Uses VWAP as dynamic support/resistance for BP intraday trades
| Strategy Type | Intraday Mean Reversion / Trend Following |
| Market Outlook | Uses VWAP as dynamic support/resistance for BP intraday trades |
| Risk Profile | Medium - Intraday focus with defined entries around VWAP |
| Reward Profile | 1.5:1 to 2.5:1 risk-reward on intraday moves |
| Time Horizon | Intraday to 1-3 days maximum |
| Iv Environment | Works best on days with clear directional bias and adequate volume |
| Breakeven | Entry price plus spread; requires price movement from VWAP level |
| Primary Instruments | BP.L CFD via IG/CMC/Pepperstone (London listing) • BP ADR via IB (NYSE) • BP.L shares via international share trading |
| Asic Compliance | ASIC regulated for CFDs; 5:1 max leverage for individual shares |
| Trading Hours | 5:00 PM - 1:30 AM AEST (London) • 11:30 PM - 6:00 AM AEST (US ADR) • VWAP resets at market open each day |
| Australian Timing | Evening AEST trading; VWAP develops during Australian night |
| Settlement | CFDs cash settled; intraday trades avoid overnight financing if closed same session |
| Tax Treatment | CFD profits taxed as income; frequent intraday trading increases tax events |
| Australian Context | BP provides international energy exposure; VWAP trading requires active monitoring during LSE hours |
VWAP incorporates volume, showing where actual trading activity occurred. It's the benchmark institutions use for execution quality. Regular MAs only consider price. VWAP reveals the true average price people paid, making it a more meaningful support/resistance level.
Standard VWAP is primarily for intraday trading as it resets daily. However, you can use 'anchored VWAP' from specific dates (like earnings) for swing trading. The session VWAP strategy described here is intraday-focused.
5-minute or 15-minute charts are recommended. 5-minute provides more granular entry opportunities but more noise. 15-minute is cleaner but may miss some setups. Start with 15-minute, then move to 5-minute as you gain experience.
BP is highly correlated with Brent crude oil (0.6-0.8 correlation). If oil is above its VWAP (bullish) and BP is above its VWAP (bullish), signals are aligned. Divergence (BP bullish but oil bearish) reduces trade quality.
On TradingView: Open BP.L chart, click Indicators (fx), search 'VWAP', add it. Then click the settings gear and enable bands at 1 and 2 standard deviations. VWAP appears as a line with bands above and below.
Trending: Price stays consistently above (bullish) or below (bearish) VWAP; VWAP slope is rising or falling. Ranging: Price crosses VWAP multiple times; VWAP slope is flat; price oscillates between bands. First hour often determines session type.
Valid breakout: Price closes decisively through VWAP (not just a wick), accompanied by above-average volume, and holds above/below VWAP on retest. False breakout: Quick pierce of VWAP with low volume, immediately reverses back through.
Exit immediately. If you bought at VWAP support and price breaks below with volume, don't hope for recovery. The setup has failed. Accept the loss and look for the next setup. Quick exits on failures preserve capital.
US market open (11:30 PM AEST) brings additional volume as American traders enter. This can trigger VWAP breakouts or accelerate existing trends. It's often a turning point in the session - either confirming or reversing the LSE-only direction.
Generally avoid overnight holds for VWAP trades. VWAP resets at open, so the level you traded becomes less relevant. You also face gap risk and overnight financing. Close VWAP trades before session end when possible.
Institutions running VWAP algorithms spread large orders throughout the day to achieve VWAP. This creates consistent buying/selling pressure at VWAP levels, making the level act as support/resistance. Understanding this flow helps anticipate reactions at VWAP.
Use 5-minute data for 1-2 years. Recalculate VWAP for each session (cumulative). Include realistic spread (0.5-1p) and slippage (0.25p). Split data 60/40 for development/validation. Target 55-65% win rate with 1.5:1+ R/R and profit factor > 1.2.
Confluence occurs when multiple VWAP levels align - current session VWAP, prior day's final VWAP, weekly VWAP, or anchored VWAP from a significant date. Multiple institutional benchmarks at one level means higher order concentration and stronger S/R.
Volume profile shows volume distribution at each price level. High Volume Nodes (HVN) often align with VWAP since institutions execute there. When VWAP coincides with HVN on volume profile, the level is even stronger. Use both for comprehensive analysis.
Reduce trade size by 30-50% when session volume is below 70% of average. VWAP levels are less reliable with fewer trades contributing to the calculation. Consider skipping VWAP trades entirely on very thin days (holidays, between major sessions).
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