Trade Ideas - VWAP Scan

The basic idea behind this strategy:

  1. Buy after it breaks above VWAP and holds it, risk a few percent below VWAP.
  2. Buy after it has been rejecting VWAP for several candles and finally gets above, risk a few percent below VWAP.
  3. Short after it drops below VWAP and rejects it, risk a few percent above VWAP.

It’s not always obvious as to what you should do since each trade is unique.

If the stock is up a lot on the day, look for it to come down and test VWAP. If it breaks down through, wait for it to pop up and test VWAP. If it holds: long, if it rejects: short. Note that it can break a few cents above VWAP and then come down.

The opposite works if the stock is down a lot on the day. Wait for it to bounce into VWAP. If it breaks through and holds: long, if it comes back down and rejects: short the pop.

Not all stocks will follow VWAP so it mostly comes down to experience and how the chart looks. Avoid choppy/illiquid stocks and ones that have large 5m wicks. It seems to work best before 1:00 PM EST.

Here is the cloud link to the current scan that appears to find what I’m looking for. I made this with the demo account and modified it during the 5-day trial period. I’m sure I will tweak it in the future.

Unforunately VWAP does not appear on the charts accurately (with 4.2.28). It’s a known issue and they are working on it. Scanning is perfectly fine though.



Disclaimer

I am not a registered financial adviser/broker/anything. Use this information for entertainment/informational purposes only. Any tickers mentioned are not recommendations to buy/sell/or sell short. They are used as examples only.