NEWBIE is now ready to take trading a little more seriously. After a minor disaster trading with the trend and getting stopped out, he's decided to look at the "Trading with Market Statistics" Threads and has read
Part I and
Part II at least a half a dozen times. He doesn't know much about statistics but he is willing to learn if it will help him with his trading.
What he has learned so far or at least should have learned is that market direction is reflected in the relation of price to the
VWAP AND the relation of the
VWAP to the
PVP. Market data is skewed to the upside when the
VWAP is above the
PVP, skewed to the downside when
VWAP is less than the
PVP and symmetric when
VWAP ~=
PVP.
NEWBIE should be trading only in the high volume region of the price action
so for NEWBIE to enter a trade, the following conditions should prevail:
Long Entry:
VWAP > PVP and price action above the VWAP
Short Entry:
VWAP< PVP and price action below VWAP
No Trade:
VWAP~=
PVP
NEWBIE is going to embed this in his brain so that it becomes second nature.
Download the following video and see how NEWBIE fairs by following market statistics.
ER2VWAPTrade
In the next thread,
part IV, our newbie will learn about other points where he can trade