The Simple Way To Make Gains In This Market

We’re facing more and more opportunities every day, and the best way to focus is to narrow down your list of choices.

That’s why yesterday I stressed the importance of using high-quality, reliable setups in your trading.

What is one of my favorite patterns that fits that criteria?

Without a doubt, it’s what I call the VWAP (Volume Weighted Average Price) Hold.

There are tons of technical indicators out there, but VWAP is at the top of my list. 

Without getting into the math, VWAP is the average price of the stock during a given trading period.

It helps you filter out the noise by giving you a clear visual indicator of who’s in control—the bulls (buyers) or the bears (sellers).

And the VWAP Hold is one of the easiest strategies to learn. I’ve been trading it for 15 years so today, I’m here to teach it to you.

Understanding VWAP and the 2 PM Magic Window

VWAP isn’t just an indicator but a gauge of trader psychology. Here’s how we interpret it:

• When a stock is trading above VWAP, buyers are in control.
• When it’s below VWAP, sellers are in control.

Pretty simple, right?

One of my favorite times to watch for VWAP plays is in the afternoon, especially around 2 PM Eastern. 

I call this the “magic window” because that’s when you often see explosive moves as traders position themselves for the close.

Why VWAP Works: A Real Example From This Week

On Tuesday, Cumberland Pharmaceuticals Inc. (NASDAQ: CPIX) gave us a textbook VWAP setup. 

After gapping up in the morning from around $2.25 per share to $3.48, the stock consolidated sideways around VWAP. 

I love seeing this because it’s often a sign that short sellers are starting to pile in. They think the stock’s run is over. 

But when a stock consolidates around VWAP but still holds above it, the shorts get trapped.

And when that happens, they panic, cover their positions, and create the perfect scenario for a short squeeze.

With CPIX, we saw exactly that. 

After holding above VWAP all day, the stock spiked into the close, triggering a break of the high of the day. 

And once it breaks the high, the momentum really heats up…

Alerts start firing across trading platforms, algorithms kick into gear, and momentum traders flood in.

And speaking of alerts, our trading algorithm, Oracle, caught it too…But way before the break of the high. It sent a green buy signal in the morning when the stock was trading at $2.44 per share.

Here’s what a CPIX did on Tuesday:

Why Afternoon VWAP Patterns Are Ideal for New Traders

When I get asked what the first pattern new traders should learn is, my answer is always the same thing: “The VWAP Hold.” 

Why? 

Because the market open is chaotic…

There’s too much noise, and it’s overwhelming, especially for beginners. 

But by the afternoon, things calm down. You can narrow your focus to a handful of stocks holding above VWAP and setting up for potential breakouts.

And with tools like the StocksToTrade platform’s VWAP scan, you can filter for these setups and only focus on the best opportunities.

StocksToTrade also has tons of other built-in scans, charting, technical indicators, and more.

Right now, you can get two weeks of both the STT platform and our Breaking News Chat service for $17.

 

Grab your 14-day StocksToTrade + Breaking News Chat trial today for only $17!

 

My Final Thoughts…

VWAP is on every single chart I use…

I don’t care if I’m trading penny stocks, momentum plays, or short squeezes—it’s my go-to indicator.

Day trading is about finding the most high-probability, high-conviction setups and executing them with discipline.

And in this crazy market, you have to pare down that list to the trades with the best chance of success.

VWAP helps us do that because it shows when buyers are in control and when shorts are likely to panic. 

To learn more trading strategies like the VWAP Hold, subscribe to my StocksToTrade Advisory service today.

You’ll also get a monthly newsletter with a list of my top picks, three weekly videos with my watchlists, bonus reports, and more. 

 

Sign up for StocksToTrade Advisory right here!

 

Have a great weekend, everyone. See you back here on Monday. 

 

Tim Bohen

Lead Trainer, StocksToTrade