VWAP STRATEGY

VWAP Strategy Video Explanation:

https://youtu.be/erA_wAjUh0k

Explanation of vwap strategy:

-Indicator used : vwap (volume weighted average price)

Vwap indicator itself takes into consideration volume weight (time) and price. Hence, no other indicator
is required.

-Time Frame : 15 minutes

Vwap is an intraday indicator so a small time frame is used. Works best on 15 minutes time frame,
however, if you are comfortable, you can try on 5 minutes time frame as well. Strategy says 15 minutes
so if you deviate, do your back-testing and then deviate.

Two words are used here. Pvwap and cvwap.

Pvwap is previous day end of the day vwap.

Cvwap is current day vwap.

Pvwap can be obtained by plotting vwap indicator on chart and looking where it was plotted at 3:30 pm.

Cvwap is obviously current day vwap which can be obtained by plotting vwap indicator.

Applicability of the strategy : all instruments (stocks, indexes, commodities, currencies) . Works best on
fast moving stocks and Nifty Future and Bank Nifty Future.

So the strategy says :

-If the instrument is trading above pvwap, it is bullish and we look for a buy entry

-If instrument is trading below pvwap, it is bearish and we look for a sell entry

-buy entry - any 15 minute candle that crosses cvwap and closes above both cvwap and pvwap, buy
entry will be above high of that candle.

-sell entry - any 15 minute candle that crosses cvwap and closes below both pvwap and cvwap, sell entry
will be below low of that candle

Target : NF - 30-35 points, BN 90-120 points, crude - 30 points, others - 1-1.2% from entry level

SL : NF - 25 points, BN 60 points, crude - 20 points, others - 1% from entry level.

Back-testing of this strategy cannot be done on any software, you will have to do it manually.

Answers to common queries and other tips :

1. Fake breakout cannot be totally avoided. However, with use of price action knowledge, one can
observe each candle and its movement and then take a decision whether to continue the trade or quit.

2. Agreed that strategy doesn't work on range bound days but whether a day is range bound or not that
we get to know only during the day. No way to identify beforehand if a day will be range bound. One can
only predict.

3. This strategy gives more than 60% results and with 1:1 Risk reward ratio, it is excellent. You can do
your maths.

4. I personally avoid trading a day after trending day as mostly it is a range bound day. You guys can take
a tip from here.

5. Avoid trading on election days and or RBI event days as fluctuation is high. If one is new and cannot
manage fluctuations, you might end up losing capital.

6. It is ideal to risk 1-2% capital in your trade. So if your capital is say 1 lac, max risk should be 2000.
Hence you can trade in one lot of NF (25*75= 1875)

7. As already mentioned, strategy can only be back tested manually.

8. High beta stocks are fast moving stocks. I will update list of the same here in a while.

9. I am also a working trader. If one is ready with levels and uses bracket orders, one can very well trade
alongwith job.

10. If you are new to this, do paper trades and then start with one lot.

Answers to some other common questions :

1. We don't use any other indicator except vwap. If you want to use, you can use on your own discretion
and comfort.

2. Whether to take all the trades generated as per vwap or not totally depends on your risk appetite.

3. For crude trade, target is 30 points and SL is 20 points from entry level.

4. In order to scan stocks to trade as per vwap, take following as a guide

- if you are totally new, trade only in NF first

- if you're a little experienced in NF, trade in high beta stocks

- if you have knowledge about PA, short list stocks that are about to breakout/breakdown

Basically, manual scanning is best scanning.

5. Pvwap is nothing but vwap at 3:30 p.m. on previous trading day. Simply draw a horizontal line and
you're good to go.

6. Please avoid questions on anything apart from vwap

7. Please don't generalize anything unless you have proof of it.

8. Avoid questions which can be googled, like, is tomorrow a market holiday

9. Avoid strategy related questions during market hours as all admins are taking trades while helping
you all here. Please respect their time as well.

10. There is no holy grail in stock market. More the number of hours you spent in front of screen, more
confidently you can take trade.

11. Save your capital first.

Trades compilation:

https://drive.google.com/file/d/18X-5ZEV3N-tqzzoIqRIPKKtV3gAK_cRK/view

Trading GAP using VWAP:

https://drive.google.com/file/d/1bjGwir6BAaUVyKwWiHE0nszkLX5mPzzD/view?usp=sharing