Hello everyone this is Zeeshan Manzoor,I am her e after a long time. I was busy in my studies and took break from steem. I really missed that time and anxiously waiting for this time to again continue my journey of life which is incomplete without steem.
Volume and VWAP: A simple way to understand the market
What is the scale?
If you've ever wondered why a currency gets stuck at a certain value or moves up/down so quickly, a price index may be the answer. This is a tool that tells you how many coins are trading at different prices. This allows you to understand the prices that buyers and sellers were using.
Size category:
- Point of Control (POC): The specific location where most sales are made.
- Value Center: The area where about 70% of the sales are made.
- Low Cost Areas: Areas where sales are declining. This means that there is a possibility (significant change in price).
What is VWAP?
VWAP (Volume Weighted Average Price) plays an important role in trading. It tells us the average price for each day taking into account the sales. Think of it as a marketing mirror.
Why is VWAP important?
- If the price is higher than the VWAP, the buyer is responsible.
- If the price is lower than the VWAP, it means the sellers are strong.
- It helps to determine whether the transaction is taking place, i.e. whether the money will go in that direction or not.
The Role of Volume Profiles and VWAP in Understanding Breakouts
Sound Quality:
Important for Sequencing
Price trends allow you to predict where prices may break.
Noise zone:
This is where prices often fluctuate.
Low-density areas: These are the areas where prices move the fastest.
Steam/USDT Example:
If we look at the Steem/USDT chart, we will see that prices are either stable or rebounding in overvalued areas. At the same time, there may be more waste in less densely populated areas due to fewer resources in these areas.
VWAP and Violations:
VWAP is used to determine the breakout.
If the stock is above the VWAP, it indicates that the stock is bullish.
If the price falls below the VWAP, the value of the stock may decrease.
For example:
When the steam was bullish, when prices were above VWAP and share prices were rising, it was a sign of strong growth. This was a good entry for investors, especially as prices rose after settling near VWAP
How do you develop a marketing strategy?
Focus on each:
- Step 1: Understand the market.
Observe the sound level and identify the highest and lowest noise levels.
Then write the VWAP on the chart.
- Catching losses.
If prices are approaching an area of low supply and continue to rise with inflation, prices are likely to fall.
Watch the price stay above the VWAP.
Choose a good time to enter.
Wait for the price to break out of the low price area and stand above the VWAP.
If it fails after assembly (the value is fixed), even better.
- Think about the downsides.
Set the damage threshold below the POC, or lowest value point.
If the price goes below the VWAP, exit the trade.
- Set a profit target.
Consider the range that can exist behind a low-frequency sound environment.
Profits are sold when prices reach a peak.
How to prevent false positives?
What is a lie?
False reversals occur when prices appear to break a support or resistance level but then immediately pull back. This can cause huge losses to investors.
## How does audio and VWAP help?
- Audio:
If the share price is low during the split, it could be a fake split.
If the price stops near the peak, be alert immediately.
- With the help of VWAP:
If the price cannot sustain above the VWAP, earnings are weak.
Combine VWAP with sound to get a better picture.
Some helpful resources:
- Observe the sound as it propagates. The higher the pitch, the louder the sound.
- Check price correlation with VWAP.
- Perform multiple time series analyses to understand trends.
- Avoid trading in low-quality markets.
Proper use of volume and VWAP ratio in breakout trading helps to understand the market better.
Sentiment: It helps to determine support levels and resistance levels.
VWAP: Determine the break-even strength.
Combining the two is the best way to strategize with volatile assets like STEEM/USDT. Be patient, wait for the right time, and be al
ert in every way. This will not only increase your profit margin but also prevent losses due to fraudulent claims.
Source
All these images are taken from pixabay.