Before I started the current training, marathon I asked Kiki what I had done right and what I could have done better in training her.
One of the things she told me was that the Outside in trades were the hardest for her. It was knife-catching as I call it and it was OK to DoubleDown once but not more than that as she would have to run for cover.
I assumed that the attendees at the training would have the same issue so I looked for a way of solving the problem. The answer was the VWAP- Volume Weighted Average Price. There is plenty of info on the web if you Google it.
MarketDelta and IRT have an excellent built in VWAP Oscillator which you can see on my charts and that I have successfully used in the training to help identify the extremes from price. Mixing this with changes in momentum has proven to be a great way of better qualifying Outside in trades in a very visual and quick way.
To VWAP, here's how dr Steenbarger uses it: http://traderfeed.blogspot.com/2009/02/using-vwap-to-determine-structure-of.html
ReplyDeleteI suppose EL uses it another way, because he mentions the word "Oscillator". The notion of standard deviation comes to my mind.
J.D.
EL, could you please post an example about Outsides in trades with the VWAP as context?
ReplyDeleteThank you,
John
Does anyone know the formula for the VWAP oscillator? I want to try to create it for Ninja Trader.
ReplyDeleteAnon 21:38, there is a band version of VWAP on the Ninja support site. You can just change how it is displayed from bands into an oscillator.
ReplyDelete