🧵EMA + VWAP STRATEGY
Every trader has a go-to strategy that works best for them. My trading is all about keeping it simple stupid and revolves around two indicators - Exponential moving averages and vwap.
Here's the strategy that I utilize on nearly 80% of my trades.
EMA's are a type of moving average that places a greater weight on more recent data points.
8EMA = Exponential Moving Averages of the last 8 candle closing prices.
EMA's adjust with respect to chart time frame.
Volume Weighted Average Price - A key intraday indicator in my trading that offers the true average price based on price & volume.
Calculation: (Price x # of shares traded) / total shares traded
While I do utilize the 50EMA, the 8 & 21 EMA are most important for this strategy. Some people use the 9 and 20 which are essentially the same thing. REMEMBER: EMA'S adjust with respect to time frames.
2. Ema Crossover
3. Pullback/Retracement to the EMA's
4. Higher conviction when EMA's are above vwap for calls and below vwap for puts.
5. Entry off of 8ema taps
An ema crossover signals to me that a trend is forming. I tend to see for a call strategy the trend is stronger when EMA's are above vwap and the same for puts when EMA's are below vwap.
I never add directly into a large red or green candle extended from the EMA's bc with every large move there will always be a pullback/bounce. That's where I like to add.
1. Bearish 8/21 EMA crossover to the downside
2. EMA's below VWAP
3. Retracement to the 8EMA triggers me to add 363p
4. Price action rejects 8EMA
5. Exited for +103% 24 minutes later
As you can see here we get a bullish 8/21 crossover and a pullback to the 8ema. The vwap rejection plummeted the price and the strategy would have failed here.
More from Strategy
Start with a low capital and master all 3 phases of the market – upward, downward and consolidation. If your winning trades are >60-70%, then increase your capital.
Treat trading as a business and target similar gains. An annual profit of 25% is reasonable and achievable.
Does a restaurant change recipes every day? No.
Similarly, stick to strategies if there is a 70% success rate. If it doesn’t work for 2 months, don’t worry, it might work for the rest of the 10 months
Option buyers need more skill than sellers as they need to catch the direction at the right time.
Mitesh Sir's FUTURES BREAKOUT TRADES 101:
• How to pick stocks at right time?
• What to look for?
• Importance of BO post consolidation
• How to manage SL
• How to get huge profits
• Multiple Examples
In collaboration with @niki_poojary
Importance of Trading only BO or BD stocks by @Mitesh_Engr Sir: 👇
•Two questions to always ask:
~Why stock is going up/down and when?
~ Who is behind big up/down and when?
• Trade only stocks with Momentum
• Instant results
• Small SL or huge profits
Sir's take on how to Trade: 👇
• Observe fight between buyer & seller
• Position will be created within first 3 hours
• Operators will win
• Just find BO or BD
• Look for huge volume support
• Give company to operators
• ATP importance explained
How to take trade in Breakout/Breakdown stocks by @Mitesh_Engr Sir: 👇
• Check Support & Resistance
• Wait for 2-3 months consolidation
• Surge in volumes
• Trade on 3 min charts
• Small SL
• Keep trailing
• Always pyramid in profit
When and Why to Pyramid? By @Mitesh_Engr Sir
• Adding to winning positions
• Signals of continued strength
• Potentially large profits
• An Example of pyramiding in one of his trades
Disclaimer: I share just one stock here which may or may not be held in any of his smallcases currently. @WeekendInvestng if you still feel this shouldn't be shared, I'll take it off immediately, just let me know. Leaking any sensitive info isn't the intention here.
So firstly, I have 2 accounts in my name, one in which I hold all my smallcases and do not tamper with them. In the other account, I only buy to pyramid up on the winners. I do this so that my smallcase constitution is okay and rebalance remains hassle free.
When Alok sir adds any stock to the smallcase, I'll just observe for 1-2 more rebalances for it to sustain/lose momentum.
Now if it's rate of change remains high, and it is becoming one of the better performers, I'll wait and watch till it enters a small consolidation. Once it breaks the consolidation range, I enter.
1) Always backtest the ideas before using them in live markets. It gives confidence and conviction.
2) Always keep your risk within 2-3% (of your capital) per trade.
3) System hopping is not a good idea.
#1 IB Open Low Setup
When the market opens above/at the previous day's high, displays open-low, and OL sustains for some time.
It indicates the presence of Initiative Buyers.
Entry: Long trade above Open-Low Candle (in 10 or 15 min chart)
SL: Below open-low candle
#2 IB Open High Setup
Similar to OL, when the market opens below/at the previous day's low, displays open-high, & OH sustains for some time.
It indicates the presence of Initiative Sellers.
Entry: Short trade below Open High Candle
SL: Above open-high candle
#3 IB Open Test Drive Up
This is similar to OL, but it opens above PDH, but tests the PDH, negates all selling, and then closes above PDH.
It indicates the presence of Initiative Buyers.
Entry: Long trade above Open Test Drive UP Candle
SL: Below OTD-UP candle
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Or find options that move 1,000% in a single day/week?🤯
I made a thread going over exactly how I find these stocks BEFORE they take off 🚀
So, let's start with the software I use…
Finviz!! Finviz is a free website that I use to scan for stocks.
They have a lot of other cool features as well, but I only use their scanner.
Head on over to finviz and go to the screener
Click on the “All” tab on the top and put in the criteria in the next tweet
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✅Vol over 400k
✅Price > $20
The next scan I use is the opposite of the first one.
✅Quarter +10% to -10%
✅Week Down to Week up
This is my bearish scan for swing setups. 👇