Hello traders! Today, I want to walk you through an exciting trade and break down why it worked so well. This setup is what I call a VWAP play, and while not every trade plays out like this, when it does, it can be a real game-changer.

Understanding the VWAP Strategy

VWAP, or the Volume Weighted Average Price, is a key indicator that many traders use to determine a stock’s overall trend. On my chart, you can see the VWAP represented by the reddish line. The VWAP can act as either:

• Support when a stock is trading above it and pulls back to test it.
• Resistance when a stock is trading below it and moves up to test it.

This strategy works best on stocks that show high volatility and strong momentum.

Breaking Down the ADTX Trade

ADTX was a highly volatile stock on my radar. Here’s what happened:

1. The stock initially dropped below the VWAP.
2. It then broke above the VWAP, signaling potential strength.
3. After briefly moving higher, it pulled back down to the VWAP.
4. This is where I made my move—if the stock could hold the VWAP, I was looking to enter above the high of the previous bar.

The Entry and Outcome

At 9:38 AM, I entered the trade just as the stock confirmed support at the VWAP and started to push higher. And wow—did it ever take off! The stock quickly surged, reaching 10:35 in no time.

This is a textbook example of a VWAP bounce play—using VWAP as a dynamic support level to time an entry with minimal risk and high reward potential.

Final Thoughts

Do all VWAP plays work this perfectly? Of course not. But when they do, it’s a thrilling experience. The key takeaway is to look for setups where VWAP provides clear support or resistance and to be ready to act when the trade aligns with your strategy.

If you’re looking for more trade ideas and real-time insights, join us in the Trade Ideas Trading Room, where we analyze setups like this every day!

Subscribe Today and use Use Promo Code BARRIE15 for 15% off

Happy trading!