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6 Tips for Trading the VWAP Hold High-of-Day Pattern - YouTube
Channel: StocksToTrade
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- Today I'm gonna be talking
about what I think is
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the best pattern for part-time
traders or new traders.
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This is an afternoon setup
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that is the most reliable
setup that I've been trading
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for over a decade.
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(upbeat music)
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Hey everyone.
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Lead trainer with
StocksToTrade, Tim Bowen here.
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Be sure to subscribe,
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ring that bell and
share with your friends.
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We're putting out a ton of videos lately,
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live videos, podcasts,
how to videos like this,
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tips and tricks.
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We're really proud of this channel,
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would love for you to
share it with your friends
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and be sure to subscribe
and ring that bell,
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so you know as soon as I go live.
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All right, today, we're gonna
be talking about a pattern
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many of you have asked me to describe.
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I believe we've got several
videos over on the channel
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where I explain it,
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but I don't think I've
ever done a screen share
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of this pattern.
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So what it is is, is that VWAP HOLD
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high-of-day pattern.
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Now it's not just the pattern.
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Something that I teach
in the SteadyTrade team
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is you have to have a why, a thesis, okay?
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There's a million, well, not a million.
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There's thousands of stocks
moving big every day.
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How do you decide which one?
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I mean, we're in the middle
of the busiest market
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I've ever seen in my 15
years of day trading.
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You need a system to break
it down and pick that one,
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maybe two, maybe three stocks,
'cause listen, this pattern,
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the chart pattern you're
looking at on screen right now,
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there's 10 setups doing this today.
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You can't trade all 10, especially
if you're under the PDT,
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especially if you're a part-time trader.
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I mean, if you're trying
to do this from work
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with the boss behind you, you
can't make 10 trades a day,
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but you can grow your
account and get over that PDT
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by focusing on this pattern.
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So I'm gonna explain the pattern first,
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then I'm gonna explain the
thesis and how you find
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the best VWAP HOLD high-of-day breaks.
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Okay, so what we've got here is SRNE.
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Let me bring up a wider chart on this,
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just to give you some context.
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I'm gonna go to a one-year chart.
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So you can see criteria number
one, former runner, okay?
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This stock has made big moves in the past.
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You can see in May,
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it went from the low
twos to 10 in two days,
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then pulled back,
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recently broke out last week at 10 again,
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nice breakout on that double top,
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which is another pattern we'll talk about.
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Then you can see it's now ripped,
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hitting the high of the day,
probably closes the day at 20.
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You can look back.
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We're recording this summer
of 2020, but that being said,
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I've got a former runner stock.
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Also it's in the hot sector, okay?
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This is a Corona virus-related play.
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That's why it moved big back
in May when they had some news.
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Other thing, ridiculous
volume, tons of buyers.
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I still remember that day back
in May when this stock traded
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500 million shares in one day.
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I mean, that is unusual.
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I mean, I know I've
got all this gray hair,
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but we did not see anything
like the kind of volume
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we're seeing right now.
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500 million shares traded
on a low float stock
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with dubious news.
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But that shows you that
there's a lot of buyers,
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shows you there's a lot of eyeballs, okay?
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Just like I will never
forget that day in May,
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there's a lot of day traders
that remember that day.
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Hence, the reason this thing
is breaking out so strong.
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So those are the criteria
you're gonna start with.
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Next thing you're gonna look for, again,
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is that press release,
that continued news.
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SRNE is notorious for
putting out press releases,
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press releases, press releases.
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Then you're looking for
that big move in pre-market.
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Stock was up nicely in pre-market.
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You're looking for that 52 week breakout.
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Nice on the daily.
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Nice on the intraday.
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I know I'm talking fast, but
if you play this video back,
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I want you writing all
these criteria down.
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Now, if you don't have
time to write 'em down,
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the great thing about the
SteadyTrade team is I have
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worksheets that we step right through
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that have all these criteria.
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So check out the SteadyTrade team.
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You get access to all of my worksheets
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and you won't have to
listen to my fast talk
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and write everything down.
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That means that big gainer early,
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now the stock breaks out in the morning.
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You can see that big move
this morning at 10:00 AM.
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It then pulls back and starts
to consolidate above VWAP.
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Now, what is VWAP?
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Number one, check out a
lot of our other videos,
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I talk about it.
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Some of you, if you're a
veteran of the channel,
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you're probably sick
of hearing me say VWAP,
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but it is the single most
trendy indicator out there.
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There's hundreds of technical
indicators out there.
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As far as I know, everyone,
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everyone in day trading in
the last five or so years
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is focused on VWAP.
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What's great about that
is it tends to become
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a self-fulfilling prophecy.
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Now, what is VWAP?
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It's basically the way I put it is
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it's an amalgamation of value and price.
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Basically it's acronym
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for volume-weighted average price.
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And the two indicators you hear me say
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all the time to focus
on, price and volume,
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price and volume, price and
volume, price and volume.
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Now that's what's great about VWAP.
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It's an indicator, that is exactly that,
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a combination of price and volume.
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And you know that when
a stock is above VWAP,
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particularly in the
afternoon at a 52-week high,
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trading unusual volume, in a hot sector,
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they tend to break out in the afternoon.
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Buyers are in control.
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That's why the stock is above VWAP.
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Now vice versa, if you're
short biased, big gainers,
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VWAP fails great afternoon short pattern.
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We'll save that for another
video, but you can see SRNE,
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notice kind of had a trip,
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well, not a triple, it
broke the triple top,
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but there was a double top
at 18 early in the morning,
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as well as just before noon.
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So now you know that there's resistance
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on the intraday chart,
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but yet the stock's
still trading high value,
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we get those volume candles
and it's above VWAP.
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So now, as you head into
that 2:00 PM window,
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you can see on my system
clock, it's 1:30 PM right now,
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but remember, the 2:00 PM
window I talk about is a window.
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It's basically afternoon,
12:30 to like 3:45.
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I say 2:00 PM is kind of a shorthand.
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And you can see right there
when it breaks that top
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at 1:03 PM rips to the upside,
almost while as of right now,
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a dollar a share higher
and probably continues
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the breakout before I can
even finish this video.
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Then what you're looking
to do is you would stop out
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on that fail of the intraday support level
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down there in the low seventeens.
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So you've got that kind of bracket idea.
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You've got support down here.
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You've got resistance up here.
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When that stock breaks through
18, you've got a solid setup
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based on all those criteria I listed.
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Now, doesn't mean it's guaranteed to work.
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VWAP fail or VWAP breakouts might be,
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not might be, I think they
are my favorite pattern,
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but they don't all work.
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But what's great about this simple support
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and resistance idea is you know,
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if it breaks back down
to those low seventeens,
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it's headed back towards VWAP,
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the idea of failed, you stop out.
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You don't hold stocks that break support,
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just like you wanna buy
stocks that break resistance.
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So great example on SRNE
of all of the criteria
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that I tell you to focus on.
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So be sure to have a process, okay?
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And many of you might ask, well,
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how do I start with the process?
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Take notes, log data, spreadsheets.
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I'm a big fan of Evernote.
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You see me using it every
day on the daily lives
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that I do on social media.
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It's a great way to log your data.
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You can screen save charts.
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You can drop 'em into Evernote
or heck, back in the day,
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I still have binders over there
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of charts that I used to print.
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Data, data, data.
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That's how you find a
setup that works for you.
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That's how I found this
pattern six or seven years ago,
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was I started to recognize, wait a minute,
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every time these big
gainers in a hot sector
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hold above VWAP and the market's strong,
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they tend to break out in the afternoon.
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That's why I call it my
favorite part-time trader
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or new trader pattern.
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Alright, everyone,
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be sure to check out the SteadyTrade team.
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I know I talk fast on these videos.
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I go through a lot, but I
also know everyone's got,
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it is YouTube and everyone's
got a limited attention span.
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What's great about the SteadyTrade team,
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it's two webinars every
day, morning and afternoon.
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And in that morning webinar,
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we're talking about stuff like SRNE,
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so, you know, four, five hours in advance,
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so you can be that part-time trader,
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you can jump on on the
webinar in the morning,
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take your notes, build your
walk list, and be like,
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hey, if SRNE breaks the height of the day,
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we got a solid setup,
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we talked about it in
this morning's webinar.
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And again, you can see new
high of the day, 19 incoming.
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I should just keep this video rolling
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and see if we can get 20.
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That's the power.
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Oh, look at that.
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Maybe we will.
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So anyway, thanks everyone.
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Be sure to ring that bell,
watch the archived videos.
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Check on SRNE.
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This video is being
recorded on August 10th.
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Go back and let's see what
SRNE did on August 10th.
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Drop me a comment below.
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Probably does 20 plus.
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Let's see if I'm right or wrong.
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Have a great day everyone
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and we'll see you on the next video.
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