Thanks for the link. I've never traded using these bad boys but that link looks like a good quick and dirty on how to:
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VWAP will start fresh every day. Volume is heavy in the first period after the markets open, therefore, this action usually weighs heavily into the VWAP calculation. MVWAP can be carried from day to day, as it will always average the most recent periods (10 for example), is less susceptible to any individual period and becomes progressively less so the more periods that are averaged.
General Strategies
When a security is trending, we can use VWAP and MVWAP to gain information from the market. If the price is above VWAP, it is a good intraday price to sell. If the price is below VWAP, it is a good
intraday price to buy. However, there is a caveat to using this intraday. Prices are dynamic and what appears to be a good price at one point in the day may not be by day's end.
On upward trending days, traders can attempt to buy as prices bounce off MVWAP or VWAP. Alternatively, they can sell in a
downtrend as price pushes up toward the line. The figure below shows three days of price action in the iShares Silver Trust ETF (
SLV). As the price rose, it stayed largely above the VWAP and MVWAP, and declines toward the lines provided buying opportunities. As the price fell, it stayed largely below the indicators, and
rallies toward the lines were selling opportunities.
SLV with MVWAP (20) and VWAP in trending market, 10 minute chart. Image by Sabrina Jiang © Investopedia 2020
The indicators also provide tradable information in ranging market environments.
SLV with MVWAP (20) and VWAP in ranging market, 10 minute chart. Image by Sabrina Jiang © Investopedia 2020
On ranging days, traders can buy as price crosses above VWAP/MVWAP and sell as price crosses below VWAP/MVWAP for quick trades. This method runs the risk of being caught in
whipsaw action. Alternatively, a trader can use other indicators, including
support and resistance, to attempt to buy when the price is below the VWAP and MVWAP and sell when the price is above the two indicators.
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That's one method that you just don't see chart image posts of on ET it seems...
Anybody having a chart after a day that they wanted to mark up and post here, maybe we can get rolling on that yacht.
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