VWAP & SQBT STRATEGY

VWAP
VWAP Strategy Video Explanation:

https://youtu.be/erA_wAjUh0k

Explanation of vwap strategy:

-Indicator used : vwap (volume weighted average price)

Vwap indicator itself takes into consideration volume weight (time) and price. Hence, no other indicator
is required.

-Time Frame : 15 minutes

Vwap is an intraday indicator so a small time frame is used. Works best on 15 minutes time frame,
however, if you are comfortable, you can try on 5 minutes time frame as well. Strategy says 15 minutes
so if you deviate, do your back-testing and then deviate.

Two words are used here. Pvwap and cvwap.

Pvwap is previous day end of the day vwap.

Cvwap is current day vwap.

Pvwap can be obtained by plotting vwap indicator on chart and looking where it was plotted at 3:30 pm.

Cvwap is obviously current day vwap which can be obtained by plotting vwap indicator.

Applicability of the strategy : all instruments (stocks, indexes, commodities, currencies) . Works best on
fast moving stocks and Nifty Future and Bank Nifty Future.

So the strategy says :

-If the instrument is trading above pvwap, it is bullish and we look for a buy entry

-If instrument is trading below pvwap, it is bearish and we look for a sell entry

-buy entry - any 15 minute candle that crosses cvwap and closes above both cvwap and pvwap, buy
entry will be above high of that candle.

-sell entry - any 15 minute candle that crosses cvwap and closes below both pvwap and cvwap, sell entry
will be below low of that candle
Target : NF - 30-35 points, BN 90-120 points, crude - 30 points, others - 1-1.2% from entry level

SL : NF - 25 points, BN 60 points, crude - 20 points, others - 1% from entry level.

Back-testing of this strategy cannot be done on any software, you will have to do it manually.

Answers to common queries and other tips :

1. Fake breakout cannot be totally avoided. However, with use of price action knowledge, one can
observe each candle and its movement and then take a decision whether to continue the trade or quit.

2. Agreed that strategy doesn't work on range bound days but whether a day is range bound or not that
we get to know only during the day. No way to identify beforehand if a day will be range bound. One can
only predict.

3. This strategy gives more than 60% results and with 1:1 Risk reward ratio, it is excellent. You can do
your maths.

4. I personally avoid trading a day after trending day as mostly it is a range bound day. You guys can take
a tip from here.

5. Avoid trading on election days and or RBI event days as fluctuation is high. If one is new and cannot
manage fluctuations, you might end up losing capital.

6. It is ideal to risk 1-2% capital in your trade. So if your capital is say 1 lac, max risk should be 2000.
Hence you can trade in one lot of NF (25*75= 1875)

7. As already mentioned, strategy can only be back tested manually.

8. High beta stocks are fast moving stocks. I will update list of the same here in a while.

9. I am also a working trader. If one is ready with levels and uses bracket orders, one can very well trade
alongwith job.

10. If you are new to this, do paper trades and then start with one lot.

Answers to some other common questions :

1. We don't use any other indicator except vwap. If you want to use, you can use on your own discretion
and comfort.

2. Whether to take all the trades generated as per vwap or not totally depends on your risk appetite.

3. For crude trade, target is 30 points and SL is 20 points from entry level.
4. In order to scan stocks to trade as per vwap, take following as a guide

- if you are totally new, trade only in NF first

- if you're a little experienced in NF, trade in high beta stocks

- if you have knowledge about PA, short list stocks that are about to breakout/breakdown

Basically, manual scanning is best scanning.

5. Pvwap is nothing but vwap at 3:30 p.m. on previous trading day. Simply draw a horizontal line and
you're good to go.

6. Please avoid questions on anything apart from vwap

7. Please don't generalize anything unless you have proof of it.

8. Avoid questions which can be googled, like, is tomorrow a market holiday

9. Avoid strategy related questions during market hours as all admins are taking trades while helping
you all here. Please respect their time as well.

10. There is no holy grail in stock market. More the number of hours you spent in front of screen, more
confidently you can take trade.

11. Save your capital first.

Trades compilation:

https://drive.google.com/file/d/18X-5ZEV3N-tqzzoIqRIPKKtV3gAK_cRK/view

Trading GAP using VWAP:

https://drive.google.com/file/d/1bjGwir6BAaUVyKwWiHE0nszkLX5mPzzD/view?usp=sharing

SQBT
SQBT Strategy Video Explanation:

a. Video in English - https://youtu.be/oyDQOhD1mXY

b. Video in Hindi - https://youtu.be/7dQn8MZhOrg

SQBT Explanation:
Squeeze is nothing but Narrow Trading Range of any financial instrument.

Break out from squeeze zone has similar effect of spring held under compression. Spring will expand
violently after it is released from the compression zone.

Same spring phenomena is applicable for any financial instrument trading in squeeze zone.

Most often break out from this squeeze zone leads to strong move in either of direction.

Squeeze breakout has following added advantages over classical break out:

1. Squeeze breakout is non-directional trade, Trade can be taken in any direction based on break
out direction.
2. Squeeze breakout offer higher rewards with tight stops.
3. Squeeze breakout works excellent on Index and leading stocks.
4. Squeeze break out can be easily identified without using complicated chart patterns.
Trendlines etc.
5. Squeeze breakout is easy to Trade without keeping eyes on chart and even easy to automate.

Squeeze Zone:

Here, I am taking help of Candle stick patterns to identify Squeeze zone.

Combination of following candle stick pattern is considered as Squeeze zone for this article.

1. IB (Inside Bar) and NR7 (Narrow Range 7) candle

2. IB (Inside Bar) and NR21 (Narrow Range 21) candle
3. 3 Inside Bar or 3IB
4. 3 inside of Inside Bar or 3IIB
 NR7 + IB & NR21 + IB
Inside Bar (IB):

Inside Bar is Candle formation in which last candle range (High & Low) is completely inside the range
(High & Low) of previous candle.

Candle which is completely inside its previous Candle is called Inside Bar and previous Candle is called
Main Candle.

NR7 Candle:

NR7 stands for Narrowest Range of last 7 bars. Which means, any candle which has narrowest range
in last 7 bars is called as NR7 candle.

NR21 Candle:

NR21 stands for Narrowest Range of last 21 bars. Which means, any candle which has narrowest range
in last 21 bars is called as NR21 candle.

We will be displaying example of NR7 + IB in this article, you can trade NR21 + IB in similar fashion.

Below is Jubilant Food stock Daily chart, where candle marked with A is main candle followed by Inside
bar, which is also NR7 candle.

Candle A (Main candle) has high of 1440 and low of 1407, whereas Candle B has high of 1430 and low
of 1410. Which means candle B ‘s range is completely inside candle A’s range and that’s reason candle
B is called Inside Bar.

Upon observing range of last seven days it is found that Candle B has lowest range in last 7 days, and
hence it is NR7 candle.
Positional Trade set up:
For Squeeze, we look for Candle which is meeting criteria of Inside bar (IB) as well as Narrow Range 7
(NR7).

Once I get above set up, trade is taken based on Main Candle High and Low value.

Buy Entry: Few points above High of Main Candle which is followed by IB +NR7

SL: Few points below Low of Main Candle and reverse the position, means square off the long position
and short the stock. Now High of main candle will be the SL for this new reverse position.

Note: Carry the position overnight only if it is in profit. Avoid carrying if in loss.

Target: 1st target - 1.5 times range of Main Candle from entry point

2st target - 2 times range of Main Candle from entry point

Sell Entry: Few points below Low of Main Candle which is followed by IB +NR7

SL: Few points above High of Main Candle and reverse the position, means square off the short
position and go long. Now low of main candle will be the SL for this new reverse position.

Target: 1st target - 1.5 times range of Main Candle from entry point

2st target - 2 times range of Main Candle from entry point

Intraday Trade set up:

Buy Entry: Few points above High of Main Candle which is followed by IB +NR7

SL: 1% from entry price

Target: 1st target - 1.2 % from entry price

2st target - 1.5 % from entry price

Sell Entry: Few points below Low of Main Candle which is followed by IB +NR7

SL: 1% from entry price

Target: 1st target - 1.2 % from entry price

2st target - 1.5 % from entry price

Note 1: If Sell trade is executed and hits SL then prices move towards buy level, then do enter the
trade

Note 2: If Buy trade is executed and hits SL then prices move towards sell level, then do enter the
trade
Below is chart example of Squeeze break out Positional Trade. (Please calculate intraday SL and
Targets as per given percentages above)

On 19-July -2018 Jubilant Food made Inside Bar Candle, which in turn was also NR7 Candle.

Therefore, combination of 18-July -2018 Candle (A- Main Candle) and 19-July Candle (B- Inside Bar +
NR7) formed Squeeze.

On 20-July -2018 Jubilant Food broke Main candle high, which triggered Buy signal @ 1440. That Trade
work out very well and made high of 1499.

Main Candle formed on 18-July-2018 had range of 33 points (high 1440- low 1407), Hence first target
level is around 1.5 x 33 points from entry level.

1st target = 1440 (entry level) +49.5 (1.5 X 33 –Main candle range)

1st target arrived = 1489.6 (Which was met on Intraday only).

Sell Trade shall be taken same way, in case of break of Low of Main Candle.
 3IB & 3IIB
Torrent Pharma – 3IB example

Tata chem 3IIB example

In both the above examples of 3IB and 3IIB, note that it’s a 3 days pattern. Stock must have qualified
for NR7+IB or Nr 21+IB based on first 2 days and then if on third day the candle has not broken first
day candle (Master candle) high or low then it might be a 3IB or 3IIB depending on the fact that the
third candle has broken high or low of the 2nd candle or not.
Positional Trade set up:
For Squeeze, we look for 3 Candles together which are inside Main candle.

Once we get above set up, trade is taken based on Main Candle High and Low value.

Buy Entry: Few points above High of Main Candle which is followed by IB +NR7

SL: Few points below Low of Main Candle and reverse the position, means square off the long position
and short the stock. Now High of main candle will be the SL for this new reverse position.

Note: Carry the position overnight only if it is in profit. Avoid carrying if in loss.

Target: 1st target - 1.5 times range of Main Candle from entry point

2st target - 2 times range of Main Candle from entry point

Sell Entry: Few points below Low of Main Candle which is followed by IB +NR7

SL: Few points above High of Main Candle and reverse the position, means square off the short
position and go long. Now low of main candle will be the SL for this new reverse position.

Target: 1st target - 1.5 times range of Main Candle from entry point

2st target - 2 times range of Main Candle from entry point

Intraday Trade set up:

Buy Entry: Few points above High of Main Candle which is followed by IB +NR7

SL: 1% from entry price

Target: 1st target - 1.2 % from entry price

2st target - 1.5 % from entry price

Sell Entry: Few points below Low of Main Candle which is followed by IB +NR7

SL: 1% from entry price

Target: 1st target - 1.2 % from entry price

2st target - 1.5 % from entry price

Note 1: If Sell trade is executed and hits SL then prices move towards buy level, then do enter the
trade

Note 2: If Buy trade is executed and hits SL then prices move towards sell level, then do enter the
trade
We will be displaying example of 3IIB in this article, you can trade 3IB in similar fashion.

Below is chart example of Squeeze break out Trade.

On 21-Aug -2018 and 23- Aug-2018 Tatachem made Inside Bar Candles within Main Candle of 20-Aug-
2018.

Therefore, combination of these 3 candles has formed a squeeze setup.

On 24-Aug -2018 Tatachem broke Main candle high, which triggered Buy signal @ 715.3. That Trade
work out very well and made high of 733.15.

Main Candle formed on 20-Aug-2018 had range of 17.55 points (high 715.3 - low 697.75), Hence first
target level is around 1.5 x 17.55 points from entry level.

1st target = 715.3 (entry level) +26.3 (1.5 X 17.55 –Main candle range)

1st target arrived = 741.6

Sell Trade shall be taken same way, in case of break of Low of Main Candle.
Please note above strategies are best for Swing Trading for 3-5 days and shall be implemented with
High Beta stocks like Axis Bank , Adani Enterprise , DLF , Rel Infra , Rel Capital , Tata Steel , Tata Elxsi ,
Tata Motor , Idea , SBI , Canara Bank , BOB , BOA , Indiabulls Real estate , Indiabulls Housing Finance ,
Just Dial , LTHF , Ashok Leyland , BEML , Jubilant Food , Hindalco , JSPL , Vedanta ,Jet Airways , Indigo
, Yes Bank , M&M Finance , Bajaj Finance , DHFL etc

We shall be posting Daily OHLC data file on our Telegram Channel: Stockengineer.

Link: https://t.me/Stockengineer

That Daily OHLC data file have dedicated column for Candle type, from where combination of NR7+IB,
NR21+IB, 3IB, 3IIB can be easily obtained.

Most traders find it difficult to find list of stocks for next day Intraday trading. With above scanned list
it is very easy to find stocks for next day Intraday Trades as well as with fixed entry level.

Squeeze break out strategy trades can be planned well in advance with proper entry, exit and SL
levels.

Squeeze pattern works very well with Index Like Nifty and Bank Nifty and also works very well with
weekly chart.

I hope Squeeze Break Strategy will help you guys in taking confident trades and make trading Journey
little easy. @sanstocktrader
 Inside Bar (IB)
Inside bar is Candle formation in which last candle range(High & Low) is within previous candle
range(High & Low). High of candle is lower than high of previous candle and low of candle is higher than
previous candle.

Candle which is completely inside its previous candle is called Insider Bar(IB) and previous candle is
called Main candle.

Logic: Price is in compressed range and range breakout can lead to blast in either direction.

Recommended Timeframe: 1 Hour

Entry: Break of High(for long)/ Low(for short) of Inside Bar(IB)

Target/ SL: Same as mentioned for VWAP strategy. Risk takers can revise SL to high/low of inside bar.