When the price is above VWAP they look only to initiate long positions. Traders tend to use VWAP more as a trend confirmation tool, similar to a moving average.
You can use this information to find out if you are buying a stock at a good price or not. This indicator gives the average price per share based on both the volume and price the stock has traded at throughout the day. With that being said here are my 3 FAVORITE indicators in order. Looking at the direction of the chart before trading can save you from making potentially portfolio destroying trades. This is important because if the stock has a descending pattern and the indicators signal a buy it’s most likely a fake out and will continue to make lower lows. It is critical that you look at the overall chart of the stock and analyze the overall direction of movement prior to looking at the indicators. I emphasize the golden rule, which is never to rely on just indicators to find entry and exit points. Entry is after the close of that rejected candle and stop loss is above the candle highĥ, Draw trend lines as the price continues to move in the direction of the trade.Technical Analysis involves reviewing charts and making decisions based on trend patterns and indicators. Wait for rejection from that area on high volume in the downward direction.ģ. Price should be below 200 EMA or cross 200 EMA and should have closed reasonably well below a previous price action zone and then retraces back toĢ. Exit once 1:2 or 1:3 Risk to Reward ratio is seen or a major PA zone is reached or the inner most trend fan is broken by the price in the opposite direction.ġ. Draw trend lines as the price continues to move in the direction of the trade.Ħ. You could also move the stop loss to break even after price moves the same number of pips as size of the signal candle (high to low)ĥ. Move stop loss to break even after price moves reasonable number of pips (depending on your trading time frame and the volatility of the pair, it could beĪnywhere between 25 - 40 pips (on M!5). Entry is after the close of that rejected candle and stop loss is below the candle lowĤ. Wait for rejection from that area on high volume in the upward direction.ģ. Price should be above 200 EMA or cross 200 EMA and should have closed reasonably well above a previous price action zone and then retraces back toĮither the 200 EMA or VWAP or another previous price action zone or a confluence of one or more of 200 EMA, VWAP or PPA.Ģ. Ensure that there is "sufficient" gap to the next PA (in the direction of the trade)ġ. Refer to the "normal" sized candles for that pair in the recent past)ģ. Good size candles should form (Avoid Extreme candles which are too big or too small. Good volume must be present (preferably above the 200 EMA of the volume)Ģ. Do not enter a trade if you do not know how much capital you are risking.ġ.
Capital preservation is key to long term success. Trade what you see and not what you thinkĨ. Stay out of the market before major news events like FOMC, Interest rate decisions,NFP etcħ. Make sure the "right" frame of mind is present along with good emotional controlĥ. Always check the price action on ALL higher time frames ( 4 Hour and Daily and Weekly and Monthly)Ĥ.
This system works well on M15 and lower - preferably M15.ģ. Draw horizontal and non-horizontal (trend lines) on higher timeframes (Monthly, Weekly, Daily, 4 Hour)Ģ.
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