The VWAP Extensions Trading Strategy
Intraday Strategy During a Flat VWAP
In my last webinar, I covered the ‘VWAP extensions fade trade’.
A nice intraday play during a flat VWAP.
“Ah but how does that differ from the rules on Trading Plan Pro? They look different”
So I think there are 2 ways to trade this type of setup.
#1 Use fixed ATR bands around the VWAP (As per Trading Plan Pro templated strategy).
#2 Create your own bands based on the price action.
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And here’s #2
I actually tested the band-based strategy for almost a year, it had spells where it did exceptionally well and other times struggled.
But it’s a tough one to trade manually as you are getting signals all day long.
So I settled for a discretionary approach with these rules:
- Wait until the VWAP is flat (crucial)
- Measure the first extension away from the VWAP
- Draw lines around the VWAP at that distance
- Take mean reversion plays on line touches whilst the VWAP is flat
- Stops are double the distance from the VWAP
It’s far from perfect, and I like to add an extra price action trigger to it, but it might be a play you want to explore.