Does not matter what you use as long as you know how to read this important piece of data
The greatest damage to existing portfolios happens in the smallest timeframe which is one hour to one week
One week is a lifetime for a derivatives trader & a typical flow of money through A WEEK which starts Friday & ends Thursday is between 1000 - 1500 CR some weeks even more
Incidentally the derivative picture paints larger volumes for the weekly cycle over the monthly cycle with crores changing hands daily.
A quick look at holdings for a week ( thurs settlement) can help in understanding which traders are profitable or which traders are to use a term from #Orderflow "upside down"
It's the " upside down" traders who create the moves in prices as they have to adjust their "inventory"
Contrary to what people think, it is not new business but existing business or old inventory which moves markets
Popular terms to describe this movement of old business or old inventory is called " short covering" or "long liquidation"
Now you know why it happens
A typical thurs in the markets has between 22 to 33 CR of contracts ( number of contracts ) traded with out fail.
An average day between Fri to wed is typically 6 CR contracts
In #MarketProfile we change our focus from the study of price to the movement of Volume .
Larger volumes inevitably mean larger change in prices which fuel more inventory adjustments creating even bigger volume.
The cycle moves.
Price behavior now becomes a by product of this inventory change
Hopefully the thread has helped you with undertand market behavior a bit more.
I am passionate about trading markets and like to tweet often on what I see
🧵You all know what VWAP is, but did you know it should be used differently depending on the market conditions?
Whether the market is zooming, dropping, or standing still, VWAP can be your roadmap.
Let's dive into how to tailor your VWAP strategy to navigate any market!
📈 What is VWAP?
Volume Weighted Average Price (VWAP) is a trading benchmark used to determine the average price an instrument has traded at throughout the day, based on both volume and price.
It's a vital tool for derivative traders looking to maximize their trades' efficiency.
🔢 How to calculate VWAP?
It’s calculated by adding up the rupee amount traded for every transaction (price multiplied by the number of shares traded) and then dividing by the total shares traded.
This gives traders insight into the market's trend and liquidity at various points