By the end of this video, you'll have a very solid understanding of how to use the V WAP as well as several tips and tricks to use this indicator very effectively in your trades. As always, the only thing that I ask for in return is that you hit that like button. And also, if you see value in this video, subscribe for more short, sweet and simplified videos on how to trade the stock market. Ok, so the V WAP or V whap doesn't really matter is the volume weighted average price, But put simply, the line indicates the average value of a stock traded over a set time period.

So the purple line is literally the dead center or the pure average of the price value for that time period. On the chart, you point to a specific point on the chart. You could say that for example, at 9:41 A.m. PCG was trading at like 1210, but the average adjusted for the entire day at that point was 1225 ish.

So with that information, you now know that at that point in the time, at that point in time, shares were trading below average. Ok, so let's go ahead and label everything. So to start, you already know that the purple line indicates the View App line and it's the most important part of the indicator because it tells you whether or not a stock is trading below or above average for your selected time period. The top line is the 75th percentile of the average, in the lower line is the 25th percentile of the average.

Now if you think about this, in terms of an analogy on height, for example, if you're on the 75th percentile of average, you're likely to be considered pretty tall. And if you're under the 25 percentile, you're likely to be considered pretty short. Likewise, if a share price is trading above its 75th percentile, that is statistically significant and is one early sign of a more sustained upward trend. And if it's trading below its 25th percentile, a sign of a more downward trend.

But of course, these indicators don't predict price action, but are rather statistical tools to predict the probability of where the price action is going to go. Now to understand why the View App and this information is important to you on a practical basis, let's go over how it's used and what it's known for. So the View App is famous for being used by institutional investors and big mutual funds, as well as these computer algorithmic trading platforms. When your uncle Billy tells you that the stock market is rigged by those at the top, this is who he is referring to.

Now, the reason these big corporations like the View App is because these players by extremely large amounts of shares and must if they aren't careful, they could move the share price. Over all, think about it. if you're buying 200 million dollars of shares in a billion-dollar market capitalization company, this is obviously going to have a huge effect on the share price. That's also why individual traders such as you and I stay away from super low volume stocks on an individual scale because it's going to be very difficult to get into and out of positions at the price points that we want if it's such a low volume stock.

But anyways, in summary, the View App helps protect institutional investors and automatic algorithms from this problem by indicating a good position to get in based on the statistical formula employed by the View app. So to add the View app all you need to do is go to studies and then add studied and search for View app. I'm not going to show that because I have a whole video that discusses how to add it in. This video is more about explaining the View app.

So returning the PCG we can now go on and better analyze what is going on with the knowledge that we just learned. A dip below this purple View App line means the chairs are being traded below average and a dip above the Purple View App line means that shares are being traded above average. This is important because it's good to know whether or not you're buying in at a higher than average price or at a lower than average price if you're taking a position. That being said, it's not necessarily bad to buy in at a higher than average price or good to buy in at a lower than average price.

So the explanation for this is that view a blind serve as a sort of support and resistance. We look at the time span. we can see the price is trading above average and we see a dip to the View App line, but the RSI is also indicating that the stock is oversold. Now you may be wondering how a stock can be both oversold and above average in price.

Simply put, that's because when a stock is trading above, the View app that serves as support and I mentioned that earlier. As you know, when a stock dips to support, it's considered a discounted position and it's simultaneously marked as oversold on the RSI. Ok, great. So when we price dips below the View App line, that line switches to resistance and the lower 25 percent threshold serves as support.

Now this is where it gets interesting. So going back to one of the most helpful uses of these lines that they give you an early indication or a warning sign of a more sustained upward momentum. If you see an increase above the 75% tile line, that's an early warning sign of this uptrend. and if you drop below the bottom line, that's a bigger sign of a downtrend.

This makes a lot more sense when you think about the rules of support and resistance. When something breaks above resistance, that's a sign. We'll see higher highs, and when something breaks below support, that's a sign that we'll see lower lows. While this is true by definition, you must use your understanding of the RSI, the MACD and most importantly, the SMA to most accurately predict how far up or how far down these are going to go afterwards.

So at this point, you should have a good general idea of what the V whap is and how it is used. So let's go over another example to really beat this in. So let's look at Tesla. Now if we are looking at Tesla and today, we can spot many points where the V whap would have been useful.

First off, the stock price pretty much held support and traded below the view app and held about at resistance thing here as we did see several breaks above the V Whop line, but they fail to support, so that wasn't a strong indication of a continued uptrend Now when we saw this more consistent gap up later, which by the way had consistently growing real estate between itself and the SMA line, which which is why it's so important to combine your usage of other indicators. But we then saw a breaking above the V Whop line which means that this V Whop line was no longer resistance, but now serves as a support line as a reminder. When shares are trading under the line, it serves as resistance and wind shears break above the line that serves as support. Anyways, Now, as we know from the price action earlier, a break above the V whop line means that we are experiencing higher highs.

But it doesn't mean that the stock will continue up trending. But again, an early sign of a continued uptrend was this consistent gap above the SMA line. And most importantly, it is consistent over all dipping back and forth from support. Then later we saw a gap in the SMA line and a continued uptrend.

I Just want to reiterate that these indicators are never an end-all be-all of the stock market. It's really about developing a skill set and working knowledge around using all these indicators in conjunction with solid strategies and more consistent practice. Honestly, it's all about practice and learning the EFT you have to or ball this stuff like a sponge and the best way to do this is by watching these videos by watching other trailer videos. A lot of traders don't recommend you to watch other training videos, but there's just there's such.

There's such a plethora a plethora of knowledge on the Internet that you could absorb, and it's super important for your training to just take in all the dog you can as well as all of the practice. But anyways, if you have any questions for me or comments or whatever comment below. We also have the Zip Trader Circle Facebook group which I plugged a bit in the beginning, but it's really a great place to learn and it's really a great place to connect with other traders because at the end of the day, it's all about building a community and being involved in this greater training community. But anyways I Hope that this video was helpful for you and I'll see you guys in the next video.

Have a great week folks!.