Thoughts on Day/Swing Trading

Before going to Nifty futures ,try with 2 lots of Minifty.

It was a choppy day. I was feeling bore.

Hi Debarghya Mukherjee;
Todays was really a good day for a good gain. Why did you get bore brother?
I do like such types of days to come more and more.
Thanks.

Dear ST,

At the end of the day, there could be one of these two situations:
(With specific reference to NIFTY FUT)

1. Close greater than VWAP by 35 - 40 points

2. Close less than VWAP by about 35 - 40 points.

Can we expect a Gap Down in the first case and a Gap Up in the second case,
when the next day opens up for trading?

Since huge gap up/down have become common nowadays, can you please
throw some light on the alert signals which fore-warn on such gaps?

Thanks..

We expect gap up open in the first case and gap down open in the second case. This is so because afternoon session is determined by Europe and Dow futures....so we expect the trend to continue the next day open barring some unexpected reversal in US markets in the evening.You will see that 70 % of the time the gap will be in direction of the late afternoon trend and the late afternoon trend is generally durable..

Smart_trade

We have a break out now and retracement did not close below the break out pivot body , we may start a new trend ? anything possible if market has to go prolong sideways then it may fail

Lets See how it pans out

Dear murthyavr,

I have some query regarding calculation of VWAP.

1. If we are calculating VWAP after day end for next day, whether VWAP remains same for the next day, thorought the day or will it change within a day? If it keeps on changing what is the logic of calculating it on running basis?
2. In above calculation H,L&C are of prev day & then multiplied by volume of the whole day to get VP. Right?
3. I have not understood "And cumulative VP divided by cumulative Volume is the VWAP." can you pl explain with e.g.
4. Since you are calculating VWAP for next day on the basis of prev day data, how you are linking it with 1 min chart?
5. If i want to caculate VWAP on 5 min chart in metastock what should be the formulas so that i can have a VWAP line on my chart itself?

Kindly explain,

Regards

Dear ST Da,

I have some query regarding VWAP,

1. What is a diff betn ATP(Avg Traded Price) & VWAP (Vol Weighted Avg Price)?
2. Which one is more significant?
3. Whether this strategy needs to be adopted for last 1-1.5 hrs for day traders & positional traders can carry the position after checking the day ending VWAP vs the then closing price(may be at 3:25 hrs).
4. what i have understand is -
a. If VWAP is more than Closing price & with a gap of more than 35-40 pts, then it means longs are trapped, will try to cover their longs near the end of the session or as per their SL or as per their risk appetite. This long covering will lead to supply & prices will decline to fill this gap of 35-40 pts apporx. Hence we need to take short position till this gap is filled. I have not understood if price will come down again will it not further increase the gap between VWAP & closing price?

Reverse is the case for shorts.

Kindly confirm what i understood above is correct.

5.Also kindly explain if this gap remains there till that day end, meaning those trapped longs have also carry forwarded their long trade to next day. Do we also have to carry forward our short trade that we have taken in anticipation of price will be declined, for next day?

6. Can we trade on this strategy throught the day. offcourse the trade will be initiated once we have a gap of 35-40 pts.
7. I read that there is no historical data available of VWAP that would have helped to monitor the trend of average gap which creates imbalance between the bulls & bears & lead price to move to equilibrium.

Regards,

1. I am only aware of VWAP calculated for the intraday data. I don't know
if it can be equally and effectively escalated to a daily TF. What I have narrated
was the treatment for the intra-day data, and as such the value of VWAP
keeps changing every minute.

2. H,L,C refer to the values of completed 1-minute candle.

3. VP is calculated for each 1-minute bar. For example, by 10:15, you have
60 such values (VPs) on hand, besides 60 items of volume data. Divide the total
VP with total volume, to get the VWAP by 10:15

4. Please refer to (2) above.

5. I am not aware of the MetaStock environment. If you know the programming,
you can perhaps create a program with the kind of calculation suggested by me.
But then, you need to be knowing about arrays to do this job.

Q.If it keeps on changing what is the logic of calculating it on running basis?
The idea is to find out how far away the current price is from the VWAP. From
ST's experience, deviation of about 35 - 40 points is to be watched out.

Hi ST,
is there anyway we could have traded the high lighted area in the chart? The reason I am asking this question, it looks like the same scenario is repeating for every RBI policy release. Also I am not sure this is right thread this question and sorry if wrong. Thanks much

Nearly 75 points movement in 30 minutes. Same for the SBIN also.


Thanks
Bala