Alpha Mail #60
DeltaXBT, Jim's Trading Plan, and Magus on VWAP
PARTNER: THE HAVEN
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DeltaXBT is a crypto trader and investor that has been active in the markets from the age of 15. He talks risk, patience and Twitter gurus.
“Don’t let your lack of patience ruin you.
The hardest trade is no trade.”
JIM TALBOT: POTENTIAL TRADE PLAN
Keeping it simple this week, Initially, I wanted to take a short in the upper box around $22,200, which unfortunately got front-run. If it gets back up there over the next few hours, I think the EV on the short idea is reduced based on the thought process that it already rejected that region. Price should have no real reason to revisit this level before heading lower.
Now my attention turns to a possible ‘long the bounce’ scenario from my box around $20,500.
Due to ongoing negative news and CPI release, I won’t be looking to fade too aggressively. Instead, I will look for potential 30-minute or one-hour divergences into that level.
TP1 would be the underside of this current consolidation around $21,500, with extended targets back towards the $22,200 level if momentum is sustained.
Overall for the week ahead, I'm keeping my invalidations fairly tight with an emphasis on catching quick moves to minimise my time exposure in light of an upcoming volatility event.
MAGUS: VOLUME WEIGHTED AVERAGE PRICE
This is a guest article based on a recent Twitter thread from TraderMagus, introducing the basics of VWAP.
TraderMagus runs The Paragon Group educational community and was the featured interview in Alpha Mail 29.
Thanks to Magus for allowing us to reproduce this information in Alpha Mail.
Think of Volume Weighted Average Price similar to how you would a moving average; only volume is an added component.
TYPES OF VWAP
There are three types of VWAP:
Time - Daily, Weekly, Monthly, Quarterly, Yearly
Anchored - Choose the starting swing point
Rolling - Without resetting, calculates the previous X period of time
Regardless of timeframe, VWAP is highly effective in bias formation.
For a higher timeframe, VWAP’S strength is in momentum and trend following. For a Lower timeframe, VWAP is effective for identifying both momentum and reversion.
Momentum; Trend following
Momentum and Reversion
VWAP FOR BIAS
1. Price and VWAP Structure
2. VWAP Slope
VWAP FOR REVERSION
Logic: Enter into low volume and exit into higher volume
Fade outside deviations, exit at mean
Looser hard stops
VWAP FOR MOMENTUM
Logic: Enter into higher volume during momentum
Enter mean and exit deviation
Tighter hard stops