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As long as any anchored VWAP placed continues to update and build with every bar (and you don't have to extend it manually), then yes this will be good too.
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- Trade what you see. Invest in what you believe -
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Can you help answer these questions from other members on NexusFi?
I'm fairly new to FIO and have found this thread (AND COMMUNITY) very helpful and really appreciate the knowledge. This site reminds me alot of the 2+2 forums back in the day.
A quick question if I may. I did read the entire thread and apologize if i missed something but I recall you saying something to the effect of VWAP is giving you all the levels you need. Is this correct? Do you ever feel like you need to get daily / hourly levels? I'm asking because I actively rely on these and intra day levels for entry and exits.
It is not my intent to change the way anybody trades or approaches the market. On any chart posts, I try to strip them down in an effort NOT to force the levels that I use as reference on other traders and only show the levels that refer to what I am talking to. If that makes sense...
If something works for you successfully then it works for you. I do have a Planned Levels Visualizer that allows me to plug in all of the important levels from the prior day and any naked VWAPs, naked VPOCs, value areas etc. and display them on my chart. However, I personally have never found hourly levels to be of any use for me, but that doesn't mean they are not valid and doesn't mean you shouldn't use them.
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- Trade what you see. Invest in what you believe -
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big thanks to @JonnyBoy , its a great thread, very educational and informative about VWAP, I personally use VWAP for quite a long time now but can't figure out the best way to use it(I trade 1 min charts), after read all the comments here, i think im gonna be on a new exploring adventure of VWAP again.
I do have some more questions would like @JonnyBoy to share your thoughts about them if that's ok, I have seen people asked a lot of questions but nor the ones that im gonna ask, so if you could kindly share your thoughts to me and every hard working traders here i will be appreciate
1) I know that you have already shared your basie concept of how to use VWAP as entry and exit in 4 different ways, there is one thing that in my mind all the time and never cleared, that is the entry method (not talking about the timing or under what market condition to entry), may i ask would it be much better if we just enter the position when the price reached the VWAP/SD level or the bottom of the entry zone rather than entry after we get a confirmation when price bounce off from a VWAP or SD zone? because IMO the SL level would always be at a predetermined level or "stop zone" in your word, so if we consider any trade will be a losing trade, wouldn't that be less risk and more profit we take for each trade? or is the whole profitability or strategy would be ruin if we use that approach?
2) I have notice you will scale out of a position depending on the market condition, what hasn't been told regarding your VWAP market approach in this thread is your "rules" about when will you exit the entire position manually, what i mean by that is when do you consider the trade no longer have a reason to hold? im sure you move your SL to breakeven, but im not sure do you use trailing stop or not, if you do how much space do you leave and how do you work out whats the standard of the space you should leave?
3) at last, I'd like to have some advice on the psychological side of trading regardless of using VWAP strategy or not. I often find myself unlucky in trading, don't want to sound like someone can't do their job properly but find something to blame for but things always happened in a way that makes me feel that way, scenario 1: if I take my profit quickly then price will continue a lot further; scenario 2: if I hold on to that trade it just traces back and hit my stop loss at breakeven or at negative profit(even worse); I've missed large trades for 1 or 2 ticks which I knew it would be traded in a certain direction,(i know this happens all the time but it seems to happen to me quite often). I have noticed about myself quite Idealistic about some trades I make, what I mean by that is I often like to enter at a bottom or top of a price swing then exit at the end of that swing, I'm not saying I'd like to get the 100% of the swing, my strategy determines my entry will be at a swing high or low, but its my exit level or method often giving me this sense of unlucky because I always like to get the 80% out of 100% of the swing, I want to get this superstition sense out of my head hence I need someone can logically tell me what's wrong with me about my psychology in a professional way, how bad the impact is idealism in trading for me? are those scenarios happen because i was being too greedy or too fearful OR is my approach(in terms of strategy) is wrong in the first place? this question can be answered by anyone who has got enough trading experience to note that what my problem is, its important for anybody like me to have someone got a clue to tell me what should be adjusted properly to survive in this game, I appreciate if anyone can share their thought on these questions above.
I will add. I have been using VWAP in my trading for several years. This is a really awesome tool and the best indicator (IMHO). This is an intraday probability map.
Understanding how it works and evaluating the probabilities, each trader can apply his own patterns and make them more profitable.
Follow the market context to avoid a fat tail. Good luck.
Thanks. Hopefully I can contribute more going forward.
Makes perfect sense.
Right. Lately I've been doing less of those hourly levels and simply relying on the volume profile. That, along with watching the DOM has kept my charts cleaner. I also noticed that some of my levels conveniently line up with VWAP levels so that's nice too.
I doubt I will be able to answer these questions concisely...
1) The advantage of what you're suggesting here is clear; You are going to get a better fill with a tighter stop. For the sake of argument let's put the underlying market structure aside and assume a VWAP TEST LONG is in the making. Price has entered into the VWAP band and you place a limit order at VWAP itself and you get a fill. Your stop is placed and will be tighter to your entry, but in no different a place than should you enter a few bars later on a BUY STOP ''if'' VWAP does become the turning point and the market rotates higher.
If price doesn't rotate higher and moves down towards -SD1, you will get stopped out. Versus not being in the trade at all as you were not swept in to price with a BUY STOP on the assumption a bullish move higher was expected.
If price does rotate higher, you have the opportunity to take your first target sooner and perhaps get the opportunity to achieve more profit at +SD1 should price rotate up there.
With this scenario I can't honestly tell you if statistically speaking you would be worse off or better off. Assuming this presumptive entry, your stop is 0.5 SD from VWAP vs. 1.0 SD from ''typical'' entry. So, in effect it is 50% "better''. Taking two of these presumptive trades that don't profit is equal to taking one of the ''traditional'' setup types that is also not profitable. You would certainly need to model this out.
I always approach every trade with the mindset that it will be a winning trade. Losing trades are part of doing business and of course I have them, but my expectation is that each trade I take will be profitable. I wouldn't however be able to place a trade ''just because'' without the rationale behind it.
I am not saying there is anything wrong with what you suggested, but testing it to find out what suits your trading style is the best approach.
2. If I framed out exactly when, why and how to manage each trade then this becomes more of a system and I'd be giving away years of research on a plate. Every trader will (and needs to) approach these setups differently and discover what works best for them. A 10 contract trader will have a different approach than a 4 contract trader for example.
3. The market knows where you live. Every time you enter a position the ID number of your trade is routed to a special department within the CME. This department's special task force ensure that you get shaken out of the market before the big move. Okay, I am joking but it sure feels that way sometimes right?
In reality and as far as the market is concerned, all traders are created equal. We all start out the day at zero. When the RTH session begins, how you conduct yourself from a behavioral standpoint will dictate whether you will make money on the day. If you follow the rules, you should do well. If you do not, you will do poorly. The market moves wherever it wants to go. It does not care about you or me. It does not play favorites. It does not discriminate. It does not intentionally harm any individual. The market is always right. You must learn to respect the market. The market will mercilessly punish you if you do not play by the rules.
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- Trade what you see. Invest in what you believe -
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thank you so much for spending time to answer all my questions, appreciated it @JonnyBoy
I think this is well said because you will take many factors into consideration whether that setup is tradeable or not hence the certainty of that setup is known before you enter it, so if anyone said they will think of any trade will be a losing trade, they just don't have confidence in their strategy, take me as an example, my win rate is low hence I will think of any trade as a losing trade subconsciously.
very simple but straightforward answer, thanks
almost got me here, I totally understand your point, I just want to be sure is it me not following the rules or is it my strategy just doesn't work. no one, no strategy can be 100% correct on any given trade, not even George Soros, so if VWAP got a 70% win rate but the rest of the 30% is still down to pure luck(hope you don't mind me put it that way), and I just want to make sure I don't fail at not being discipline to execute the 70% win rate strategy but fail for that 30% of the time being unlucky(you got no choice if things happen that way).
some market wizards often said to the quitters don't keep changing strategies just because it didn't work for a few times, so my question is at what stage or to be more specific, how many time it failed or how low the percentage of win rate the strategy is, we should consider the strategy no longer does its job?(every criteria has met before the trade has taken). simply speaking, at what point will you make some changes to your VWAP setup or stop trading VWAP for a while,(its a VWAP thread so maybe its better to stay with it), for example, in the summertime when the volume is much lower because of the institution guys are off to the beach(which is a month or two from now). personally, I've stopped trading VWAP for a long time in the past because it offer me only 20% of profitable trades, but the RR ratio is high, i've noticed if price bounce from VWAP it will move significant to the high(low), im talking about 70-100 ticks move, but it doesn't just "go" there but moved with lots of swings, and i only hold a position for minutes so can't handle the choppy before it can bring me the high reward as same as it couldn't bring me more profit before I lost too much trades with it. but of course, my result and yours can't really compare because my approach was different than yours at that time,i didn't even look at the SD levels as my entry/exit reference level, so my 20% win rate is not an objective reference for VWAP strategy because I skipped a lots of components of VWAP.
, I totally understand your point, I just want to be sure is it me not following the rules or is it my strategy just doesn't work. no one, no strategy can be 100% correct on any given trade, not even George