So V WAP is actually a very powerful indicator as long as you remember these criteria, so you must remember from all my videos that I leave my charts very clean when trading the only indicators I use are V 1 and volume. What I do not rely on any indicator for entries and exits V WAP is something I look at where I'm gauging the overall strength of the stock. It's an indicator, that's extremely useful when trading large cap stocks, as well as identifying potential long traps and short traps. When trading small cap penny stocks, which is what I'll be talking about in this video, as well as some very nice, long and short setups for beginner traders to get started and, of course, all the important criteria to look out for.

As long as you remember to tap the like button for the YouTube algorithm, thank you very much, my friends. So V WAP stands for volume, weighted average price and the reason is such a powerful indicator for day trading. It's because it takes into consideration both the volume and the price into calculations in the most general definition, v WAP indicates a strength of the stock, whether there's more buying volume or selling volume. So if a stock is trading above V, WAP think it's considered bullish, because the majority of the volume are the buyers bit in a stock higher and vice-versa.

If a stock is trading beneath v1, then it's considered bearish. So that's why traders like to use V WAP cross as a trend reversals indicator for them to go long or short. So, let's take a look at this example here, what we call the V WAP cross long setup, so this stock, spce Virgin Galactic stock was very beaten down on the daily chart sold off from $ 30 all the way to 2000 in three days, and of course One of the reasons for the sell-off was the earnings miss and the overall condition of the market. So, on this day, as you can see, with a very beaten down daily chart, you can see spce open around the lows around 1950s and then very quickly.

Cross over v, WAP with volume and volume, is a very important criterion for this view across long setup. So make sure you make note of that and once spce cross this V, we can see it run up from twenty dollars to twenty one, fifty and then quickly pulled back so once the be-what indicator is crossed over it could act as potential support. Again, it's always going to work a support, not always remember, of the criteria we mentioned earlier. It has to hold with volume.

So if the stock selling volume around this level, where s PCE is holding around 20 40 s 2050s is relatively high, then maybe this V WAP may not have held a support. Then the stock would have broken down, but on this particular day you can see the selling volume was decreasing slowly and on a while. The stock is holding steadily above V WAP. So if you didn't get a load on the stock, when you first cross over V WAP, then this area is what we call a vo uphold.

This could be a potential long entry as well, and your stop loss would be some room beneath view up. It's really important, though, to know to not set your stop right on V WAP, because if you do it that way, then L goes where the market makers could very easily. Take you out we'll talk more about this topic later on so hold on tight, now, keep in mind this V, WAP reclaim long setup could sometimes take a while to work out. It all depends on the float of the stock, the overall market condition and the volatility.

If it was a low float, penny stock, like this example here, sometimes we can see the stock, reclaim, P whap and then very quickly shoot up just seconds later. In this case, spce is a larger market cap stock, but it's one that's pretty volatile and can give us traders a lot of range, which is why I love trading the stock, low or short. You can see. The stock is forming higher lows about V.

Walk all the while the bottom buying volume is increasing, and eventually we see a volume squeeze in a stock breaking out higher above 21, 50s and all the way to $ 24 and then climbing, even higher later on. That's just one example of via WAP reclaim long setup but make sure you're taking into consideration other criteria such as the daily chart, the volume intraday, as well as the overall market condition. Another important note to mention is that this setup sometimes works best in the afternoon time around what we call power hour around 3 o'clock to 4 p.m. market time.

I generally avoid trading midday or in the afternoon, but this loan setup is one I actually like to trade. So you can see this example here apt. This stock was trading around V WAP all morning until around 11:00 a.m. wave broke down.

Now, if you remember what said earlier once the stock crosses beneath V, WAP treaters, consider it short term. So that's why the stock was selling off from $ 19 to $ 18. But something very interesting is happening here. Midday! Yes, the stock is beneath V WAP.

So it's technically bearish and yes, the volume is pretty low, so it's considered choppy. But if you look at a stock from a bigger timeframe, overall, you can see the stock is holding its lows, meaning that it's holding a lower range from around 16 80s to $ 18. But it's not breaking down the gap and going even further down trending, while miss indication isn't 100 % guaranteed because nothing is 100 % guaranteed in day trading. But this is what we call a potential short trap where you see that keep the stock beneath V WAP.

For extended amount of time with low volume to attract short sellers piling on too short a stock back down to $ 14 for $ 15 and near about 1:30 to 2:00 o'clock is where you see some volumes starting to pick up, and that's where things starting to Get interesting you can see that was starting to form a higher low trend beneath the you up, and you can see apt. The stock retest vo up a couple of times but got rejected and over always just kind of chopped around the indicator. For a couple of times, eventually, you see the stock breaking above V WAP and starts holding and once vol home, saying that's where the squeeze happens. So all the shirts that were complacent, holding a stock for a potential date fate now they have to buy to cover, as you can see, the volume from the new buyers coming in to buy the stock in a short sellers buying to cover squeeze the stock.

From $ 20, all the way to $ 28 once it breaks above V WAP, and because this stock apt is part of the crazy sector hype. That's going on right now we seen a stock going higher all the way to $ 33 after-hours. Now, with this afternoon, loan set up there's still a few important criteria you need to watch out for first is the volume like we talked about earlier. Second, make sure you tap the like button at the bottom of the video and third make sure you see the stock holding the lows and consolidating beneath view up for an extended amount of time.

This is an important criterion to make note of, because if a stock just keep some down trending and making lower lows, then there's less likelihood of the stock actually reclaim the WAP and breaking out in the afternoon. It's probably just gon na keep them no down trending and going all the way back down to the Chateau. Next, let's talk about the V WAP break down short setup. Like we talked about earlier once a stock cannot hold V.

Whopping starts breaking down. Think it's considered very short-term. So let's take a look at this example here, Neil you can see the stock after it breaks out in the morning. It pulled back to support level around V WAP.

So if you are lonely in a stock using V WAP as an over/under level, to look at that's holding right now at the moment, but once the stock breaks beneath V WAP, you can see a drop even lower and testing the opening price ideal me you want To see the stock retest, this V WAP level for a couple of times and still fail to hold they'll make this breakdown a more convincing short. So you can see the stock neo tries to hold V WAP support around 376 level. You can see the game has some short-term bounce, but then the bounds was very short-lived and a star quickly got rejected again and breaking down v WAP level. That will be one important criteria.

Criterion. Quick English lesson here, plural is criteria. Singular is criterion. Thank you to my lawyer subscribers for teaching me English and grammar.

Hey, remember I'm ESL here I said I could trade, but I never said I could do math with spell or tell you jokes, that's actually funny so anyways. I don't want to just short any view. Op break down, ideally one. I want to see the stock bounce about the you up a couple of times and then really quickly got sold back down so later on.

You can see neo try to reclaim V walk during mid-day, but also got rejected again so that to me, if I was shorting a stock, this would be potential short entry as well in the risk, would have to be some room above V. Wap again, you don't want to put it right on view up, because you're, probably gon na get chopped up, and you can see that this stock, thus eventually reclaim V later on in the afternoon and after the reclaim eventually broke out higher. So this will be just like the afternoon. Reclaim long set up that we talked about earlier V.

Wap is a very powerful indicator as a general support and resistance guide, and it tells us a relative strength of the stock short term, but with the rise in popularity of V WAP, the L goes in the market makers have adapted to using V WAP in order To trap traders or to take their stops out, like we talked about earlier so MRNA, this stock was a perfect example of L goes using V WAP. In order to take out stops last week, you can see it in every single wick right here. You see the stock tries to break above you up, but really quickly gets slammed back down, but at the same time, even after multiple rejections, the stock was still holding really well beneath V WAP, instead of selling off like we talked about earlier, this stock was literally Just shopping around v, WAP and taking out people stops long was short. It did that early on around 10 o clock in the later around 2 o'clock as well.

When you see it literally attempted to break out, but then got pulled back down the movi WAP and stopped out all the law stop losses. So we see a stopping everyone out only to do a grinding, higher lows and they're starting to reclaim and doing a Power Hour run later um. This stock was very algo driven. You can either just avoid it.

Long was short like I did after some attempts, or you just have to give it a lot of room blow more short, especially around VIN WAP. If you choose to trade it that's why I mentioned earlier, do not set your stops right on V WAP and really it's just too easy to get stopped out either long were short on every single wick. Yes, this V WAP indicator is very useful for us day. Traders but make sure to use it, alongside with volume, the daily chart and taking consideration the overall market conditions.

If you want to learn more about other indicator, setups such as the MACD in the RSI pair or how to use V WAP along with an IE MA, make sure to check out this video. Thank you guys so much for watching. As always, I'm the humble trader and I'll see you guys next week.