VWAP orders are used by Independent Small Funds Managers. IF a Small Fund or Small Asset company has 3 billion or less assets under management, the SEC classifies them as NOT a professional side entity.
This is because most independent Small Funds Managers have no Financial Degree, no professional certification aka CMT, CFA etc.
These managers often know less about the inner workings of the stock market than the average retail trader. It is wise to check to see the dollar value of a small fund and make sure it has more than 3 billion in assets as these managers have minimal experience, education, and usually no certification.
The small funds managers became enamored with the VWAP order as an order that could be placed several days to weeks ahead and then trigger when volume surges.
Unfortunately, that can often cause major sudden whipsaw action. especially intraday and pose much higher risk of sudden huge run downs when buyers evaporate.
The 2010 FLASH CRASH that stunned the financial world was an error on the part of a Fundamental trader who accidentally hit the VWAP order type rather than the TWAP order type for selling futures he had decided to sell. The VWAP order quickly caused a major stock futures sell off especially for the SP500 futures. Then the VWAP caused a systemic spreading of selling into the stock market and options market.
During highly stressed market conditions VWAPs triggering can drive prices down as panic among the less informed retail groups spreads rapidly. The goal is to enter a sell short with pro traders, rather than chasing a VWAP order that is spiraling out of control. When the VWAPs cease, then the market whipsaws or rebounds suddenly upward again.
This is just a snippet of what you need to learn about VWAPS but it is a good start for all of you. Trade Wisely
This is because most independent Small Funds Managers have no Financial Degree, no professional certification aka CMT, CFA etc.
These managers often know less about the inner workings of the stock market than the average retail trader. It is wise to check to see the dollar value of a small fund and make sure it has more than 3 billion in assets as these managers have minimal experience, education, and usually no certification.
The small funds managers became enamored with the VWAP order as an order that could be placed several days to weeks ahead and then trigger when volume surges.
Unfortunately, that can often cause major sudden whipsaw action. especially intraday and pose much higher risk of sudden huge run downs when buyers evaporate.
The 2010 FLASH CRASH that stunned the financial world was an error on the part of a Fundamental trader who accidentally hit the VWAP order type rather than the TWAP order type for selling futures he had decided to sell. The VWAP order quickly caused a major stock futures sell off especially for the SP500 futures. Then the VWAP caused a systemic spreading of selling into the stock market and options market.
During highly stressed market conditions VWAPs triggering can drive prices down as panic among the less informed retail groups spreads rapidly. The goal is to enter a sell short with pro traders, rather than chasing a VWAP order that is spiraling out of control. When the VWAPs cease, then the market whipsaws or rebounds suddenly upward again.
This is just a snippet of what you need to learn about VWAPS but it is a good start for all of you. Trade Wisely
Martha Stokes, CMT
ttrader.im/learn-tv
Learn how to use the technical patterns of each market participant for better trade planning.
ttrader.im/learn-tv
Learn how to use the technical patterns of each market participant for better trade planning.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Martha Stokes, CMT
ttrader.im/learn-tv
Learn how to use the technical patterns of each market participant for better trade planning.
ttrader.im/learn-tv
Learn how to use the technical patterns of each market participant for better trade planning.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.