What's going on traders welcome back to the best trading indicators for beginners in 2021, part three in this video we're going to be talking about the volume weighted average price. I made a mistake in the first video regarding how you set this up, so i am going to clear that one up for you right now, so my volume weighted average price, when we add it to the chart, is already kind of preset from the way i Like it, but when you go to add it, you are most likely going to have the lower band and the upper band plotted. So again, when you go into your studies, tab - and you add the volume weighted average price - you can double click it and from there you can go in and edit it. You don't want to change any of the numbers on the top here negative two or two.

Those all are just the same. You just want to keep that the same. Now, when it comes to the upper band and the lower band you can see, i did not have mine plotted, so i'm going to go ahead and plot those for you guys update the chart. So you know what it looks like now.

So when we do this and we go in and look at the one minute chart or say you should have an upper band and a lower band, the upper band in this case is the pink one and the lower band in this case is the yellow one And the middle band is this dotted white line? Now, in my charts, i do not run the upper band and i don't run the lower band and there's reasons why and we'll get into that later, and it will make more sense, but for right now, you're going to only have your setup like this. Without the upper band and lower band, if you would like to match my screen perfectly now, i will say: the upper band and lower band can be very helpful in determining when the stock is kind of oversold and overbought. It might have a reversal. So again, you can also play with having the upper band and lower band on and you might actually end up liking it more yourself all right.

So with that being said, we're just operating off this v-wap action here, so we're gon na go over to stock tesla, because this is what we're working with on the previous video. So, in a nutshell, a lot of the times that we kind of use the v app is to help us understand direction for the day very similar to that of using the 50 and 100 moving average. When the price action is below a lot of times. The stock is going to be in a downtrend until it gets back up and through those prices.

Now this would be a good time to let you know what the volume weighted average price is. The volume weighted average price is a calculation of the average volume paid over a certain or sorry, the average volume on the day and how much um the investors have paid on the day. So it's kind of an average weighted price of ownership of stock. For the day, amongst all the investors so again, volume weighted average price is calculating in volume and the average price paid per share.

To give you an average kind of trend on the day, so in a nutshell, the way that we go about using it. A lot of times this is what ends up happening. Whichever way the stock rejects, the volume weighted average price at the open for the day is generally the way the markets are going to try to move um. You know viciously to begin with, so you know we're always looking for that big move to start the day, which way is it going to run? Which way is it going to go a lot of times? Whichever way the volume weighted average price, or whichever way the price rejects off the volume weighted average price can be a telltale into which way the markets are going to try to move their big move? To start the day that might have seemed confusing.

I hope it wasn't so we're going to kind of go over a couple stocks and review some of the good ones and some of the bad ones and you'll get the point from there. So again market opens and you will see that tesla or yes tesla spikes up. Then it comes down and you can see these candles kind of push away from it. So that would sort of be the first rejection on the day, but i would comfortably say this is the legitimate rejection where we bounce back up, try to get through the 50.

Try to get to the volume weighted average price. It fails and moves lower, and you can see we get our big swinging move down now, we're just going to kind of jump through a couple stocks to get you familiar with this we're going to hump over to i just said hump over, i meant to say Hop over, but you know we're going to go over here to facebook. So again, you will see here with facebook opens up on the day pulls down to the v web pushes up breaks above, and you kind of get your first big move now that right there is a situation where i myself, probably wouldn't even trade into it, because It'd be too hard for me to really even judge based on those two candles and just one whip through and one hold through. I myself probably wouldn't see that as a comfortable area to take a position on nonetheless, so that's a situation where what we just told you would be very contradictory, very confusing and probably wouldn't even help.

You uh all that much all right, let's hop over to another one. Let's take a look at, let's see what amd did today, so here's amd all right same sort of scenario. Market opens up kind of chopping around pushes up finally breaks through and it just kind of falls apart. So this is a situation where you don't really get a clear rejection off the v web.

You just get a little back and forth trading and then the market swings down all right. Let's hop on over, let's see what happened to roku today. So this is a good example right. You can see.

Roku starts the day chopping, the view app. Spikes up comes down breaks through pushes back to the view app 500 rejects. That would to me would be more of a safer play to try to do the v-wap rejection catching the bigger move on the day. All right, let's hop over.

Let's take a look at boeing yeah, one, second, all right so with boeing again, this is a situation where it's very iffy again market opens kind of pops right to the view app instantly down, and then you don't really get a clean cut. Rejection, probably a move that you wouldn't really get an assumption to hop in on just too quick for it to happen. All right, we're going to pop on over to neo and we're going to do this a couple more times. So here's a situation where it works, but it's a little choppy today market swings down and we get up to the view app and it rejects kind of gets through.

But just can't quite do it and eventually turns into like this wedge pattern that breaks down. So there's another situation uh where it works and you'll also notice that the price never really exceeds too greatly through the 50 and 100 in sustains it kind of falls back through and gets weak again. I want to do just a couple more examples. Let's look at uh: let's see what plug power did today, all right so plug power, this one kind of worked for the first start.

You have your breakdown, pops back into the v web rejects away, and then you do in fact get a move, but this really wasn't a big move but sure enough. It was the kind of first start of the move and the trend down for the day, and then the last thing that we will touch on is that occasionally, throughout the day, you will see the market swing close to the v-wap and kind of ride, the v-wap, As a trending support and the reason you see that a lot of the times is because again that is the volume weighted average price so that trend line you see there is typically the average ownership of the stock for the day and if that's the average ownership For the stock for the day, then it means a lot of people own the stock or generally, the volume owns a stock around those prices and doesn't really want to let that price fall below that trend. Theoretically, right because if that's the average ownership price for the day and the market starts to go below, then everybody that owns around that average price is starting to lose. So that's why a lot of times you'll see the market, try to stay above that because people don't want to lose their money.

So with that being said, ladies and gentlemen, that is pretty much everything we had to talk about on the v web. I know that seems very simplistic. Very really, that's all, but in a nutshell, that's pretty much all we use and kind of look at the volume weighted average price for at least for me. So again, thank you guys again for tuning in all, we ask to hit the subscribe button notification bell and the thumbs up as much as it can as it helps you great get these videos out to more people.

So we'll see you guys in the next one stay tuned.