Day Trading Blog: Trading Plan: Better Entries with VWAP, Prior Swing highs & lows and Value Area

Monday, August 15, 2011

Trading Plan: Better Entries with VWAP, Prior Swing highs & lows and Value Area

POC was lower so entry at the value area high was value in the GBPUSD:

Besides looking at the VWAP line for volume confirmation the value area high and low as well as the POC (point of control) play an important rule for re-entries, as the price either bounces off these levels or not.

Nevertheless by just looking at the POC you can tell if it will be most likely an up day or not.

Prices can bounce off the POC but in general they should go from value area low to value area high on a strong up trend (see the screenshot with the 3 markets YM strongest, S&P + fdax is weaker therefore they might not fill the value area)

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Trading Rules:

how to trade profitable? with KSE. knowledge, strategy, execution.
Knowledge: You need to buy low and sell high. So I wait for the price to first go to a prior support level on the daily, 4h, 1h chart.
Strategy: Timing is important so I trade when there is a good setup on the dax, s+p, nasdaq or oil market. My goal is to make few trades with high risk reward, that is archived by either holding a trade till the market closes or reaching a level that sets up a counter trade.
Execution: Usually there is only a 20 point risk involved, so I try to get into a prior support level on the 10 min chart and automatically set a stop and multiple take profit targets.
All the little details how to trade better are listed here but I like to keep it simple: just enter the market at prices with a target that it at least 3 times the initial risk.

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