Follow or fade the VWAP?

Discussion in 'Trading' started by 1a2b3cppp, Aug 6, 2018.

  1. Additionally, when does the VWAP start? I feel like it starts after regular trading hours on my chart.

    Untitled-50.jpg

    Perhaps you can trade in the direction of VWAP. This is what that chart displays.

    Or wait until price gets some length away from VWAP and do the opposite.
     
  2. Untitled-51.jpg
     
  3. SunTrader

    SunTrader

    First got to say I can't tell you how your VWAP works because I don't even know what software you are using or timeframe or time period of your chart. Beats me. Probably wouldn't know anyway. When it comes to trading platforms, although there are some similarities, each do things their own way.

    As for when VWAP gets some length away - sure but how do you determine "some length" is the right length?

    A suggestion is to test BBands set to 3 standard deviations. Wait for close outside band. Both on attached chart barely made the cut, 1st closing at 2791.00 with lower band at 2791.05, and 2nd 2793.50 and 2793.60 but they would have been nice entries nonetheless.
    ES 3 BBands.png
     
    MarkBrown likes this.
  4. vanzandt

    vanzandt

    Depending on the stock, the day, and the time of day... VWAP is the best short term indicator for momentum based direction reversal there is.
    It works best on high vis stocks that are trading well above their average daily volume. SPY too on high volume days.
     
  5. Are you able to talk about momentum based direction reversal?
     
  6. I did a system with 2.5 amount standard deviation on bollinger bands.

    https://www.elitetrader.com/et/threads/making-bollinger-band-fading-profitable.266426/
     
  7. SunTrader

    SunTrader

    That would be counter momentum which is what I previously posted - BBands.

    Beyond that though there are all kinds of ways to trade against momentum. Most of the time I do that only within a correction against the main trend.