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Showing posts from March, 2020

Get Signals from VWAP and Awesome Oscillator

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VWAP, the best trend indicator for day trading:
The volume-weighted average price is a powerful trend indicator for day trading, and it's crucial due to its heavy use by investment funds and smart-money. It looks like a moving average in your 1-minute chart (orange, in mine), and is the same weighted-average we learn in school, in this case, used with the two main factors involved in trading: price and volume.

Institutions work the investor's accounts always buying below the VWAP and selling above it. This way their actions push the price back toward the average, instead of away from it. That's great information for retail investors and traders!

I trade the VWAP in two different ways, depending on the type of trade: breakouts, and pullbacks.

- For breakouts, look first when the price is below the VWAP and, due to price action, crosses it with a big momentum candle.  If this candle also breaks any of your resistance lines (or a trendline), that reinforces the strategy. Then…

Trading the Volatility. Part 2

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The VIX and its inverse relationship with the markets:
The VIX, as a contrarian indicator, is an incredible weapon for technical traders to determine extreme conditions of bullish or bearishness of the market, using its inverse relationship: when the market is rallying, the VIX tends to drop; when the market is tanking the VIX tends to rise. Smart and serious investors use it to bet against the crowd when its greed (or fear) levels are high. And mainly, they use it as protection or hedge for their investments.

The VIX, also known as the 'fear gauge', measures the frequency and intensity of changes in the SP500 in the short-term (30 days), through the implied volatility IV of its at-the-money call and put options. A level below 20 generally indicates a bearish or complacent market, while reads above 30 are generally associated with a large amount of volatility, and mean that investor fears are taking place.

Smart traders usually "buy bargains" when volatility is hi…