The video discusses using a modified version of the volume weighted average price (VRAP) as a supportive indicator in trading. The VRAP helps to detect momentum shifts and can act as a trend indicator on short and high time frames. The line is confirmed only when it is broken, and the indicator is beneficial for scalping as well as swing trades. The video demonstrates how to use the VRAP as a trend indicator and provides an example of using it to scalp Bitcoin.
Understanding the Volume Weighted Average Price (VRAP) Indicator
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Introduction: The Purpose of this Article
The Volume Weighted Average Price (VRAP) is an indicator used by traders to determine the average price of a security when volume is factored in. In this article, we will explore how the modified VRAP indicator works and how it can be used as a supportive indicator in a trading strategy. We will also examine the features of the indicator and its benefits when used on different timeframes.
The VRAP Indicator: A Modified Version
While the VRAP indicator is not new, the modified version used by traders is dynamic and reacts to price action. It can be used as a supportive indicator in conjunction with other strategies or on its own. In this article, we will focus on how to use the VRAP indicator effectively as a support indicator in a trading strategy.
Features of the VRAP Indicator
The VRAP indicator is composed of two colors: red and green. The red color indicates that the price is below the VRAP, while green means that the price is above it.
It is important to note that the VRAP only measures and confirms a change in trend if the line is broken. Therefore, the confirmation of a change in trend should not be based on the color of the line, but rather on whether the line has been broken or not.
Benefits of Using the VRAP Indicator
When used correctly, the VRAP indicator can provide several benefits to traders. For one, it can be used as a trend indicator on short time frames (i.e., one minute, five minutes, 15 minutes). If the price is above the VRAP and has not yet broken the line, traders can use the indicator to stay in their trade longer without worrying about retracements.
Moreover, on higher time frames, the VRAP line acts as a trend direction line. If the price is not breaking the VRAP line, then traders can expect a continuation of the current trend. Additionally, the VRAP line can act as a support or resistance level when used on the four-hour or daily time frames.
Using the VRAP Indicator for Trading Bitcoin
In this article, we will use Bitcoin as an example to demonstrate how the VRAP indicator can be used in a trading strategy. In a recent trade, the trader started taking limit orders for a bounce once the price got near the 27,727,000 period.
Conclusion: The VRAP Indicator as a Supportive Indicator
The Volume Weighted Average Price (VRAP) indicator is an effective supportive indicator that can be used to track the average price of a security when volume is factored in. When used correctly on short or long time frames, the VRAP line can act as a trend direction line, support or resistance level, and confirmation of a change in trend. Understanding how to use the VRAP indicator in a trading strategy can help traders make informed trading decisions and maximize their profits.