWAP confluence

What I always look for are confluences. The level I found is based on Volume Profile and Price Action, but I always look for something extra, that would confirm my trading idea.

In this case it is the 1st Deviation of Weekly VWAP.

Generally speaking, the 1st Deviation works as a strong support/resistance.

Currently, the 1st Deviation is a bit above our 114.06 level, but it is still developing. The way i see it, is that it is quite possible that it will slowly decline and when the price reaches the 114.06 zone, the 1st Deviation will be there (or somewhere close).

This would be another nice confirmation of the level.

You can see what I mean in the picture below.

CHF/JPY, 60 Minute chart with Weekly VWAP:

Macroeconomic news

Today is a pretty important day because there are some high impact macroeconomic news coming up later today.

It is the Main Refinancing Rate and Monetary Policy Statement, and then maybe even more important the ECB Press Conference.

The CHF/JPY is not “directly” affected by this news. But because the CHF is very closely linked to EUR (which will be directly affected by this news) the news will also have a strong impact on CHF/JPY.

So, be careful around the time when the news come up. It could cause a heavy volatility and it would be very risky to trade during that.

I hope you guys liked today’s commentary, let me know what you think in the comments below!

Happy trading,

-Dale

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EUR/USD: Day Trading Volume Profile and Price Action Analysis

In my yesterday’s article, I did an intraday trading analysis of EUR/CAD. You can check it out here if you missed it:

EUR/CAD: A Complete Volume Profile, Price Action, and VWAP analysis

Today’s example will be a bit similar as there will also be Price Action and Volume Profile confluences.

EUR/USD – Recent development

Let’s get to it and have a look at what happened on the EUR/USD yesterday.

The most important thing on EUR/USD yesterday was a strong buying activity/uptrend which started in the EU session.

When there is an uptrend like this, I am always interested in how the volumes were distributed within the trend area.

Volume Clusters

What I look for are significant and nicely visible Volume Clusters.

In this case, there was a nice Volume Cluster created in the middle of yesterday’s uptrend.

A Volume Cluster which is created within an uptrend tells us, that there were buyers adding to their Long positions there. Those are the volumes we see in the Volume Cluster.

From that place the buyers pushed the price further up.

What happens when there is a pullback to this Volume Cluster area at some point in the future?

There is a solid chance that the buyers who entered their Longs there will become active again and they will defend this area.

As a result, that should push the price upwards again (it will work as a Support).

Check it out in the 30 Minute EUR/USD chart below:

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Price Action setup

There is also one more thing I wanted to show you about this Support. It is the same Price Action setup I talked about in my article yesterday.

The basic logic behind this setup is that a breached Resistance becomes a Support (and vice versa).

The picture below shows the same chart, only with 60 Minute time frame and it’s little bit zoomed out.

What I marked there for you are two strong selling reactions to the 1.1376 area I spoke of earlier.

Those two reactions tell us that this area worked as a strong Resistance in the past. For this reason, when this Resistance got breached yesterday, it became a Support.

This is quite an old (but working) Price Action setup which I like to use.

So, all in all we have volume-based Support (based on Trend Setup), and at the same area also a Price Action setup.

I really like a combination of those two setups. Trades based on this combo have a really good chance of success!

I hope you guys liked today’s analysis. Let me know what you think in the comments below.

Happy trading!

-Dale

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EUR/CAD: A Complete Volume Profile, Price Action, and VWAP analysis

Today, I will do a day trading analysis of EUR/CAD using Volume Profile, Price Action, and VWAP.

I usually start doing my intraday trading analysis using only a simple 30 Minute Price Action chart.

The things that I look for first, are rotation areas (sideways price channels) and strong trends.

Today, I saw both on EUR/CAD. There was a rotation and from that rotation a strong uptrend started.

Volume Profile analysis

Now it is a time to use Volume Profile to see how the volumes were distributed there.

As you can see from the picture below, I stretched my Flexible Volume Profile over the whole rotation area (and also through a part of the trend, but that is not really important).

The Volume Profile showed me how the volumes were distributed there. This way I was immediately able to tell that there were massive volumes traded in that rotation area.

The most important thing in such a heavy volume zone is always the Point Of Control (POC).

POC is the place where the heaviest volumes were traded = the peak.

In this example, there was a rotation followed by an uptrend. This means that buyers were entering their Long positions in that rotation (creating those  heavy volumes we see on Volume Profile).

Then those buyers started an aggressive buying activity (using Market orders) and they pushed the price upwards (into the uptrend).

When the price makes it back into the heavy volume zone again (sometime in the future), I expect that those buyers who were building up their Long positions there will become active again and that they will push the price upwards from there again.

That’s why I think the POC at 1.5369 is a strong support.

Price Action analysis

Another thing to notice is visible when you zoom out the chart a bit and use higher time frame (I used 60 Minute).

It shows that the price was reacting really nicely to this 1.5369 area before. Whenever the price reached this area, it bounced off it. It worked as a strong Resistance.

Now, when the price went through this Resistance, the Resistance turned into a new Support.

This is my favorite Price Action setup. You can read more about it in this article:

PRICE ACTION: Support becoming a Resistance (and vice versa)

This Price Action setup gives me a nice confirmation of the Volume-based setup I talked about earlier.

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VWAP analysis

There is also one more bonus to all this. It is visible on the VWAP indicator.

Below is the same 60 Minute chart, but this time let’s have a look at the VWAP.

My most favorite VWAP for intraday trading is the Weekly VWAP and its Deviations (the “grey lines”).

Those “grey lines” work as Supports and Resistances on their own. Currently, the lower 1st Deviation is almost at the support I talked about (1.5369 area).

This means that also the VWAP indicator tells us that there is a support in that 1.5369 area.

If you would like to learn more about VWAP trading setups, you can do so here:

VWAP Trading Setups

Below is the 60 Minute chart with the 1st VWAP Deviation:

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Conclusion

As you can see, we found a trading level which is confirmed by three completely different trading strategies/tools.

The 1.5369 Support showed on Volume Profile, on Price Action, and also on VWAP. That’s how I like it. The more confluences, the better!

Can this level fail? Sure it can! Even if we had all the confluences we could think of it could still fail. The market could change its sentiment dramatically and the price could just shoot past this support without any reaction. Things like this do happen.

There is no strategy that would work 100%, but doing a proper analysis like this one, using multiple confluences with different trading approaches/indicators makes the chance of a successful trade higher.

That’s what trading is all about. Having the probability on your side means having an edge. This edge helps you being consistently profitable in the long run.

I hope you guys liked today’s analysis. Let me know what you think in the comments below!

Happy trading,

-Dale

NZD/CAD: Volume Profile Swing Trade Analysis

Today, I will do a swing trading analysis of NZD/CAD.

For my swing trading, I prefer to use the Daily time frame, so today’s analysis will be on the Daily.

NZD/CAD has formed a new uptrend. Within this uptrend there are two significant volume zones. In this article, I will talk about the first one which was formed around 0.8769 level.

Volume Profile analysis

The reason, why this zone is significant for me is that there is my “Trend setup“.

As the price was progressing upwards aggressively, it stopped for almost a month and there was a tight price rotation.

From that rotation, the price went upwards again and it has been rising since the start of this month.

When I used my Flexible Volume Profile and looked into that uptrend, I saw that there were massive volumes accumulated in that rotation which took place in June.

From that rotation, the price continued upwards again. This means that buyers were adding to their long positions there (in that rotation) and then they started pushing the price upwards again (with aggressive Market orders).

When there is a pullback to this area again (0.8769), I think that those buyers will defend their long positions and that they will try and push the price upwards again.

That’s why I think this 0.8769 area will work as a strong support.

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Price Action analysis

There is also a nice Price Action confirmation of this zone. If you look at the picture, you can see that the price made two strong reactions of this area in the past. I marked them in the picture as well.

These rejections tell us, that this area worked as a strong Resistance. When the resistance got breached a few days ago, then it became a Support.

This is an old (but good) Price Action setup I like to look for. You can learn more about it here:

Support→Resistance: Price Action Setup

In this case, this setup supports the volume-based “Trend Setup“.

VWAP analysis

There is also one more thing to this puzzle. It is a nice confluence with VWAP.

For my swing trade analysis, I use the Yearly VWAP and its 1st deviations. Simply put, these deviations (grey lines) represent supports and resistances.

Currently the 1st deviation is below the 0.8769 support, but if the price stays above the level for a few more days, then the deviation is likely to move upwards (towards the 0.8769 support).

If the 1st deviation is around this support when the price makes a pullback there (to 0.8769), then it will be another confirmation of the level.

A third one! We would have the Volume-based setup, Price Action Setup, and VWAP setup.

That’s how I like to trade – with confluences like these! The more confluences, the better!

You can learn more about VWAP in this Beginners guide here:

Beginners Guide to VWAP

I hope you guys liked today’s analysis!

Let me know what you think in the comments below.

Happy trading,

-Dale

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NZD/CAD – Volume Profile & Order Flow Analysis

Today, I would like to have a closer look at NZD/CAD. What caught my eye here was a strong sell-off that occurred last week (13th May).

Such a strong sell-off is a sign of aggressive sellers jumping in and pushing the price downwards.

In this case, it is pretty easy to spot where those sellers were accumulating their selling positions before they started the aggressive sell-off.

Price Action

Price Action shows that there was a rotation before the sell-off started. Such a rotation is an ideal place for position accumulation.

The reason is that in a rotation those sellers could easily hide their intentions (of starting a sell-off) and slowly, unnoticed accumulated their short positions.

Volume Profile

If you look at the Weekly Volume Profile (on the left) then you can see massive volumes accumulated exactly in that rotation area.

In fact, the heaviest volumes throughout the whole week got accumulated there! (= Weekly Point Of Control).

After those volumes got accumulated → BOOM! A sell-off! It is this sell-off where the sellers were making money.

Now the price is slowly retracing back into this area (to test the Weekly POC at 0.8548).

I think that it will work as a strong resistance and that those sellers will want to defend their short positions.

It is likely, that they will start selling again and try and push the price downwards again.

Below is a 60 Minute chart of NZD/CAD with Weekly Volume Profiles:

Order Flow

We can also identify those sellers using Order Flow!

I zoomed into the rotation area which was formed before the sell-off started to show you how it looked like in there.

The thing which I think is the most important here is the High Volume Nodes. They are easy to identify (at last with my software) because they are printed in darker shades and put into a frame.

There are two especially strong ones, and the strongest one (1440) was formed just before the sell-off started.

Those were without any doubt strong sellers getting ready!

That’s a nice confirmation of the resistance we initially found using the Volume Profile! We can actually see the big guys getting ready here! Cool, right?

You know, I am really proud that we were able to make the Order Flow like this. I don’t think there is any other Order Flow software able to read Forex this way!

Below is NZD/CAD Order Flow. The footprints show 30 Minute candles and the volumes traded in them:

I hope you guys liked today’s analysis! Let me know what you think in the comments below!

Happy trading!

-Dale

PS. You can now get my new ORDER FLOW PACK (including Order Flow software, Order Flow Video Course, and Volume Profile Pack) here: ORDER FLOW PACK

How to Use Order Flow on Forex

Today, I will do an intraday analysis of CHF/JPY. It will be a bit different this time because I will also use Order Flow.

Let’s first talk about what the Price Action and Volume Profile show.

There has been a strong downtrend since the beginning of this week. There haven’t been any major pullbacks and the price has been heading downwards steadily.

Volume Profile analysis

When there is a trend like this I like to use my Volume Profile to look in that trend area. What I look for are significant Volume Clusters (areas where heavy volumes were traded).

The reason CHF/JPY caught my eye today was because there are THREE Volume Clusters! Three very nicely visible and easy to identify heavy volume areas.

I believe that the volumes we see in those three areas were aggressive sellers, who were adding to their selling positions.

After each volume accumulation, those sellers pushed the price aggressively downwards – to make money on those positions they have entered in the Volume Cluster areas.

Those Volume Clusters now represent significant resistance zones. If there is no change in the market sentiment those zones should hold and reverse the price (when there is a pullback).

Logic behind Volume Clusters

The logic behind this is that the sellers who have entered their short positions in those Volume Clusters will want to defend their shorts. And if there is a pullback, then those guys are most likely to start selling and pushing the price downwards again. That’s why I think those three areas will work as resistances.

You can see all that in the screenshot below. It shows 30 Minute chart of CHF/JPY along with those three resistances:

Order Flow

The Order Flow software is usually used with Futures. However, my software has some special features which allows you to use it on Forex too! The functions are limited because Forex is decentralized but still it is pretty helpful!

I used the Order Flow to look into detail how the 109.51 resistance area looks like – how exactly the volumes were distributed there.

Heavy volume nodes (HVN)

The most important thing to notice is how the heavy volume nodes were distributed (HVN = those numbers in black rectangles showing where the heaviest volumes were traded in the given footprint).

What I want to see is heavy volume nodes created very close to each other – in one price level area. In the picture below, you can see that many of them were created around the 109.51 area.

This gives me another confirmation that the sellers were interested especially in this area. It also helps me identify the best place for a short trade.

In this case, it would be exactly 109.51 because this is where two heavy volume nodes were next to each other. To me this is the most important level which I was able to pin-point with Order Flow.

This is an effective way how you can use Order Flow on Forex to look into detail how support and resistance areas were formed.

If you see heavy volume nodes very close to one price level, then this makes the support/resistance stronger. It confirms it. It also makes your trade entry more precise (you want to enter your trade at the price level where heavy volume nodes were created).

I hope you guys liked today’s analysis! Let me know what you think in the comments below!

Stay safe and happy trading!

-Dale

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CAD/JPY: Volume Profile Analysis

Price Action Analysis

Today, I will do an intraday analysis of CAD/JPY.

What caught my eye when I went through the charts in the morning, was that there was a rotation from which strong buying activity started.

This usually means that there were buyers entering their long positions in that rotation. After they have entered their longs, they started aggressive buying to push the price upwards – to make money on the longs which they placed in the rotation.

I am always interested when I see Price Action like this.

*I call this a Volume Accumulation setup and you can learn more about it here: Volume Profile Setups

Volume Profile Analysis

My next step was that I used my Flexible Volume Profile to look at how the volumes were distributed yesterday.

The heaviest volumes were in the rotation area, and the heaviest volume peak (where most of the trades got placed) was around 76.38.

This is where the buyers placed most of their longs. This is a support they will want to defend.

So, if the price makes a pullback to this area I think that those buyers will be defending their longs and they will start aggressive buying again to push the price upwards again.

Weekly POC

A nice addition to all that is that this support is also a Weekly POC (Point Of Control). This means that the heaviest volumes were traded at this price level this week!

You can see that on a 60 Minute chart with a Weekly Volume Profile below:

Volume Cluster at 76.56

As the price was moving upwards, more buyers were jumping in to make money on that up-move.

Most of them jumped in around 76.56. You can see that on the Flexible Volume Profile – there is a significant volume cluster around the 76.56 area.

When the price makes it back to this area again, it is pretty likely that those buyers will want to defend their longs which they placed in that Volume Cluster (76.56 area).

In order to do that they will need to start buying again – aggressive buying! This should drive the price upwards again and this is what makes this level a strong support.

Resistance → Support

There is also one nice confluence to the Volume Cluster. If you look at the picture above, you can see that the 76.56 level also worked as a resistance in the past. The price got rejected there aggressively.

The price went through this resistance yesterday, and it turned into a support. This is an old but pretty effective Price Action setup which I really like to see in a combination with the Volume Cluster – like in this case.

You can learn more about this setup here:

Resistance → Support (Price Action Setup)

I hope you guys liked today’s analysis! Let me know what you think in the comments below.

Stay safe and happy trading!

-Dale

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AUD/NZD: VWAP and Volume Profile Analysis

Yesterday, I wrote an article about VWAP trading setups. I showed you how to use VWAP when there is a rotation and also how to use it in a trend.

If you missed it then you can read the article here:

VWAP Trading Setups

Today, I will do an intraday analysis of the AUD/NZD and I will use VWAP and Volume Profile just the way I showed you in the article yesterday.

Identify the Trend

The first thing to do is to identify whether there is a rotation or a trend. In this case it is pretty simple. The 1st VWAP deviation (Weekly VWAP) is moving upwards. This means that the price and volumes are shifting upwards and that there is an uptrend.

In this case you could also tell by just looking at the price action without using the VWAP. Sometimes it is not so clear as here though…

VWAP Trend Setup

When there is a trend you want to see the price moving above the 1st Deviation and make pullbacks to it. Then you want to trade longs from those pullbacks.

If you look at the picture below, you can see that the 1st Deviation is trending nicely and that the price is moving above it. When the price hits the 1st Deviation, then chances are there will be a buying reaction!

Another thing to notice here is that the 1st Deviation from the previous week ended very close to the area of the current 1st Deviation. This adds strength to the support.

You can also notice a significant volume area around this support on the Weekly Volume Profile. I will talk bit more about it later.

Below is a 60 Minute chart of AUD/NZD, with Weekly VWAP and Weekly Volume Profile:

Volume Profile analysis

Let’s now have a look some more into the volume distribution in this trend area.

I used my Flexible Volume Profile to the whole trend area to identify places where significant volumes were traded.

There are two significant volume areas visible. The first one (around 1.0580) corresponds with the support from the VWAP Trend setup (the picture above).

As the price was moving upwards, buyers were adding to their long positions in those heavy volume areas.

It is likely that when there is a pullback into those heavy volume areas, buyers will want to defend their longs and they will try to push the price upwards from those areas again.

Below is 30 Minute chart of AUD/NZD with Flexible Volume Profile:

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What I like about all this the most is the confluence. 1st VWAP Deviation points us to a trading level and Volumes point us to the same place too!

This is how I like to use VWAP and the Deviations – as a combo with the Volume Profile. That’s where the VWAP strategies shine the most!

I hope you guys liked today’s analysis! Let me know what you think in the comments below!

Stay safe and happy trading!

-Dale

EUR/CAD: How To Combine Volume Profile and VWAP

In my yesterday’s Weekly Trading Ideas video I was talking about a strong resistance on EUR/CAD. The price has already reacted to this resistance and those who took this trade had a nice profit.

What I want to show you now is how you could have used VWAP ho get the best out of this trade.

The first thing to notice is the 1st deviation of Weekly VWAP. That’s the grey line. In this case it represents a good resistance (this is based on a trading setup I talked about in this VWAP webinar: VWAP Trading Strategies).

Combined with heavy volumes I talked about yesterday (marked in red) it made a nice confluence of two strong resistances (volumes + VWAP deviation).

Another thing I talked about in my VWAP webinar was that a good place for a Take Profit was very often the VWAP line (yellow line).

Check it out in the picture below:

New Support on EUR/CAD

Now, I would like to continue with the EUR/CAD analysis and talk about a newly formed intraday support.

If you look at what the Volume Profile showed yesterday, then you can see that there was a “double distribution” shape (looks like a capital letter B).

This means that heavy volumes were accumulated at the low of the day, and then the price went upwards. Then there were heavy volumes accumulated at the end of the day (high of the day).

This tells me that strong buyers were building up their buying positions, then they moved the price upwards and then there was a new balance (new fair value area).

What happens when the price makes it back to the heavy volume area at the bottom of all this? Those buyers who entered their positions there will most likely start defending those positions. They will start entering aggressive market buy orders. With those they will try to move the price upwards again.

That’s why I think the 1.5181 area will work as a support.

Below is a 30 minute chart of EUR/CAD:

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VWAP confirmation

A nice confirmation to this 1.5181 support is the 1st Deviation (of the Weekly VWAP). That’s the grey line. If it stays somewhere in the 1.5181…

If it stays there then it will meet with the heavy volumes and it will create a nice confluence to the volume-based support I showed you!

That’s how I like to combine Volume Profile and VWAP!

Below is EUR/CAD, 60 Minute chart, Weekly Volume Profile and Weekly VWAP indicator:

I hope you guys liked today’s analysis! Let me know what you think in the comments below!

Happy trading!

-Dale

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EUR/GBP: Intraday Analysis With Volume Profile and VWAP

Today, I will focus on the intraday analysis of the EUR/GBP. What caught my eye here was a rotation from which a strong sell-off started yesterday.

Why it caught my eye? Because in a rotation, heavy volumes are usually traded (accumulated). Big trading institutions need a rotation to accumulate their big trading positions. They need time and liquidity. The rotation takes some time so that suits them. When a price rotates then it also means that the market found its fair price (fair value) – at least temporarily. And this means traders are willing to buy and sell there = there is liquidity.

When there is a sell-off after such a rotation, then it indicates that the big guys (institutions) were building up their positions in that rotation. They were doing so unnoticed and without their intentions being revealed. After that, they started manipulating the price aggressively (with market orders)  to start a trend.

Volume Profile analysis

When I see a rotation from which a trend starts, then I look into that rotation using my Flexible Volume Profile. I look for a place where the volumes were the heaviest because this is the place where the big guys placed most of their positions. This is an important place, because when the price makes a pullback into this area again, then it is likely that those big guys will start defending their positions.

How will they defend them? They will start to sell aggressively again to push the price downwards. And that’s what I want to see. That’s what I want to participate in!

So, what I do is that I wait for the pullback and then enter a short from the place where they accumulated most of their positions. In this case, it is 0.8933. This is currently the strong intraday resistance on EUR/GBP.

You can see it in the picture below.

EUR/GBP; 30 Minute chart:

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VWAP analysis

There is one more thing I like about this 0.8933 resistance. The thing is a VWAP Trend Setup. With this setup you want to see the 1st VWAP deviations go sideways and you use them as support and resistance zones.

As you can see from the picture below, the 1st Deviation (the upper grey line) is moving sideways and it is currently exactly at the 0.8933 resistance. If it stays somewhere around this area then it will be a very nice confirmation of the volume-based level.

In the picture below I am using the Weekly VWAP. I find its signals stronger then the Daily VWAP. I like trading with the Weekly VWAP more then with the Daily.

BTW you can learn more about my VWAP setups in this webinar recording:

VWAP webinar – RECORDING

EUR/GBP; 60 Minute chart, Weekly VWAP:

EUR/JPY Prediction→Result

Did you watch my recent Weekly Trading ideas video? I made a prediction on EUR/JPY there. This prediction was based on the same setup as I showed you today (I call it the Volume Accumulation Setup). I was talking about a strong support at 118.26.

Upper picture is the prediction and the lower is a screenshot of the result. Nice and precise 60 pip reaction!

You can watch the whole video here:

Weekly Trading ideas – 30.3.2020

I hope you guys liked today’s intraday analysis. Let me know what you think in the comments below!

Stay safe and happy trading!

-Dale

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EUR/CAD: Volume Profile + VWAP Daily Analysis

Today, I am going to do an intraday analysis of EUR/CAD. I will use Volume Profile, VWAP and Price Action to do that.

What I want to show you is how you can use all those together to find strong confluences. What do I mean by a confluence? A confluence means a place where more signals from different trading indicators meet and point to a strong trading level.

Volume Accumulation Setup

The first thing I am going to talk about is a 30 Minute chart (EUR/CAD). What immediately caught my eye was a rotation from which a strong buying activity started. This is what I call the Volume Accumulation setup.

*I talk more about it here:

Volume Profile webinar

What I did was that I used my Volume Profile tool to see how the volumes were distributed there. As you can see in the picture below, there were heavy volumes created in the rotation. From this rotation a buying activity (an uptrend) started.

This tells me that buyers were entering their longs slowly and unnoticed in that rotation. When they were done with the volume accumulation, they started pushing the price aggressively upwards.

What is the most important place for those buyers? It is the place where they placed most of their positions. This is where the Volume Profile is the thickest – at 1.5462. This is a strong level they will most likely defend in the future (support).

Daily VWAP

Below, you can see the same 30 minute EUR/CAD chart. This time I will focus on the VWAP. In this chart I am using a Daily VWAP. This means that every new day this indicator gets calculated anew.

If you look closely, then you will see that the grey line from yesterday (1st deviation of VWAP) ended it’s calculation at 1.5462. This is exactly the same level as the Volume Profile pointed us to!

This makes it a nice confluence of two signals. Volume Profile + 1st VWAP deviation.

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The big picture

There is more! Let’s now have a look at the 60 Minute chart of the same instrument. I use this chart to give me a bigger picture (overview) of the market. In this chart I use Weekly Volume Profile and Weekly VWAP. This means that every week a new Volume Profile will automatically get printed. Also a new VWAP will start it’s calculation every new week.

Since it is only Tuesday morning, I merged two Weekly Volume Profiles together (to get more data). The one from the previous week and the one from this week (this one was showing only volumes from yesterday and today).

What those two merged profiles showed me is a significant volume area at our level (1.5462). It is especially important to me because this  volume area is nicely visible from the weekly point of view (the bigger picture). It is in fact, the second strongest volume area in this whole period.

As a nice addition to this there is also the 1st deviation of the Weekly VWAP almost exactly at the level. Now, this deviation is till moving so we don’t know where it will be when the price makes it back to the 1.5462 support. But if the 1st deviation is close, then it will be another nice confluence to this level!

Price Action

A small bonus to all that is that there were also two very nice reactions to this level in the past. I highlighted those reactions in orange. Such reactions mean that this level worked as a support in the past – therefore, it was an important level. This adds one more little confluence to the whole picture.

EUR/CAD; 60 Minute chart:

Intraday trading workspace

Do you think it is too hard to track all this? It takes some experience but it is not that hard. Especially if you know what to look for. What helps is to have a nice (and clean) intraday workspace that shows you everything you need.

What you see below is my intraday trading workspace. It consists of three charts and it shows all the things I was talking about in this article. Everything on just one screen.

I am not saying it takes just a quick look and I immediately see strong trading levels. It takes some thinking to find them, but having a workspace like this makes things way easier!

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Don’t risk too much!

One important thing to wrap this up. Don’t risk too much on one single trade. No matter how many confluences, no matter how strong the level appears. No trading strategy has 100% win rate and there is always a risk of taking a losing trade. Losing trades are part of this business.

You should be extra careful especially now when there is news coming up very often and the overall market volatility has risen dramatically.

I hope you guys liked today’s analysis. Let me know what you think in the comments below!

Stay safe and happy trading!

-Dale

Q/A: Volume Profile Pack For NinjaTrader 8

Features

Licensing

How can I get the Volume Profile Pack?

Can I get a FREE trial before I buy?

  • Yes, there is a free 5-day trial. Simply install the Volume Profile Pack and it will work for free for 5 days (with all functions available).

In the volume and license profile guide, you mention that you require the Machine ID. Does that mean it would only work on that machine?

  • Yes, each machine ID is unique, and the profile only works on the computer (s) that I authorize. If you have more than one computer, I can also authorize them (for free).

What do I do if I want to operate using more than one machine?

  • Send me the machine ID of the other computer that you want to authorize and I also authorize it (for free).

What happens if I change my computer?

  • When you change your computer or update it, you have to send me the new machine ID so that I can authorize your computer again (free of charge).

How to Start

I bought the volume profile package, what do I do next?

  • First you have to install the NinjaTrader 8 software . You can get it for free here: https://ninjatrader.com/
  • Then you have to install the Volume Profile Pack . The installation file can be downloaded here: TD’s Volume Profile Installer
  • Once the installation is complete you have to send me the machine ID by email that I will then use to authorize your computer to use the TD volume profile pack.  To find the Machine ID, go to the control panel of NinjaTrader and press Help → About … (Help → About …)

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  • Then I will authorize your computer to use the TD volume profile pack. This will take a few minutes or a few hours, but typically no more than one business day. I will let you know by email when your computer is ready to use the TD Volume Profile Pack.

Data

  • Do I need CME futures data for NinjaTrader to accurately pick my levels? My concern here is what additional costs will I need to consider?

    • You don’t need futures data! Even though forex is not a centralized exchange, forex data from a big broker (for example FXCM) is surprisingly accurate, and you can rely on them in your analysis. This is why there is no additional cost. You can get FXCM free data feed here: FXCM free data feed. You can also try futures data and compare. There is a free demo (email bound, time-limited) here: CQG futures – free demo.

    How can you rely on FX volume seeing there is no central exchange. Won’t different brokers show different volumes?

    • You are right; different forex brokers show different volumes because the forex market isn’t centralized. Best thing to do is to use big forex broker (for example FXCM). Big brokers usually have quite reliable and accurate volume data. I use FXCM forex data, and I must say that when I compare this data to futures data (CME), it is very close.

    I noticed that the FXCM data is a trial limited to 30 days so I am not sure what happens after this period. 

    • You can get an unlimited demo here: (demo) of data without FXCM limitations .
    • For some users it doesn’t work and the data trial is limited. Here is a guide how to renew the datafeed for free (the video refers to NinjaTrader 7, but the process is very similar to NinjaTrader 8)

I downloaded the NinjaTrader8 platform and it opened without my entering the username and password. I clicked on File and then on Connect, but it did not show FXCM as one of the options. So how do I connect with the FXCM data source?

  • Go to this page:  (demo) without limitations of FXCM data and register there to obtain the data (free and without time limitations). After that you will receive your credentials. Then go to the platform of NinjaTrader 8 and click on Connections-configure and there you can add FXCM data and complete the username and password included in the email you received. After that you will be able to connect with the data.

My FXCM data expired after the 30-day trial period. What I can do?

  • Some users have this problem. I suggest that you request a new FXCM data using this link:  (demo) data without limitations of FXCM
  • You probably need to use a different email address
  • After you have received your new username and password, go to your NinjaTrader 8 platform and click on:  Connectionsconfigure and there you can change your FXCM data configuration. Complete the username + password included in the email you received. After that you will be able to connect to the data again.

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Other Platforms / Brokers

Does this indicator work on a standard MT4 platform?

  • The Volume Profile Pack works only with NinjaTrader 8. The standard MT4 platform does not have tick volume data (which are the most accurate).

Can I still use my broker and my MT4 platform?

  • Yes you can! You only have to do your analysis in NinjaTrader 8. Then you can execute your trades on your MT4 platform or with any other broker or trading platform that you like.

Do I need to use an additional broker that NinjaTrader recognizes to be able to continue?

  • You do not need an additional broker. Just do your analysis with NinjaTrader 8 (free), and then execute your trades with your current broker, as you usually do.

If you have any questions, please send an email to contact@trader-dale.com and I’ll be happy to help. I will also answer the new questions we receive in this Q/A section.

All the best in your trading!

-Dale

Q/A: TD’s Flexible Volume Profile

I received a lot of very good questions regarding my new Flexible Volume Profile. I took the most common questions and created a question and answer post, with the most common questions answered in detail below. You will also find many answers to your questions in the video 8-minute video listed below.

LICENSING

How do I get the profile?

In your volume profile and licensing guide, you state that you require the Machine ID. Does this mean it will only work on this machine?

  • Yes, every Machine ID is unique, and the profile will only work on the computer (s) I authorize for you. If you have more then one computer, I will authorize them as well (for free).

What to do if I want to operate on more than one machine?

  • You send me Machine ID of another computer you want to authorize. I will authorize this one as well (for free).

What happens when we replace our computer?

  • When you replace or upgrade your computer, you need to send me the new machine ID so I can authorize your computer again (for free).

If I am no longer a member of your Pro Forex Course, will the profile still work?

  • Yes. The license for the profile is a lifetime license. When you buy the profile, it is yours forever, no matter if you are a still member or not.

GETTING STARTED

I bought the Flexible Volume Profile. What do I do next?

  • Follow steps in those two videos:

DATA

Do I need CME futures data for NinjaTrader to accurately pick my levels? My concern here is what additional costs will I need to consider?

  • You don’t need futures data! Even though forex is not a centralized exchange, forex data from a big broker (for example FXCM) is surprisingly accurate, and you can rely on them in your analysis. This is why there is no additional cost. You can get FXCM free data feed here: FXCM free data feed. You can also try futures data and compare. There is a free demo (email bound, time-limited) here: CQG futures – free demo.

How can you rely on FX volume seeing there is no central exchange. Won’t different brokers show different volumes?

  • You are right; different forex brokers show different volumes because the forex market isn’t centralized. Best thing to do is to use big forex broker (for example FXCM). Big brokers usually have quite reliable and accurate volume data. I use FXCM forex data, and I must say that when I compare this data to futures data (CME), it is very close.

I noticed that the FXCM data is a trial limited to 30 days so I am not sure what happens after this period. 

  • You can get an unlimited demo here: Unlimited FXCM data (demo).
  • For some users it doesn’t work and the data trial is limited. Here is a guide how to renew the datafeed for free:

I downloaded NinjaTrader 7 platform, and it opened up without me entering the username and password. I clicked on File and then Connect, but I did not have FXCM as one of the options. So how do I connect to the FXCM data-feed?

  • Go to this page: Unlimited FXCM data (demo) and register there to get the data (free and not time-limited). After that, you will receive your credentials. Then you go to your NinjaTrader platform and click: ToolsAccount Connections and there you can add FXCM data. After that you should be able to connect through it.

OTHER PLATFORMS/BROKERS

Will this indicator work on a standard  MT4 platform?

  • TD’s Flexible Volume Profile works only with NinjaTrader 7. The standard MT4 platform doesn’t have tick volume data (the most precise data).

Can I keep my current broker & MT4 platform?

  • Yes, you can! You only need to do your analysis on NinjaTrader 7. Then you can execute your trades on your  MT4 platform or with any other broker and trading platform you like.

Do I need an additional broker that NinjaTrader recognizes to continue?

  • You don’t need any additional broker. You simply do your analysis with NinjaTrader 7 (for free), and then you execute your trades with your current broker. Just like you are used to.

If you guys have any questions, please shoot me an email to contact@trader-dale.com and I will be glad to help you. I will also answer the new questions I receive in this Q/A section.

If you would like to get my custom made Flexible Volume Profile and to learn to trade with it on a daily basis, the best way to do it is to join me in my private trading course where you will learn & trade with me every day.

Do you have plans to support NinjaTrader 8? Does it work on NinjaTrader 8?

  • Current version works only with NinjaTrader 7, but we are currently developing a brand new Flexible Profile for NinjaTrader 8. Owners of NinjaTrader 7 version will receive the new NinjaTrader 8 version as a free gift.

 

Happy trading!

-Dale