Why I Started Using This Day Trading Indicator (the best!)

Whether you are day trading or swing trading, when it comes to what technical indicators to use, there are many to choose from. This can be a very overwhelming challenge for beginning traders who are just getting started in the stock market; however, it does not need to be. I have been trading stocks for over a decade and the one secret I've discovered is that "less is more". You do not need to have dozens of technical indicators in order to be a successful trader. With all that being said, I have recently started using a new indicator that I have found to be extremely helpful. The Volume Weighted Average Price (VWAP) indicator has been around for a long time, yet, I just started to use it (with great success). What is the VWAP? How does it work? I discuss this along with my reasoning for deciding to use what many other traders consider the best technical indicator to use within a day trading strategy.

[cardio]

When someone, graciously, takes the time out of their day to educate you like this it means that they really care!

[brynerlee]

Just watched this 2 years after you posted it...I finally understand what VWAP is. Thank you so much Clay! I am still learning what the heck I am supposed to do as a trader, from setting up my trading app to what trading setup to use. I’m clueless, but I won’t stop learning. Thanks to you, I’m inspired to learn more!

[perkinscove]

Clay, an additional important support line (for long trades) based on VWAP is a band -1.0 SD (Standard Deviation) below VWAP. Some platforms default to VWAP plus a high band at +2.0 SD and a low band at -2.0 SD. And most VWAP videos tell new traders to eliminate the upper and lower bands. That is a mistake, IMO, as they show support and resistance and are helpful in making good entries and exits. That said, I do recommend that the low band be raised from -2.0 SD to -1.0 SD. The reason is that if VWAP itself has a support strength of 4.6, then -1.0 SD has a support strength of 5.7 whereas -2.0 SD has a support strength of only 1.8. What this means is that if the price falls below VWAP it stands a very good chance of bouncing off that -1.0 SD line.

If your platform allows you to add a lower band below VWAP I suggest you add one at -1.0 SD and watch to see how often that line is the price reversal support area ("bounce"). In my experience, as you can see from my numbers above, it is even stronger than VWAP itself.

Try it...you may like it.
Cheers!

[PortCapital]

Clay your chalk board skills are fantastic, very satisfying to watch

[prometheus]

I have watched several of your videos . That being said this is the one that got me to sub to you. The fact you can admit to a mistake or what you perceive as one earns my respect.

[gumbywwf]

I just loaded the VWAP. Following the herd is a smart thing. The herd drives the prices. Thanks for taking the time for teaching me something new.

[sybiliverson]

I've been day trading since last May. My husband and I use the VWAP to find our entry points. I agree with what your saying, nice job.

[Lucasaraujo]

Another great reason I love the VWAP for day trading is because it stays the same on all intra day time frames. A regular moving average (Lets say 15 SMA) varies on every time frame, because it gathers the average price from the last 15 candles, now if you're using that 15 SMA on a 1min or a 5min chart the moving average is at a completely different place on the chart. This makes using these basic SMAs and EMAs a weaker confirmation than an indicator that is the same across all intra day time frames like the VWAP.

[mw]

You saved me today ! I bought a call. Price drastically went down. I added the VWAP. The price was way below VWAP. Purchased another call. Waited and price came up. Sold both and saved my loss. What a great hero you are Praise the lord

[diannad]

I just added VW too my charts this year, even though I had heard about it, too. Very cool to use it both long and short in combination with other indicators. Btw, don’t beat yourself up, as it took me hearing it from a trader that I truly respect before I would even look at it. We all them there thingy’s called an EGO. The cool thing is we have the opportunity each trading day to have a check-in or chat with the EGO. And more amazingly, you are actually willing to be authentic about it! Keep up the great work!

[jajajaja]

Once I added this to my scanner. I was seeing 40% and up gains each day .

[cebolla]

I love nothing more than learning from someone who knows more than me but even more than that is learning from someone who is physically fit. You look good in that shirt and you're a very enthusiastic, keep it up my guy.

[bobpattison]

Clay, I’m a total newbie in the mode of collecting info on day trading and have been listening to all this terminology that I have not heard of before so I REALLY appreciate your detailed explanation of the vwap. Thanks!!

[samarthpandey]

I'm an Indian trader
I use VWAP a lot
Since I'm a Novice, still learning a lot from videos like this
Thanks a lot Global Gurus ♥

[cnsjoe]

This is absolutely by far the best indicator for daytrade. I have been using this for crude oils futures
5mins trade. I trade when the candlestick has a reversal when it is away from VWAP. It has generated
so much wealth for me for the past 1 year.

[crispy]

"Prices below tend to rise back up, prices above tend to *rise* back down. Cheers.

[rajm]

Clay, you have awesome teaching skills. For someone new to this, I am slowly starting to get a grasp of what you are talking (there are other channels where stuff just went right over my head). Thank you for the effort you put in, I really appreciate it.

[Monkey_G]

I want to say thanks to people like you, who make education free and allow one to better themselves as long as they try.

[ChrisSchenk]

Good video Clay!! I use the VWAP in my trading and I use the RSI to help with entry and exits to my trades. I try to keep things as simple as possible so anyone including myself can use it. :)

[kevinm]

I've been using the VWAP for a long time. I'm a momentum trader and I have a long bias if above VWAP and short bias if below VWAP because I trade with the trend. I know this is directly opposite of what you explained but everybody looks at the "inkblot test" (charts) differently and an image appears that makes sense to them. The only thing that matters is if the image that appears makes you a consistent profitable trader. Another great thing about the VWAP is you can be rest assured knowing every trader using VWAP, no matter what time frame, is going to be looking at the exact same VWAP price as you (give or take a cent or two).