CLASS – 1 VWAP AND AVG PRICE USES

WITH OL + OH
DATE – 27/02/2022
BY – SHANU TADVI
Index
What people do in market ?
How market works ?
What to learn in market?
Moving Average
Type of Moving average and Charts
Chart reading on basis on Open High (OH)
20 and 50 SMA usage for trend Identification
Vwap and its uses
What people do in Market ?

Lot of People think that Stock market is the place where we bring big
money and start earning easy or some people think that it is a side
business and it gives earning on its own. These people do not understand
that you have to do learning in stock market. This is the worlds toughest
business and Business man’s Business
How market works ?

From very early age we are taught everything in static.

(For Ex 1 2 3 4 ….). But stock market do not work like this. It is very Dynamic
which is the specialty of the business which also make it the most toughest
business. The learning of the market is to mold and change us into the
Dynamics of the market. You have to be prepare yourself to change
according to the dynamics of market be it you are scalper, trader or Investor
What to learn in market ?

The most basic yet very important matter to learn in market is to Identify
the trend. Your trading decision is based on your ability to identify trend.
But different type of trader have different type of techniques to identify
trend like Scalper, Investor, Option buyer etc.
Moving Average
Whenever you start learning anything you should start with its core and
basic which is Average of Price. One of the most effective and oldest
tool in the market is Moving Average. If you understand and read it you
can talk to price and if you understand movement according to it then
you have learnt 70% of chart reading. But it is not easy.
Type of Moving Average and charts

We have 11 type of Moving average and 17 type of charts.

To be successful in this Dynamic market we have to be Genius in all and Master
in one. To be Genius we have to understand everything to cope up with the
change of the Dynamics of market. Because you might be using a Strategy and
after sometime it wont work because Dynamics of market is changed and your
strategy is Static.
Chart reading on basis of Open High (OH) and
Moving average (MA)
Price and chart are like Body and soul, one cannot be without another. To
identify the trend we must see Both price and MA. If price is rising and
MA is rising that means Market is in uptrend, and if price and MA is falling
that means Market is downtrend.
Uptrend Downtrend
Open High or Open low is a condition where price of Open and High/low is
same. OH/OL act as resistance and support respectively. Whenever price
goes near Previous Support/resistance of OH/OL it might reverse.
Identifying trend using 20 and 50 SMA

It is seen that whenever Price trades above both 20 and 50 SMA, Market is
Bullish and Vice-versa. Whenever Price goes above the Cross-over of both
SMA’s its very Bullish and Visa-versa. This Cross-over is known as Golden
Cross-over

Golden Crossover Uptrend Golden Crossover Downtrend

Vwap and its uses
Vwap (Volume weighted average price) is a tool made only for Intraday. It shows
the average price traded in a day. It is generally entry point (station) to initiate
trade. It can be used in all tradable instruments. Generally whenever price trades
below vwap it should not be bought and if trades above vwap it should not be
sold, but it is not 100%. There are other thing to consider while watching vwap
Below vwap Above vwap Range bound
When Market opens do not jump (New trader), Market opening is done by
retailer and closed by Smart money. Let the market trade for an hour and
then take the decision. Best would be let the market trade for 3 hours
because by then trend will be very clear and movement might be
incoming after 3rd candle.
Part of learning
We are trying to learn Price behavior through use of vwap in Intraday. Not
everyday is tradable. There are other things that we have to see with
vwap to understand what price want to do.
For ex in the case below as we can see even with OL and 1 hr close and
trading 3+ hr above vwap, Price has fallen down. We have to learn and
understand that if Price has to be bullish as OL indicates, It has to break
its High.. In such case if you are in buy side, exit if price unable to break
high and sustain
This is another case where price traded below vwap for 3 hors and did not
close below low such days such be avoided and if incase one has shorted..
One should exit at vwap