VWAP Basics for Beginners

what's going on guys Connor here and I want to talk about V Webb volume weighted average price so some of you may know this is a key indicator that I use for trading stocks on that I always have in my chart right now my chart is pretty much completely blank I have the moving averages I do not have the volume way of average price right now on this chart currently looking at DC th this is a former runner within about the past week or so so I want to go over the V Web for you guys so for any of you guys are using figger swim trading platform this will be really beneficial I'm going to go over how you can set up your V web so the a could look like mine but basically in general so you can have the volume weighted average price indicator now on your screen I'm going to go over how the V web acts as intraday support and resistance and how you can kind of recognize a V web pullback or a V web breakout to kind of give you a sense of how you can start learning how to trade the V web and if you were to ask me or if I could only have one indicator on my screen for trading and no other indicator I would personally use the V web if there was only one indicator I could have my screen at a time I would personally choose to use the V web or the volume weighted average price with that being said I'm going to go ahead and show you how to set it up so this is your typical TD Ameritrade thinkorswim now the easiest way I find to do is just go over here to studies click Edit studies come into your search tool click view error type in V web double click it then you can come over here or if you want you just basically hit apply and you'll be presented with not one but you'll be presented with three different trend lines the middle one is the volume weighted average price and then you have your upper and lower band of the view web personally and a lot of other traders do not even use the upper and lower band so I'll show you how to take those off so you can just simply use the middle middle band which is the volume weighted average price so if you want to edit them and take them out you'll just go back into studies double-click your view app come down here to upper band unclick it go over to lower band unclick it hit OK and hit apply now when you open it up it'll say you know deviation you know negative 2 2 that is the standard typical deviation you're going to want to have in your charts there's really no need to change it you can if you would like but there is really no purpose of doing especially if you're day trading instead of perfect for you apply and hit OK now you're just going to be presented with the 1 bar volume weighted average price now personally I'm going to go in here and change the color of it and I'll show you how you can do that I would like to have mine in white so let's double click it come down here to color and you can change it to white if you'd like you can go in here and change this down you make it you know dotted lines or dashed lines however you would like to do I'm gonna leave mine a solid white line right now for the video and I'm going to show you with the volume weighted average prices ok so what is the V web the view web is basically basically what it stands for is volume weighted average price it takes the amount of shares purchased at a given price and then it's able to project or graph this white line you see and generally what this white line means is that is where the average price per share is held on the stock for most investors so this is the average price spot this is where volume is going to pick up a little bit because this is where most people hold the stock in this price point right here and that's how you project the line in the beginning of the day the line is always going to move much quicker than it will into the trading day because one shares have been bought and once trading has taken place and shares have been traded the line is going to become much more still and it's not going to move as quick because now it's moving into the trading day and now it's already calculated its average price for the day for the most part as you can see here when it dipped down yeah the line moved a little bit but not much because there's been so many shares bought here and there's been so many shares sold here that it's kind of even I guess you could say and now it's just become you know pretty standard still line so I want to show you right here what it means to trade the V whap okay or let's first go into support and resistance intraday for day trading the volume weighted average price is a awesome indicator because it works as a support and resistance so you can see here once we have that breakup and we had this nice run we pulled back down to the V WEP and tested the volume weighted average price to see if the stock was going to hold there as support and sure enough it did it sold a little bit below it but surely it came back up and bounced right back off of it sold down below it came back up then now this is on a 5 minute 5 minute chart so it's not 1 minute but we sold down below it came back up then we started bouncing around on it and sure enough once we get a solid break through the V web it completely sell-off it no longer was holding its support so it just sold off right so on this chart let's see if I can get a better chart pulled up for you guys yeah this will work 10 day 1 minute now I'm going to go over to the day I want to talk about which is this chart right here this is the day I want to talk about so now that we're in a 1-minute chart okay D see th I made a video on it previously so we had this sell-off initially in the beginning and then we had our first volume weighted price break out the first V web breakout along with some other indicators that are on my screen we had some moving averages crossover and then you got this nice rip up okay then it's sold off below the video app came back up broke it then we started fumbling around on it and this is where you could have got in for volume weighted advertise pullback we started to make higher lows so we're still on an uptrend right so the volume weighted average price is used as support and resistance for intraday play so here would have been a key entry point for a V web pullback because as we noticed right here we came down test it we broke through so it wasn't holding strong support we saw our bought back up then we sold back down and we bounced right off of it and we started to make a nice uptrend now you could have bought in on the breakout of this price point right here which is what I personally would have done but if you can see intraday the V web is holding as a support right it comes up it did sell through but we hold support here we hold support here we hold support here and then eventually right here is where we got the first V web breakdown and now once you sell below it it now acts as a resistance as you can see we've sold below it we come back up and now you're hitting a support or sorry you're hitting resistance and you sell back down you know if you keep going into the next trading day you'll notice that we start above it then we sold through came back up just broke it sold back down came back up resistance resistance and now it just sells way below the VF all day long so technically intraday I was on a downtrend then look at here another great example we first start off below the V web we get a nice break out you could have bought in on the breakout here once it was fumbling around showing that I had good support you could have played this move and went up about 8% then you come across and you notice it starts holding a very strong support on the V web you go up we bounce bounce all day long so this is telling you that the stock is holding that volume weighted average price for the day then we come in to the next day we sell-off we sure enough we get a volume weighted average price breakout strong break out and you're going to move up 20 about 25 percent there depending on when you got it you got in right away you have a 25 cent move up or 25 percent then we come across and now we're just kind of bouncing around in between the vom so nothing too strong there but as you can see from the previous day was holding support right on that line and this day we're just kind of playing around the volume weighted average price continued now here's here's a good example of when it's holding resistance right we sell down greatly then we buy back up so this would be your target point so for example if you were to buy in off this reversal right here my target point I would have died on this reversal point my first target would be the V web that is a great target point since the V web intraday hold is a very strong support and resistance you play this reversal and you're wondering when you should exit the trade your first target really should be the volume weighted average price and sure enough it moves up there breaks it but then it comes back down you play this reversal but this bounce whatever you want to call it you can trade for the target up to the V web you can see what happens you trade up you hit the volume weight average price and then it kind of trickle sideways sure enough here you're trading just below the view AB so this would be a good time to play for a view web breakout because it's kind of been fumbling around right below it sure enough we get the break and then you shoot up and you know that was 6% move there now we go into this trading day and it's just trading this in turday right now it's just trading right below the V Webb so you could not you know you could essentially play for a V WEP breakout here so that's really the support and resistance behind the volume weighted average price see if I can pull up any other good stocks to show you guys how about wk HS let me remove my drawings so this one isn't doing a heck of a lot right now but let's see if you look into yesterday's trading right so you start off going above the V web now what I would have looked for is like a V web pull back so maybe off this first move up you could have gotten a pullback and a pullback would be when the price goes up it gets a little extended you sell-off and you should look for a pullback or an entry point right as it touches the volume weighted average price to get back in and you could have done it right here but it wasn't a strong move I personally probably wouldn't have done that because the volume isn't really high but right here it trades just below the V web for quite some time we get a break above it and then sure enough we shoot up that right there was a 6% move I mean not huge but you know those are just V web breakouts and what I want you guys understand is a lot of traders use the volume weighted average price for V web pull backs and volume weighted price breakouts and they use it as support and resistance intraday so if you think about it and there's all these other traders watching it that's that psychological aspect to the whole trading game you got all these people you know including myself looking for view at breakouts V web pullback support and resistance off the V web so if all these traders are watching this and you start to implement this into your style you're going to start trading the same trends and same patterns as other traders okay when people start noticing the V web breakout the load up on shares and will enter in for a nice move up or if they're noticing that the V web has been holding support all day long and now we're getting a break through the V web it's probably a good time to exit because you're probably looking at a good sell out coming in or you're looking at shorts coming in to trade the V web breakdown so that's you know that's majority of what the V WEP is okay you know there's really not much more to it I mean it could get a little bit more complex to basically keep it simple that's what you're looking at maybe I can get in on something another another stock here let's see PLU G okay great example right here this is a perfect example okay so previous day on Friday this would be Friday the stock sells off touch of the V WEP comes back up so that would be like a V WEP pullback or a V WEP bounce it breaks down to the V WEP and then we get a move up and then we just start trending right on the V WEP all day long so this is showing that the price is holding great support right off the volume weighted average price okay and another thing to watch out for is when a price gets really extended from the white line or off the volume weighted average price the V web when a price gets really extended out there be careful on buying in at those times because it's so far extended off the volume weighted average price that it should come back down to earth at some point and get closer to the average price per share on that stock like today this thing traded up and then we had a breakdown and sure enough the stock could not up so you could have tried to buy in right here but you would have been stopped out real quick once it broke down do you see what happens once a you know you once it goes up hits the V whap breaks below it look what happened it just completely sold off okay so now the only good time for me like if I want to go long for this is to see if this thing is going to rise back up and break through the view up again and then continue running so there's a basic simple understanding of the V whap for you guys I really hope that helps you know I'll do more videos on it here and there for people as long as they they want me to and there's you know still people need some clarification on it but that's your basic simple understanding of the V web for support resistance pullbacks breakdowns and how a lot of traders use it intraday for day trading stocks okay so as always please join a tech mod solutions group on Facebook especially for beginners it's a great place to be you can always you know send me your friend requests I have a link to my facebook page I'm always sending out post of potential stocks and things to look for in the stock market as we go so that can always be helpful II too and with that being said I hope you guys liked the video please like and subscribe if you want to keep getting notified of the videos I do make especially for beginners I think this information is going to be super useful for you as you start learning and hopes that I can help shorten that learning curve you guys until then thanks

Channel: Connor Pollifrone

Views: 171,463

Rating: 4.8847938 out of 5

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Id: -_NC5Nn3oPM

Length: 15min 22sec (922 seconds)

Published: Mon Jun 19 2017