General Uses

-Institutional Benchmark Pricing for Order Execution

-Basis For Large Algorithmic Trades
-Balance of Power Determination
-Can Be Used On Any Timeframe
-Represented as Moving Average or Trend Tool
-Acts as “Hidden” Support and Resistance
-Another Critical Piece of a Very Complicated Puzzle
Daytrades should generally be in the direction of the daily VWAP
-Uptrending VWAP will often act as support
-Downtrending VWAP will often act as resistance

Be aware of the DIRECTION of the VWAP

-A move above a DECLINNG VWAP will often fail
-A move below an ADVANCING VWAP will often fail

The steeper the angle of VWAP, the greater the likelihood of a

move above or below to fail.

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 Moving Averages

•Do not confuse this information with a moving average

crossover system.
•Moving averages are a constant to compare price to, they
are merely an objective reference point.
•They allow for objective trend recognition only, they do
not tell us when to buy or sell, only price can tell us
that!

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 M O V IN G A V E R A G E S
•Reference point (constant) to compare price to

•Allow for objective trend identification

•Tend to act as support in an uptrend

•Tend to act as resistance in a downtrend

•Indicates Stage 1 or 3 when price oscillates above

and below

•Beware of the direction of the MA’s

•Where stock is in relation to the MA’s

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W E E K LY C H A R T 4 0 W e e k ( 2 0 0
D ay)
1 0 W e e k (5 0 D a y )
3 0 Pe rio d = 5 D a y M A
6 5 -M IN U T E C H A R T

3 0 - M IN U T E C H A R T
D A ILY C H A R T – 5 0 D A Y

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 TREND TRADING

•Stocks follow the path of least resistance.

•Big money (wealth creation) is made by following the

primary trend.

•Longer term trend is nothing more than the

sum of shorter term trends; therefore, the short term
trend leads the longer term trend.

•Buy strong stocks - When?

•Sell weak stocks – When?

 How do we make money trading?

There is only one way…

Long position:
Others must buy after we do.

Short Position:
Others must sell after we do.
In order to make money we have to:

ANTICIPATE!

Price charts reflect the collective psychology of all

participants in the market. As we know, the only true
constant in the market is that participants’ actions can
be predictable.
 Moving Average
• A line chart that tells you whether a stock
is “healthy” or “sick.”
• Acts as support and resistance
• Institutions watch 50-day + 200-day MAs
• Decision Support Indicator for buy and sell
signals
 Different Types of MAs

• Simple – most commonly used

• Exponential – calculated by applying
percentage of today’s closing price
to yesterday’s MA value. Place
more weight on recent prices
• Weighted – Also puts more weight on
recent data; multiply previous day’s
data by a weight
• Volume Weighted Average Price
(VWAP) uses volume rather than
time
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