PART 1 : Using VWAP for Scalping like a Pro Trader _ Intraday Trading

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Finding the average price based on the closing value will not provide an accurate picture of a stock’s health.
This is where the VWAP comes into play.
If you are wondering what the VWAP is, then wait no more. The VWAP identifies the true average price of a stock by factoring the volume of transactions at a specific price point and not based on the closing price.
Did the stock close at a high with low volume? Did the stock move to a new low with light volume?
These are all critical questions you would want to be answered as a day trader before pulling the trigger.
This is where the VWAP can add more value than your standard 10, 50, or 200 moving average indicators because the VWAP reacts to price movements based on the volume during a given period.
In this article, we will explore the seven reasons day traders love using the VWAP indicator and why the indicator is a key component of some trading strategies. [1]
While we have highlighted day traders, what we will discuss in this article is also applicable for swing traders and those of you that love daily charts.
So, if you do not partake in the world of day trading, no worries, you will still find valuable nuggets of information in this post.
Now that your expectations are set, before we dig into why traders love the VWAP, let’s first walk through a few key concepts when using the indicator.
Most importantly, I want to make sure we have an understanding of where to place entries, stops, and targets.
After studying the VWAP on thousands of charts, I have identified two basic setups: pullbacks and breakouts.
By far, the VWAP pullback is the most popular setup for day traders hoping to get the best price. Remember, day traders have only minutes to a few hours for a trade to work out.
The VWAP breakout setup is not what you may be thinking. I am not looking for a breakout to new highs but a break above the VWAP itself with strength.
The first option is for the more aggressive traders and would consist of watching the price action as it is approaching the VWAP.
Wait for a break of the VWAP and then look at the tape action on the time and sales.
You will need to identify when the selling pressure is spiking, and the tape is going crazy.
This, my friend, is more art than science and will require you to practice reading the tape.
The goal is to identify when the selling pressure is likely to subside and then enter the trade.
This approach will break most entry rules found on the web of simply buying on the test of the VWAP. The problem with this approach is you don’t know if the price will breach the VWAP by 1% or 4%.
I learned the hard way, and if the VWAP were at $10, I would place my limit order at $10. At times there were traders who couldn't care less about the VWAP, and it would slice through the indicator with such swiftness, the lasting sting to my psyche persists until this day.
This technique of using the tape is not easy to illustrate looking at the end of day chart. You will need to practice this approach using ProRSI to assess how close you can come to calling the turning point based on order flow.
This is what I would recommend to traders that are new to the VWAP indicator.
Essentially, you wait for the stock to test the VWAP to the downside. Next, you will want to look for the stock to close above the VWAP.
You will then place your buy order above the high of the candle that closed above the VWAP.
While this is a more conservative approach for trade entry, it will open you up to more risk as you will likely be a few percentage points off the low.

Видео PART 1 : Using VWAP for Scalping like a Pro Trader _ Intraday Trading канала Bharat Jhunjhunwala