VWAP

JJJJ

I am trading short term daily using the vwap as a guide. I wait until the stock price hits the vwap line and starts to rise up. Now if this happens, but the vwap line is trending down, it is good practice to still buy or should the vwap line always be rising ?

markd

I don't use vwap, so grain of salt. But after reading the chart school article and looking at a few charts to see what it's about, I would say this:

When the market is trendy up on daily basis (the daily MA 5 is ticking up), and price is above the rising vwap, it's OK to buy dips above the vwap.

When the market is trendy down, and price is below the falling vwap, it's OK to short sell spikes below the vwap.

When the market gets range-y - which usually happens when the market does un-trendy things, like failing to make a new high in an up trend (the MA 5 has been ticking up), or making a lower low in an up trend (and vice versa in a down trend), prices below the vwap may be a buy, and prices above the vwap may be a sell. This is because buyers and sellers are about even, and when one shows strength, the other comes in to squash it. You don't know who will win - the trend may recover or it may turn over. A strong trend tends to react strongly to counter trend strength (lower low in an up trend) and make a new trend price. A weaker trend will take its time and maybe not make a new trend price and then roll over.

Overall, the crossovers don't seem to be the best available signals, because they seem to be infrequent during the day- except maybe in the first hour or two. I'm not familiar enough to say anything about that.

But you should rely on your own research. Pick a symbol you like to trade and collect screenshots of the entries that you would take and see how they would have worked out. You might need maybe a hundred or so to have confidence in your conclusions.