VWAP Cross
Candlefocus EditorWhen using VWAP Cross, traders are looking for ‘crossovers’ between the current price and the VWAP line. If the current price crosses above the VWAP line, then the trader believes that the market is bullish, and so should enter a long position. Conversely, if the current price crosses below the VWAP line, then the trader believes that the market is bearish, and so should enter a short position.
VWAP Cross is a very popular trading strategy due to its simple implementation and relative accuracy. Traders typically look for a series of crossovers in order to filter out potential false signals, such as a single one-off crossover that can occur during times of high trading volume.
For example, if a trader sees a single crossover between the current price and the VWAP line, but the average volume of the day is high, then they may choose to wait for a second crossover that occurs in a period with significantly lower volume before entering their trade.
On the other hand, if the volume is low, then it may be best to enter the trade based on a single crossover. However, the trader should still monitor the market closely in order to ensure that the signal is authentic.
Overall, VWAP Cross is a popular and relatively effective way to identify entry or exit points in the market, as long as traders are aware of the risks in trading, such as false signals and market manipulation. With the right knowledge and vigilance, the VWAP Cross can be a powerful tool for the savvy trader.