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Why I Started Using This Day Trading Indicator (the best!) - YouTube
Channel: ClayTrader
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why am I using this indicator in my day
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trading of stocks well I'm not going to
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build drama I'm not going to try to
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build up any suspense because it's
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behind me right now but the indicator
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that I have started to use and I'm
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absolutely loving is the volume weighted
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average price or more famously known as
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the v-wap
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so why am I using the V web I'll get to
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that in a little bit but first the
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confession on my part and this actually
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has a whole lot to do with trading in
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general because if you're newer or maybe
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you're not then if you're not new you
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already know trading is very
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psychological very emotional but I got
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to just come clean and make a confession
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I got way too stubborn in my ways I got
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way too my ego got too big and I've
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heard about the v-wap over and over
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again in fact maybe you're saying okay I
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already know what this is so I'm just
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watching this video because I want to
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know why you're going to use it which
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I'll get to but the point is yeah I've
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heard about it no I'm not using that no
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not nope nope nope and I just got so so
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stubborn when I should have just started
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using this indicator a long time ago
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so you know what work on that clay don't
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be so stubborn and as you as a Trader
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like I said the little miniature lesson
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here you know don't be stubborn don't
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maybe are you being somewhere stubborn
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somewhere else in your trading I don't I
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don't who knows maybe somewhere else in
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your life but don't be stubborn because
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like I said I've been using it I've been
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absolutely loving it it is a great great
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indicator to use now maybe you have no
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idea what the v-wap is so I want to go
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through a quick little lesson but this
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is also going to explain why it actually
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works and why I am using it so what is
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the volume weighted average price well
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let's just first look at what an average
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is so what we have here
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is a situation where we have the volume
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right so how many shares are traded
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traded what we'll trade it at a certain
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price right
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So In traditional
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you know averages if you have something
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that
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occurs
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at ten dollars
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so and then you have something that
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occurs
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at twenty dollars you would say okay
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there's been two purchases somebody
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bought it ten somebody bought it twenty
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and the normal average would be well the
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average means that is fifteen dollars
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right because that's just right in the
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middle that would be the normal average
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nothing complicated there right think
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back you gotta add up 10 plus 20 then
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divide by two and you got 15. so that is
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the average but what happens if I add it
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in this detail here
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what happens if I said that well
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actually at 10
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there were 100 shares so the volume
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at ten dollars when somebody bought 100
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shares and then what if I told you all
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at twenty dollars though
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somebody bought bought ten thousand
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shares
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is the average price really fifteen
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dollars now on the surface yeah yeah it
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is fifteen dollars but when you add in
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volume and the kind of the quote unquote
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impact that it has well the impact is a
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lot more up here at ten thousand at
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twenty dollars so in other words the V
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web is going to be telling you yeah no I
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don't really care about that 15 number I
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care about something much much closer to
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twenty dollars because that's where the
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vast majority of the volume actually
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took place
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which is quite brilliant actually that
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that's that's fantastic that makes a
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whole lot of sense so why does this
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actually work though and where is all
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this coming from what is it that people
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believe and I'm not saying this is not
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how it doesn't work I'm just saying that
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I'm sure there's more to it than just
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this but like I said from a broad
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standpoint
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there's no doubt in my mind that this
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plays a role in you know the big money
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commissions Wall Street institutional
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trading all that they're using this to
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help figure out and Define one word
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and that one word that is trying to be
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defined is good
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now what do I mean by good well if you
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are a institution if you are some big
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firm and you have a client that says I
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want 500 000 shares of
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Facebook
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of Apple of Netflix of insert any
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company you want
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well that's what institutional Traders
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are going to do they're going to go and
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buy those 500 shares for their client
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but their client wants what what would
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you want it when you buy when you buy
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anything you want a good price duh but
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that brings up the question well how
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though is good being defined
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so yeah you want
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a good price but how do they Define that
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what's the v-wap and the way that works
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is
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going back here we have actually I'm
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going to use yellow because if you start
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watching my live trade videos you're
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going to see a little dotted yellow line
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that is the v-wap so you're gonna have
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this
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and that is just representing the V web
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so what is defined as good or bad well
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let's stop and think about this what
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would be good if if they came to that
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person and said hey guess what
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the majority of the shares we bought
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we're down here
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well that that is
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that's fantastic why well because the
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volume weighted average price the
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average price when you factor in volume
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was way up here so but but Mr client we
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were able to get you we were able to get
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you less than what the average person
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was buying that's gonna have a happy
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client right when you can go and say I
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got you less and that's also going to
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get the trader extra bonuses and they're
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going to get your rewards and stuff like
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that because they were able to keep the
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client happy when you keep the client
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happy they give you more business and
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that's just business 101. now the other
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part is what happens if
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people are buying up there
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how's the client going to be feeling in
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this situation
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I mean if you go to the client say yeah
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you know we got you the 500 000 shares
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but it was actually we paid more than
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what the average price out there was
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wait you paid more you paid more than
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what the average that's not going to
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make the person happy that's not good
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but you don't know what good is unless
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you have some sort of standardized thing
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and the standardized thing again goes to
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the v-wap
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so how does this pertain to trading well
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what is going to happen
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in theory this there's no such thing as
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a Holy Grail so like I said this is just
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in fairy this is what people believe and
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I'll get to that in a second but what
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happens as the price moves away from
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this area well oh wow it's below the V
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web I can I can impress I can put a
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smile on my customer's face so there is
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going to be binding
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why is there going to be buying again
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it's going to make this the customer
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happy now I'm not trying to tell you
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intelligence but what does buying do
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well buying causes prices to rise right
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So eventually what is going to occur the
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price is going to rise back up to the
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v-wap now the problem here is that if
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the price goes up above the V web no
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what's what's happening well the further
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and further it goes above V web
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there's going to be less and less what
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there's going to be less and less buying
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right because wait a second I don't want
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to be buying up there for my client I
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want a smiley face I don't want them
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frowning and mad and sad so I I'm not I
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mean they'll buy some right because I
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mean if it's 500 000 shares their their
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end game is to try to keep it below here
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but the further and further it gets
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above that area
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there there's not going to be as much
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buying pressure so when if there's not
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enough buying what happens well
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selling pressure is eventually just
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gonna take it back down and the price is
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going to return to the v-wap
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so that is why
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prices below tend to rise back up prices
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above tend to rise back down because
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it's all a function of if you think
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about that institutional Trader who only
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cares about his Christmas bonus or his
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bonus in general or how good of a price
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he's getting
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and think about that how good of a price
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he's getting how good of a price being
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defined as relative to the V web well
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then of course he's going to stop buying
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the further it gets up there and selling
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will eventually bring it back down but
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the further it goes below yeah he's
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going to start buying which brings the
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price back up and then to bring up some
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you know terminology this is why the V
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web when the price is below it tends to
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act as resistance and this is why when
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the price is above the V web it tends to
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act as support keyword being tens this
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is not guaranteed it's just a general
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philosophy so why am I actually using
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this
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well one word
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belief
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but more importantly because like I said
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I I'm sure some of you if you're selling
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like clay the V what happened what do
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you mean you're just now starting to use
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it I mean it's like everybody uses the V
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web everybody everybody uses it for
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these reasons you just explained you
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why are you now just using it
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because I told you like my ego got in
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the way I got stubborn that's why but
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why does it why why everybody loving it
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why should you be using the view app I
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don't know if any of this stuff is true
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but you know what enough people out
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there believe it to be true and when you
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have enough belief we have this
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wonderful thing in the world of trading
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known as uh
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self
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-fulfilling
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prophecy
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whereas when prices arrive or prices
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rise and get near the v-wap because
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something is supposed to be the case
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everybody just does what is supposed to
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be the case which therefore creates
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what's supposed to happen
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so if there's stuff out there where
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people are just believing and be just
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because of that belief alone like I said
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who even knows that this stuff is true
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but when enough people believe it to be
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true then it's going to work by
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definition a self-fulfilling prophecy so
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that's why I started to use it is
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because I put my stubbornness aside yes
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but why wouldn't I use it when so many
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people out there are using it and so
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many people believe in it I'm not saying
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they shouldn't believe it I believe in
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it but I just believe in it because a
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lot of other people believe in it and
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there's a self-filling prophecy I don't
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believe in it because I don't know the
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commission structure to the fine-grained
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details on Wall Street and I don't care
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I just want to know what does what does
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the herd believe what do the Lemmings
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believe what do the vast majority of
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people believe and if most people
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believe that this has some sort of
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magical mystical Powers then my question
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is okay how can I arrange that to
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benefit my Trading which is the same way
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you should be thinking and it all goes
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back to that self-fulfilling prophecy so
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that is why I'm not using the V web why
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I found some I mean it's great it's
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amazing how many times where you'll have
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this
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sort of situation where you have a v-wap
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and then the price you know is above so
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it comes down bounces and then stays
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above it and then when the price breaks
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below it ah everybody freaks out and
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then eventually it works there and then
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it gets rejected and it gets rejected it
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is crazy I mean pull up a chart look at
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the v-wap and see how many times the
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price almost perfectly bounces off that
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level so yes that is what the v-wap is
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that is why I'm starting to use it and
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this is how it all works let me know in
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the comment section though
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how long have you been using the view
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app are you gonna at least give it a try
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um some of you probably like I've been
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using it for like 10 years clay welcome
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to the party fair point but I am curious
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how long have you been using it or a
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limit maybe this is the first time
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you've ever heard of it or if you just
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have any other questions on it in
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general let me know in the comment
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section uh down below and then also hit
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the like button if you enjoyed this I
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will keep on making these sorts of
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videos if I know that people are
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interested in the quickest way for you
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to show me that you are interested is
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just to click that like button and also
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just check out the channel hopefully you
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decide to ultimately subscribe but yeah
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I'm using the v-wap I love me some
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self-fulfilling prophecies first off
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thanks so much for watching the entire
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video real quick before you go I want to
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invite you to a live webinar web class
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training workshop online event whatever
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you want to call it but it will be me
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live revealing to you what I discovered
[752]
that has allowed me to transform myself
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from being an employee to being My Own
[757]
Boss including how I had only one losing
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day out of 73 days in total I'm going to
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cover three keys that have helped me
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unlock profitable consistency within the
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markets the first key is super weird but
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in a productive type of way the second
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key is super awesome because it quite
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literally is wired into our DNA as
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humans making it very easy to use but in
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a cruel way this becomes a pitfall for
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many Traders I'll explain it all though
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including how to avoid the pitfall that
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it creates for some and yeah the third
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key when you hear it sounds way too good
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way too good to be true but it's not and
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I'll show you how it all works then at
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the end I open it up for a question and
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answer session that is again totally
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live even if you can't make the live
[800]
session please still sign up as it will
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be recorded and you can go back and
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watch the replay that I will send you
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click the image on the screen or click
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the link down in the description box so
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you can get the date and time and claim
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your spot which I should note is limited
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due to the fact that this truly is a
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live event if you have any questions let
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me know if not I'll be seeing you soon
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