This post shares a presentation on VWAP Tactics for our VWAPIAN Trader Community that should help instill specific practices or rules that a VWAP Trader needs to keep in mind each day when they trade.
These rules help form the backbone of principles, the tactical approach if you prefer that should improve the repeatability of a VWAP trader's strategic edge.
What is VWAP
The Volume-Weighted Average Price or VWAP is a Technical Indicator or benchmark of the average price a security has as it trades throughout a day [LINK]. Based on both volume and price, it shows the overall open interest (long or short) in the stock's directional behaviour across a selected trade horizon that's being observed.
VWAP Trading is appealing to traders because the relationship the asset's price has with this benchmark will generate specific patterns or setups that play out in a repeated fashion each day. Nearly all securities present VWAP behavior which improves the predictability of the asset's direction of travel. In a previous posting on VWAP, we shared this TrickTrades video [LINK] that explains a tiny part of the strategy in an easy to follow manner.
At the age of 22, Lauren Simmons was the youngest female NYSE Trader | VWAP Presentation LINK
VWAP Tactics
In our presentation [LINK] we write up Fifteen Principles that need to be followed everyday. Interestingly, you may find these tactical principles for success beyond the thematic aspect of VWAP; in many cases these principles can apply to other Risk Management, trading and entrepreneurial endeavors.
In Causal Capital, we developed these rules to bring some consistency to our VWAP trading community.
Quite often, losses on VWAP strategies are an outcome of not following the rules and with that in mind, we recommend a VWAP Trader grounds themselves emotionally, try to become disciplined and focused before each day of trading.
Anyway, we hope you enjoy the Fifteen Principles of VWAP, download the presentation and feel free to share it, add to it and come back to us with your thoughts.
For those of you who are part of the Singapore Options Trading Community, we stepped through these VWAP rules in a two-hour hands on masterclass. That uncut video can be accessed here [LINK] and we will be publishing more information on VWAP trading in the community channels in the coming weeks ahead.
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