Volume Weighted Average Price (VWAP) Indicator

VWAP Support And Resistance

Volume Weighted Average Price (VWAP) is a technical analysis tool used to measure by the average price weighted by volume. VWAP is typically used with intraday charts as a way to determine the general direction of intraday prices. VWAP is similar to a moving average in that when price is above VWAP, prices are rising when and when price is below VWAP, prices are falling. VWAP is primarily used by technical analysts to identify market trends.VWAP is used by institutional players having huge orders. VWAP helps these institutions determine the liquid price points, near the VWAP, For a stock over a very short time period. VWAP serves as a reference points for prices for one day. As such, it is best suited for intraday analysis. For me personally it works best on anywhere between 10 minutes to 15 minutes time frames. I suggest you to read the full post before reaching conclusion :)Most aggressive traders, would be watch the price action as it hits the VWAP.Essentially, you're watching for the stock to downside check the VWAP. Last, look for the stock to close above the VWAP. You will then place your buy order above the candle high that closed above the VWAP. While this is a more conservative trade entry approach, it will open you up to greater risk as you are likely to be a few percentage points off the low.If you are taking the aggressive trade entry approach, you'll want to put your stop-loss or a main point (i.e., morning gap up or morning gap down). Again, this can work, but if you get things wrong, be prepared for wild swings which can happen.The pullback stop is easy to identify, it is the lowest point in recent times. Therefore, if the stock begins to roll over after you enter the trade, breaks the VWAP and then cuts the latest low odds are you having an issue. You'll want to close the trade at this point and protect your capital.You don't but at the highs so you lower the distance from your entrance to the gap below in the morning. Thus reducing the money, if you just blindly buy the breakout, you risk on the trade.Also, trading activity can be monitored and "sized up" as the stock shifts back and forth trying to find its footing at VWAP. This allows you to perhaps look at two to four candles before you decide to pull the trigger.Buying a low and selling high is all-great, though if you're an momentum trader, you'd look to buy when the price goes up and sell when the price goes down, right?A VWAP strategy called the VWAP cross can help you find the market momentum and trade it into. Since the VWAP indicator resembles a market equilibrium price you can interpret this as a signal when the price crosess above the VWAP line that the momentum is rising an that traders are willing to pay more money to acquire stocks.When the prices is below the VWAP, find this a warning that the trend is bearish and act accordingly.Day traders love the VWAP indicator, because the price finds support and resistance around the VWAP more often than not. Although this is a self-fulfilling prophecy that other traders and algorithms buy and sell around the VWAP line, a VWAP strategy can help you find dynamic support and resistance levels in the market if you combine the VWAP with simple price action.(1) As the price breaches VWAP wait for price to also break an important swing low for the day with immediate reversal support volume. Buy above this high volume candle with a stop below it.(2) Price breaches VWAP and makes a low and for the price pullback to to VWAP then head lower again to X or make a higher low near X. Here Y would be the entry point. With stop previous candle closing basis.# Also keep in mind that day trading is not as easy as explained above.* We also analysis daily, hourly and lower time frame before pin pointing entry to 10-15 minutes chart.* Trades taken in direction of trend veiled handsome profit.* We also have to take into consideration the overall indices movement.* Notice if the stock has been outperforming 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 day's to learn 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 all make you perfect.