Last week was quite a week!
All the different trading patterns showing up every day really kept me on my toes.
By Friday, I was definitely looking forward to the weekend, which is rare for me. I usually can’t wait for Monday to come so I can get back to trading and mentoring my subscribers.
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As I said earlier, every trading setup out there popped up last week.
The morning fader setup appeared almost every day, not just last week but also the week before.
Read my recent blog post about it. It’s an awesome trading pattern that I encourage you to learn.
Today, I want to talk about another one of my favorite patterns that consistently showed up last week, and it’s great for part-time traders or those just getting started..
Today, I’m going to walk you through an afternoon trade setup, the VWAP Hold pattern. It’s been my bread and butter for over a decade. It’s also super reliable and perfect for new traders.
By the way, VWAP stands for Volume Weighted Average Price.
Learn more about this valuable technical indicator in my article.
How to Spot the VWAP Hold
The first thing you want to look for is if it’s a former runner. A signal I love is that it’s a former runner in a hot sector, with big volume and trading near 52-week highs.
Next, we want to look for a news catalyst. And it could just be a company that loves to pump out press releases. That creates momentum.
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How to Trade the VWAP Hold
Once the news comes out, the stock will probably have a big morning gain. But hold on still… We want to wait until the afternoon to be sure this is good to trade.
We wait for what I call the “2 PM Window.” This tends to be the time when stocks make their afternoon moves.
If during the window, the stock is holding above VWAP and showing unusual volume, you know the buyers are in control.
That’s when you make your move and enter the position. Make sure to set your stop loss at VWAP.
If the VWAP Hold works out, the stock will break through resistance and you’ll see a nice gain. If not, you’ve set your stop loss to minimize your downside.
My Final Thoughts
The VWAP Hold pattern is one of my favorites.
Is it guaranteed to work every time? No, of course not. There is absolutely no setup out there that works every time. If you believe there is, then you shouldn’t be trading.
But with solid risk management, it’s a powerful tool.
If the stock breaks support, you get out. If it breaks resistance, you’re in. Keep it simple, don’t hold losers and don’t be a bag holder.
And I really like this pattern for new and part-time traders because it’s reliable, easy-to-follow, and happens often enough to keep you engaged without overwhelming you.
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Have a great day everyone. See you back here tomorrow.
Tim Bohen
Lead Trainer, StocksToTrade
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