Firstly the average of the high, low, and close: (H+L+C)/3, is calculated (technically known as the typical price). This typical price is multiplied by the candle's (depending on time frame used). The cumulative total is calculated with each successive candle. Cumulative is also calculated along with this. Then divide the cumulative total of price-volume by the cumulative total of .
And we get . Fresh calculation start every day at 9:15am and end at 3:15pm.
Sounds difficult?? Simply apply the tool on a chart and you are ready to go.
is used by institutional players having huge orders. helps these institutions determine the liquid price points, near the , for a stock over a very short time period. serves as a reference point for prices for one day. As such, it is best suited for intraday analysis.
For me personally, it works best on any where between 1 minute to 5 minutes timeframes. I suggest you to read the full post before reaching at conclusions :)
Hit and Run:
We buy as the price pulls back to the . We wait for a signal candle reflecting buying interest and pull the trigger. Here we place the stop below the or the previous swing low, whichever is lower. The advantage is that on this lower timeframe stop will be small. For exits use targeted approach. One can also trail.
The Value Trade:
Buying below the is generally considered as a good buy.
1) As the price breaches wait for price to also break an important swing low for the day with immediate reversal supported by . Buy above this high candle with a stop below it.
2) Price breaches and makes a low X. Wait for the price to pullback to (Y) and then head lower again to X or make a higher low near X. Here Y would be the entry point. with stop at X.
Both these strategies can also be used for shorting a stock. You just have to read it upside down.
# Also keep in mind that day trading is not as easy as explained above.
1) We also analyse daily, hourly and lower time frames before pinpointing entry on 1 minute chart.
2) Trades taken in the direction of trend yield handsome returns.
3) We also have to take into consideration the overall indices movement.
4) Notice if the stock has been out-performing the indices.
# In trading world, nothing works 100%. So active trade management and efficient money management is essential to avoid unbearable losses.
As I always say, "Greed and Fear are traders' enemies". We can't eliminate them but they can be managed patiently.
Before applying this strategy you should first test it for few days to learn trade execution. I suggest you to use them on top gainers and losers. One has to be fast and fully concentrated in the morning. But if you missed the morning move, that does not mean the end of world. Wait for the next opportunity and grab it. Just practice, practice and practice more. It ll make you perfect.
Hope this post will enhance knowledge of some traders.
Do hit like button for better stuff in future.
Sometimes we have to take quick decisions, sometimes we have to be patient.
Do comment for queries.
I had few more scratch trades and one loss in some other setups but i want to stay focused on vwap in this article.
Hope it would help fellas.
Enjoy the holiday tomorrow.
I recently got introduced to this stratergy from a you tube channel. But thanks for giving a further insight to this stratergy. But that is kind of academic in nature. Since I've info from two different sources now, it has confused me now. I request you to please guide me as to where exactly should an ideal entry point be ? Please also tell me Is there a need of overlapping it with another indicator ? Will it help ? And which are cases where we can avoid a trade ? I hope this works well futures as well ? Or should I keep looking at stock and trade in futures ?
For entry points I have detailed notes. Two types of entries I just mentioned. These are my own setups, you can have any other that suits you.
This theory is built from practical. I have shown some examples which are my real trades. So it's not just a acedemic.
Just keep in mind that 100% win rate is not possible in trading world. But we can have higher percentage wins than losses. Have proper money management, and dun do heavy trades in the beginning.
All the best.