Works Best in Trending Markets with Volume Confirmation
| Strategy Type | Trend Following / Volume-Weighted Moving Average System |
| Market Outlook | Works Best in Trending Markets with Volume Confirmation |
| Risk Profile | Defined by VWMA Cross or ATR Stop |
| Reward Profile | Unlimited in Direction of Trend |
| Time Horizon | Swing Trading to Position Trading |
| Indicator Type | Volume Weighted Moving Average (VWMA) |
| Signal Type | Buy When Price Crosses Above VWMA; Sell When Price Crosses Below |
| Primary Instruments | STI ETF, DBS, OCBC, UOB, SINGTEL, CapitaLand, Keppel |
| Trading Hours | 9:00 AM - 5:00 PM SGT |
| Recommended Timeframes | Daily for swing trading; Weekly for position trading |
| Currency | SGD |
| Default Settings | VWMA(20) - Standard setting for SGX stocks |
| Liquidity Note | Works best on liquid stocks with consistent volume |
| Typical Holding Period | 1-6 weeks per trade on daily timeframe |
SMA treats all prices equally. VWMA weights prices by volume - high-volume prices have more influence. VWMA better reflects where institutional trading occurred.
Start with VWMA(20) for daily charts. This is the standard that balances responsiveness and reliability. Use shorter (10-14) for active trading, longer (50+) for position trading.
The difference between VWMA and SMA reveals institutional activity. VWMA > SMA means high-volume buying (accumulation). VWMA < SMA means high-volume selling (distribution).
VWMA works best on liquid stocks with consistent volume. Avoid using on low-volume or illiquid stocks where volume is erratic. For those, use regular SMA instead.
Best entry: Price crosses above VWMA + VWMA > SMA + Above-average volume on signal day. All three confirm institutional buying.
Divergence % = (VWMA - SMA) / SMA × 100. Positive = accumulation (bullish). Negative = distribution (bearish). > +1% is strong bullish; < -1% is strong bearish.
Use fast VWMA (10-14) and slow VWMA (20-50). Buy when fast crosses above slow. Sell when fast crosses below slow. Both are volume-weighted for better signals.
Yes. VWMA signals are most reliable when accompanied by above-average volume. Low-volume crosses are less trustworthy. Look for volume at least 1.25× average.
In uptrend, VWMA acts as dynamic support - buy pullbacks to VWMA. In downtrend, VWMA acts as resistance. These levels are volume-weighted, making them more significant.
Hybrid approach: Exit half when divergence turns negative (VWMA < SMA), trail rest until price crosses below VWMA. This protects profits while allowing winners to run.
VWMA Oscillator = (Price - VWMA) / VWMA × 100. It measures how far price is from VWMA. Values > +3% are overbought; < -3% oversold. Use for mean reversion signals.
Compare current volume to 20-day average. High regime = > 1.5× average. Normal = 0.75-1.25×. Low = < 0.75×. VWMA signals are most reliable in high-volume regime.
Track % of stocks with VWMA > SMA (accumulation). > 70% = broad institutional buying. < 30% = broad selling. Use for market timing and sector rotation.
Yes. Create bands using VWMA ± 2× standard deviation of (Price - VWMA). Upper band = overbought; Lower band = oversold. Trade mean reversion at bands, trend continuation at VWMA.
Adaptive VWMA adjusts period based on volatility. Formula: Period = Base × (Average Volatility / Current Volatility). Shorter in high vol, longer in low vol. Recalculate periodically.
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