Back to VWAP Basics
The Warlock – Kenny Glick – here.
What a way to come back to Warlock’s World after being off air last week for the Money Morning LIVE Summit.
Trades were flowing like the wines of Napa, California.
If you weren’t a part of it…well, you should have been!
Lucky for you, I’m about to go LIVE with my FREE DAILY PREVIEW of Warlock’s World.
The fun begins at 9:15 a.m. ET RIGHT HERE in the big room.
Recently, a lot of VWAPians have been asking to take things back to basics.
Never fear, the Warlock is here.
Let’s dive into some of my core VWAP trading beliefs with a few trade examples from yesterday…
But first, make sure that you’re in the room with me RIGHT HERE at 9:15 a.m. for my FREE daily preview of Warlock’s World.
WHAT IS VWAP?
You can click here to watch the entire clip, but I’m also going to break it all down for you step by step right here.
VWP stands for Volume Weighted Average Price.
The blue line on my charts is the 1-minute VWAP, and it’s THE ONLY LINE THAT MATTERS IN THE STOCK MARKET.
I’ll explain why that is in just a moment.
I also employ a multi-day VWAP that requires a custom ThinkorSwim code – exclusively available to all Warlock’s Worldmembers – but the 1-minute VWAP is the basis for almost ALL of my trading; you don’t need the multiday to make money trading VWAP.
If you have ThinkorSwim, you can add the 1-minute VWAP on your charts by going to Studies/All Studies/V/VWAP and looking at a 1-minute chart.
Many trading platforms outside of ThinkorSwim also have the 1-minute VWAP available; call your broker or your platform’s customer service line if you’re unsure, and make sure you COMPLAIN if they don’t.
WHY IS VWAP IMPORTANT?
The entire market is RIGGED and revolves around institutional algorithms.
The blue line – the 1-minute VWAP – is telling you where institutional money is going into the market.
Take Geovax Labs (GOVX), for example.
You can see on the chart below that once GOVX shares broke back above the 1-minute VWAP, volume increased and moved even higher.
GOVX was on the move on Monday
That’s no coincidence.
When a stock makes a definitive move back above the 1-minute VWAP, that tells us that BIG, institutional money is coming into the stock, and that’s what gives us the volume.
We’re not looking to move markets or find the next hidden gem, we’re using VWAP to ride the wave of institutional money flow causing spikes in price action.
When a stock moves back below the 1-minute VWAP, it tells us the big boys are hitting the exits, and that there could be further downside follow through in price.
Take this chart below from SIGA Technologies (SIGA) for example.
You can see on the chart once SIGA broke the 1-minute VWAP to the downside, volume increased and price action accelerated.
SIGA broke VWAP to the downside on Monday
Pretty neat, right?
But Kenny, how do I use this in my every day trading>
I wasn’t finished, Blanche.
HOW DO I TRADE VWAP?
Now that we’ve established the importance of VWAP, if I say “This stock is breaking back over VWAP” during one of my Warlock’s World sessions, you might think, “Institutional money is getting into this stock – maybe I should buy it.”
On the flipside, stocks making decisive moves back BELOW the 1-minute VWAP often present opportunities on the bearish side – which is when I tend to short shares.
Of course, VWAP trading is MUCH more nuanced than that, but that’s’ the gist of it. To best educate yourself on the ins and outs, it’s important to join my Warlock’s World every day.
At the very least, you NEED to be there for daily FREE Warlock’s World preview at 9:15 a.m. ET RIGHT HERE.
Stay tuned for more training, as I take VWAP back to basics.
And if you haven’t already, be sure to grab your VWAP 101 Training Guide right here.
That’s all for now, VWAPians!
Kenny “The Warlock” Glick
May 24 2022
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