15:16
This ONLY Indicator I use to make $6284/ Day Trading
PBInvesting
Overview
This video introduces a simplified trading strategy focused on a single indicator: the Volume-Weighted Average Price (VWAP). The presenter argues that overcomplicating trading with multiple indicators leads to failure, and advocates for a clear, simple approach. The core of the strategy involves using VWAP in conjunction with pre-market highs and lows to identify high-probability entry points for both long and short trades. The video explains how to set up VWAP, defines the trading rules, illustrates entry and exit strategies using concrete examples, and highlights common mistakes to avoid.
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Chapters
- Many traders fail because they overcomplicate their strategies with too many indicators.
- Overcomplication leads to second-guessing, confusion, and ultimately, unprofitable trading.
- Simple trading approaches lead to clear decisions and better profitability.
- The presenter's success comes from a single, simple indicator, not complex systems.
Understanding the pitfalls of overcomplication helps learners avoid common mistakes and adopt a more effective, less stressful trading mindset.
The presenter mentions not using ICT, IFVGs, RSI, MACD, or Bollinger Bands, highlighting the contrast with their single-indicator approach.
- VWAP stands for Volume-Weighted Average Price, representing the average trading price for the day.
- When a stock is above VWAP, it suggests an upward trend; below VWAP suggests a downward trend.
- VWAP resets daily and is influenced by the opening price and trading activity.
- Two golden rules: never buy calls below VWAP, and never buy puts above VWAP, to trade with the prevailing trend.
Grasping the fundamental concept of VWAP as a daily average price and trend indicator is crucial for applying the trading strategy.
When a stock's price is above VWAP, it indicates buyers are in profit, increasing the chance of an uptrend. Conversely, being below VWAP suggests sellers are in drawdown, favoring a downtrend.
- VWAP can be added to charts via TradingView by searching for 'Volume Weighted Average Price'.
- Customize the indicator by disabling upper/lower bands and fill, and setting the line color (e.g., yellow).
- The core trading strategy revolves around 'retests' of key price levels.
- Key levels to monitor are the pre-market high and pre-market low.
Knowing how to configure the VWAP indicator and identify the critical pre-market levels is the first step in executing the trading strategy.
On TradingView, search for 'Volume Weighted Average Price', click it, go to settings, disable bands, and choose a color like yellow.
- For bullish trades (calls), wait for a 5-minute candle to close above the pre-market high.
- Two primary entry triggers after breaking the pre-market high: a retest of the pre-market high or a retest of VWAP.
- Enter on a pre-market high retest if VWAP is at or below the pre-market high.
- Enter on a VWAP retest if VWAP is above the pre-market high.
- A retest occurs when the price briefly touches a level and then moves away.
These specific conditions define when to enter a long trade, minimizing risk by waiting for confirmation and price interaction with key levels.
If a stock closes above its pre-market high and VWAP is also above the pre-market high, look for the price to pull back and touch VWAP (a VWAP retest) before entering a call trade.
- For bearish trades (puts), wait for a 5-minute candle to close below the pre-market low.
- Entry triggers include a retest of the pre-market low or a retest of VWAP.
- Enter on a pre-market low retest if VWAP is at or above the pre-market low.
- Enter on a VWAP retest if VWAP is below the pre-market low.
- The strongest setups ('A+' setups) occur when both the pre-market level and VWAP are retested simultaneously.
These rules provide clear criteria for entering short trades, ensuring trades are taken in the direction of the confirmed trend.
If a stock closes below its pre-market low and VWAP is also below the pre-market low, wait for a pullback to touch VWAP (a VWAP retest) before entering a put trade.
- Add the 8 Exponential Moving Average (EMA) to your chart.
- For exits, switch to a 3-minute timeframe after entering a trade on the 5-minute timeframe.
- Hold a long position as long as the price stays above the 3-minute 8 EMA.
- Exit a long trade when the price closes below the 3-minute 8 EMA.
- For short trades, exit when the price closes above the 3-minute 8 EMA.
The 8 EMA provides a dynamic exit strategy, helping traders capture profits while managing risk by exiting when momentum shifts.
After entering a call trade, monitor the 3-minute chart. If the price consistently stays above the 8 EMA, continue holding. Sell when the price closes below the 8 EMA.
- Always adhere to the golden rules: no calls under VWAP, no puts over VWAP.
- Wait for the retest and subsequent price movement (momentum) before entering; don't enter on the initial tap.
- Avoid trading when the market is flat or lacks clear momentum.
- Never trade between the pre-market high and pre-market low; wait for a clear break and retest outside these levels.
- If a trade moves against you immediately after entry (e.g., closing back over VWAP after a bearish retest), take the loss quickly.
Recognizing and avoiding common trading errors is as important as understanding entry signals for long-term success and capital preservation.
If you enter a put trade based on a VWAP retest below the pre-market low, but the price quickly closes back above VWAP, exit the trade immediately to cut losses.
Key takeaways
- Simplicity in trading strategy, using fewer indicators like VWAP, can lead to clearer decisions and better results.
- VWAP acts as a crucial daily reference point for price and trend direction.
- Trading opportunities arise from price 'retesting' key levels like pre-market highs/lows and VWAP after an initial break.
- The 8 EMA on a 3-minute chart provides a dynamic exit signal to lock in profits or limit losses.
- Strict adherence to trading rules and avoiding common mistakes are essential for risk management.
- Trading between pre-market high and low is generally advised against, waiting for a clear directional bias.
- Confirmation of momentum after a retest, not just the touch itself, is key for entry.
Key terms
VWAP (Volume-Weighted Average Price)Pre-market HighPre-market LowRetestBullish RetestBearish Retest8 EMA (Exponential Moving Average)Calls (Long Position)Puts (Short Position)Risk to Reward Ratio
Test your understanding
- What is the primary reason the presenter advocates for using only VWAP instead of multiple indicators?
- How does the VWAP indicator help determine the likely trend direction of a stock for the day?
- Describe the conditions required to enter a bullish (call) trade based on the VWAP strategy.
- What is considered an 'A+' setup in this trading strategy, and why is it significant?
- How is the 8 EMA used to determine when to exit a trade, and why is this exit strategy effective?