VWAP Trading Strategy (STOCK Selection & Trades) – Intraday Trading 🔥🔥


– So in this VWAP
trading strategy video I’ll give you some quick
tips on stock selection, and then I will explain
how I selected one stock that is Hind Petro and
traded it over the next three to four sessions
to make 5% gain. Towards the end of this video, I’ll also explain two variations of VWAP trading strategy. So, before we get started,
let me show you how to set up chart on
tradingview.com. I think many of
you struggle here, so let me explain this. So, let me first
explain how to get the VWAP indicator
and MVWAP line. So, just click on the indicator
link here, scroll down. You will get the VWAP indicator. So, click on this and close it. You will see VWAP
indicator is added here. Now, to get the MVWAP indicator, just go to indicators
again and type here, “exponential moving average.” So, you get this moving
average exponential. Click here, and it will
get added on the chart. Now, on the exponential
moving average indicator, just click on this, and in the input
section, instead of close, just select VWAP, and the parameter that you
have to enter here is 50. So, once you do this,
your basic chart is ready with VWAP indicator
and MVWAP line. Now, once you set up
indicator and MVWAP, now go to the Pine editor
and remove everything here, and go to the comment
section below. I have mentioned the code
for narrow range clusters. Just copy that code,
and paste it here. So, I’m pasting the code here, and then what you do is just
click on “add on chart.” Just minimize this, and then you get
these black dots. So, all of these black
dots that you see are narrow range candles. So, I sincerely hope this
basic setting up of chart for tradingview.com
is now clear. So, once you’ve
followed all the steps that I’ve just shown you, you will then get this chart. So, this orange line that you
see is the VWAP indicator, and the blue line that you see is the MVWAP indicator, and all these black
dots that you see here are narrow range candle sticks. Now, in one of the
videos I had covered why narrow range clusters
are more important than individual narrow
range candle sticks that I have marked here. You have to understand
one more thing, that narrow range clusters
become more powerful when price is in a
very defined range. In this particular chart,
if you see for Hind Petro, price is currently in
this particular range the day before I was
about to trade this. Now, as an Intraday trader, it is absolutely crucial that you understand
Volatility Cycle. Now, there are two phases
within the Volatility Cycle that is Volatility Contraction
and Volatility Expansion. So, in Volatility Contraction, price usually trades in a range, and candles are very
narrow in range. In Volatility Expansion phase, price usually rises up, or it falls down on
back of high volatility. Now, knowing this is
extremely important. As a day trader, you always
have to focus upon phases where volatility is expanding. So, you have to
focus on two things. Number one, price
has to be in range, and then you must spot
narrow range clusters within that range. Once you spot this particular
existence on the chart, then you can expect
price to either move up or move down in the
following sessions. So, this particular
chart of Hind Petro I had Tweeted about
one day before because I had spotted
this stock in range, and all these narrow
range clusters were consistently showing up. So, let me now show you
how I traded Hind Petro over the next two
to three sessions. So, on the first trade,
price actually gaped up, and we got these
two hammer candles. Now, while the body of these
candles is not positive, look at the long tail here. Both these candles
represent bullishness, and do not forget that
price has gaped up, so, naturally for the day’s
session, was positive. The entry candle was
this particular candle that I’m showing here. Now, during this candle, this actually engulfed
these two prior candles, and hence this was
extremely positive. Even volumes on this
candle was fairly okay, and hence this became
my entry price at 309. So, as far as exit is concerned, I exited this trade at 312, and let me now explain this. So, when I entered
the trade at 309, price had already moved about 3% with respect to the
previous trading session, and hence my main aim here was to take out 1% to 1.5%, as price had already
moved quite a bit. I also a spotted a couple
of these bearish candles though they were
not high on volume, and I was hence more
inclined to get out somewhere between
1% to 1.5% gain. Now, this is more logical because once price has gaped up, you should always be in a
position to book out profit. That is the more
logical thing to do rather than waiting for
price to move up 7%, 8% because that actually
happens rarely when it comes to day trading. So, the second trade
that I did in Hind Petro was when I entered at 312, and then I exited at 318,
320, 321, and 322. So, let me now
explain this trade. So, for this particular trade, again gap up happened, but the gap was gap was less when you compare it
with the previous trade. First candle was bullish. You can see long tail here, and even the candle
body was strong. Second candle that you
got was not that negative. It did engulf the
previous candle’s body, but then the first candle also had a beautiful
hammer pattern, and this hammer pattern
was actually forming above the range of
previous session. So, entry candle was
this particular one because this actually broke
out of the daily range, and then I entered at 312. So, do note here
that the entry candle was actually not on
back of high volumes, but at times I do this because I was trading this
count the previous day, and I did know that there was some underlying
demand in the stock. You then get this wide
range candle here, and this candle
actually are used to offer some bit
of positions at 318, following which I exited
at 320, 321, and 322. Now, I’ll again
explain one more thing. The moment you enter a trade, and you get about 3% or 4% gains in the next 20 to 30 minutes, always think about
exiting the trades, and what I do is, instead of selecting these
weak candles to exit trades, I always select wide candles
to exit my trades in VWAP. Now, this is something
you must be seeing when I update my trades
on Twitter and on blog. So, when I exited the
trade in this region, I certainly did not know
that price would retrace and start consolidating. I just exited based on the fact that after I entered at 312, within the first 60 minutes, I was getting about
3% to 4% gain. So by the time I
exited this trade, my total gain in
Hind Petro was 4.2%. So, the third trade
I did in Hind Petro was at 322.6, that
is entry price, and I exited the same at 326. So, let me explain this. So, the third day we
again got a gap up, and I entered as this
candle was forming at 322.6. So, second candle if
you see was also bullish because you then get
this long tail here, which is always a
sign of strength. So, right about at this point, price was already
about 2.5% higher when compared to
previous session, and I was waiting for some
strength candles to form, and my exit in here
was somewhere between
1% to 1.5% gain. So, this came around at
this particular candle, where I exited at 326, again on back of wide
range strength candle. Now, I’ll tell one more thing, that when I exited
I did not know price would consolidate
and move lower. It was just that I was looking
to make only 1% to 1.5% here because by the time
price reached 326, Hind Petro was
already up 7% to 8% over the last three sessions. So again, situational
awareness here was more important when it
came to exiting trades here. You always have to
keep this in mind because this is one aspect
that many day traders ignore. So, at the end of third trade, my total gains for
Hind Petro was 5.2%. So, once I had done three
trades in Hind Petro, I then stopped
tracking the stock, and let me explain why. So, the third trade actually
ended in this session. So, the next
session, what I saw, was price started moving lower. Before this, you also
have to understand that stock was up about 7% in the previous two
to three sessions. Now, as a trader, it is
important to be aware of this because it is very natural
for a stock to take a breather and enter a phase
of consolidation. When I had this thing in mind, I then spotted these
three candles here. They were pretty high on volume, and in this entire
movement that happened from about 300 to about 328, such candles were
completely absent. So, this actually
indicated presence of strong sellers in the market, and this is why I completely
stopped tracking the stock and switched over to few other
stocks that I Tweeted about. I hope this particular
point is clear. Now, as an intraday trader, if you’re looking to trade
a stock on the long side, and you see such strong
bearish candles forming, that is taking price lower, then always switch away
from that instrument. There are many instruments
available in the market. So, when you spot such
candles on the chart, always avoid
trading such stocks. So, the next two
trades that I’ll show that is Infosys and ICICI. This actually I did
on 6th of November, and these two
trades are actually variation of VWAP
trading strategy, and, therefore, do
pay attention here. So, Infosys was a case of
Hind Petro that we discussed. Price initially moved up
and then got into a range, and look at all these
narrow range clusters forming on the chart. After the initial
bit of movement, look at the volume activity after
the ask price consolidated. Volumes were
completely dried out. I hope this aspect is clear, and then we got this
wide range candle, here, which was also accompanied
by volume expansion. So again, a simple concept
of Volatility Cycle is at play here. As price got into range, volatility started moving lower, and then volatility
started expanding, and price started moving
higher in this case. Now, do note here that
in these examples, I have used narrow range
candles to identify stocks, but you have to remember
that this concept does not work all the time. With experience, you will know how and when to use it, and this is the main reason why I keep emphasizing
on practicing trades, as that is how you
will get experience with VWAP trading concept. So, let me now explain
this trade in Infosys, where I entered at
702 and exited at 710, and then at 713. So, this trade was actually a variation of VWAP
trading strategy, where then I took entry
despite of VWAP indicator being below the MVWAP line. So, our rules state that
you have to only enter when VWAP Indicator is clearly
above the MVWAP indicator, but in this case,
I entered at 7-0-2 despite VWAP indicator being
below the MVWAP indicator. Now, such variations
are very common, and hence you have to be
aware of such situations and how to trade these
on a regular basis. For trading such situations, you have to be aware of
underlying demand and supply, and then you have
to decide to trade based on volume expansion and price moving high or low. So, if you look at the
chart in front of you, let us first focus
on this candle, this particular candle, and
these two candles, here. So, this candle, again,
you get long tail here. This is not a hammer pattern, but hammer pattern
usually has a long tail, and hence you can classify
this as a hammer candle. Again, volumes are high here. So, you can argue
that there are some sellers present in the system. Now, as price
starts moving lower, volume actually
starts to move lower. There is no substantial
volume expansion here. The only point where
you see volume expansion is at this particular candle and these two candles here. This candle can be categorized
as a bearish candle, though this has some
segment of tail here but still this is
fairly bearish, but when you come to
these two candles, again these two candles have
long tails and high volume. So, typically, this is not how down-move plays out in market. Also, take a note here that as prices move
from 7-0-6 to 690, you can just spot on strong
bearish candle, here. Now, remaining
high-volume candles clearly have long tails here. So again, this is
a sign of demand that as price is moving lower, sellers are actually
failing to take price lower with momentum. You then get this bullish, engulfing sort of pattern, here, on high volumes, and then you get this
wide range candle. So, when I entered at
this particular point, I was tracking Infosys or previous one or two sessions, and hence at this
particular point, I knew that this was
a demand shift candle, and price would move higher. If not in this current session, it was supposed to move
up in the next session. This is usually how
reversal play out. So, after I entered at 702, price did consolidate sideways, but there was no
meaningful retracement within this wide
range candle here. So again, this is a sign of
bullishness in the market. Post this, you then
get these series of wide range candles, which I eventually
used to exit my trades. I hope this is variation of
VWAP trading strategy is clear. So, one more variation trade
I did was in ICICI Bank. So, after the initial up-move, price again started
drifting lower. Look at the volumes here. Volumes, again,
started moving lower, and then you get these narrow
range candles on the chart. Now, as price moved lower
from 472 to about 467, there are three main bearish
candles that you can see. One at this point. Another one you get, here, and the third one is at
this particular point. Now, look at volumes of
all these three candles despite of down-move happening, there is no volume expansion
that you’re seeing. You then get volume
expansion at this candle. These two candles,
again, have long tails, and then price starts
to move sideways. You then get this
hammer pattern here, which is on back
of high volumes. Now, those of you who are
familiar with bar charts, this is also very
similar to a Pin Bar. Now, I will cover this some
point in a different video, but these patterns
that form on the chart are usually reversal patterns. So, in this trade, as
price was moving lower, volatility was
actually contracting, and then volatility
started expanding once you got this wide
range candle here, which finally became my
point of entry in the trade. So, ICICI Bank trade was
actually taken at 471, and I did exit at
477 and 480, I think. So, this was, again,
a variation trade. I entered when this
candle was forming, while VWAP indicator was
clearly below the MVWAP line. Now, I have clearly
said not to do this, but I have just shown you in the previous two examples, on how to assess demand
and supply in the chart, and then take such
variation trades. In this region, as
price was moving lower, especially in this
range that you see, volume had completely
moved lower, and then you’ve got this
wide range candle here. Look at the volumes
accompanying this candle. Clearly, strong buyers
were entering the market as price was moving
on the upside. So when it comes to variation
of VWAP trading strategy, I’m looking at
two main elements. One, volatility should contract, and number two,
volatility should expand, and price should
either move up or down on back of volume expansion. Now, this is absolutely crucial. See, the thing is that you have to understand
with VWAP indicator, that it is the overall
price structure that plays a huge role in
trading it successfully. Now, through such videos, I’m just trying my
best to help you understand the
same in the market. Now, when it came to
exiting the trade, I did so at 477 and 480. So again, I have
used the principal of strength candles that
is wide range candles to offload my positions
in the direction of trend. So, in this particular trade, when I entered ICICI Bank, momentum in Bank Nifty, that is the parent index
was actually strong. So, I decided to
hold this trade more, when you compare it
to the Infosys trade, I just explained. So, in this particular
trade I eventually exited, I think at 3% and 3.5% higher. So, all the important links with respect to VWAP
trading strategy and intraday trading is given
in the description box below and in the comment
section below. Do check out the same. So, kindly consider
hitting the “like” button and sharing this video if
you find the content useful. Thanks a lot for watching
this video, guys. Take care, and be safe.

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