How effective is the VWAP?

Discussion in 'Technical Analysis' started by cashclay, Oct 2, 2018.

  1. cashclay


    I hear many day traders use this an indication. But can it really be an effective tool to trade with or does it become too much clutter? Please dont reply it all depends on this and that. Im only asking for your experience. Thanks
    murray t turtle likes this.
  2. They


    VWAP is a market constant, it occurs daily like the open, high, low, close of the day.

    Some strategies look to be long when price is above it and short when price is below it. Some strategies look for price to revert to it when deviating from it by a certain amount.

    Clutter? Definitely not.
  3. tomorton


    Brian Shannon refers to VWAP consistently on his Youtube market summaries. Sounds pretty convincing, worth a look.
  4. speedo


    That's the problem with your question Cash, it DOES depends on YOU. I use a momentum oscillator on my charts and it is an critical element in my trade plan. There are others on ET who will tell you how useless such things are. For them it is useless, for me it's highly useful.

    Bottom line...if you want to find the effectiveness of a thing, you are going to have to do the work and test it within your own strategy.
  5. DaveV


    Correct, but I would add that it is a constant only after the market is closed. Just like the high and low, the VWAP can change throughout the trading day.
    IHB and tommcginnis like this.
  6. I find absolutely no use with it. But that does not mean that there is no valid use. It has kept me out of too many winning trades no matter how I choose to use it.

    MarkBrown likes this.
  7. cashclay


    Thanks!! But the thing is i know that trends and other sorts of indicators can be entirely fulfilling if a large majority of traders are using it too. So imm trying to find out which one a lot of traders use. thanks
  8. They


    Intraday NQ RTM VWAP trade using FAANMG for confirmation...

    NQ price deviates from its VWAP by X % but FAANMG stocks do not confirm the move - NQ reverts to its mean/VWAP

    Intraday VWAP Trade.PNG
  9. %%
    Worth noting, like 100 other things.
    I found 200 day moving average more helpful, but even with that-- there are so many kinds of moving averages...................................................................If your only time frame was 7 days or shorter, VWAP, may be more helpful. Much , MUCH,More Important; never miss a move, quibbling over quarter,[ 00.25]as IBD founder warns.:cool::cool:If I made money daytrading i would have kept @ it.....[Delayed edit quote, but worth it, on strong trend day, small pullback, ignore VWAP, = dont miss that major move//trend. After a while you will recognize that major move.... good question]
    Last edited: Oct 4, 2018
  10. qlai


    The answer is in the first statement of your question! Lol.
    #10     Oct 6, 2018