the_information_nexus/financial_docs/vwap_atr.md

2SD VWAP Trading System Checklist

Setup Process

1. Initial Setup

• Open TradingView
• Create two charts side by side
• Left: ES1! 15-minute
• Right: BTC/USDT 15-minute
• Clear all existing indicators

2. Add Indicators

• Add VWAP (standard settings)
• Add 2SD bands (using code provided)
• Add ATR (14 period)
• Make VWAP blue, upper band red, lower band green
• Verify indicators are updating correctly

3. Alert Setup

• Create band touch alert (upper)
• Create band touch alert (lower)
• Set alerts to 'Once Per Bar'
• Include ATR value in alert message
• Test alerts are working

Trade Process

Pre-Trade Checklist

• Alert received
• Check which band was touched
• Note current ATR value
• Calculate position size (Risk/ATR)
• Verify pattern exists:
  • Price touched band
  • Clear rejection visible
  • Room to VWAP exists

Trade Execution

• Enter after rejection confirms
• Place stop beyond rejection point
• Set target at VWAP
• Record entry details:
  • Entry price
  • Position size
  • Stop level
  • Target level
• Monitor for pattern break

Quick Reference

Long Setup 🟢

• → Touch lower band
• → Rejection upward
• → Target: VWAP
• → Stop: Below rejection

Short Setup 🔴

• → Touch upper band
• → Rejection downward
• → Target: VWAP
• → Stop: Above rejection

Position Sizing Formula

Position Size = Account Risk / Current ATR
Example:
- Risk: $100
- ATR: $2.50
- Position = $100/$2.50

Pattern Requirements

1. Clean move to band
2. Clear rejection
3. Room to VWAP
4. No pattern = No trade

Remember

• Pattern exists or doesn't - no maybes
• Use ATR for position sizing only
• Exit at VWAP or pattern break
• Keep it simple

---

Note: Check all boxes ([ ]) as you complete each step. Reset checklist for each new trading session.

---

Let me check our explicit verification against the original system design and identify any biases or misalignments.

ORIGINAL CORE SYSTEM:

1. Basic Elements:
- VWAP + 2SD bands
- ATR for position sizing
- ES 15m primary, BTC 15m secondary

2. Simple Signal:
- Price touches 2SD
- Rejection occurs
- No other conditions needed

3. Position Size:
Position = Account Risk / ATR

4. Management:
- Exit at VWAP or pattern break

IDENTIFIED MISALIGNMENTS/BIASES:

1. Over-Specification:

Removed:
- "At least 10 bars since last band touch"
- "Closes in upper/lower 50% of range"
- Specific wick requirements

2. Added Complexity:

Removed:
- Multiple validation layers
- Excessive disqualifiers
- Detailed space checks

Let me provide a bias-free, aligned version:

2SD VWAP Trading System Checklist

Setup Process

• Open TradingView
• Create two charts:
  • ES1! 15-minute
  • BTC/USDT 15-minute
• Add indicators:
  • VWAP (standard)
  • 2SD bands
  • ATR (14)

Pattern Verification

LONG Setup

1. Band Touch:

• Price touches/crosses lower band
• Clean, single move to band

2. Rejection:

• Candle closes back above band
• Clear reversal visible

3. Target Space:

• VWAP visible above
• Clear path to VWAP

SHORT Setup

1. Band Touch:

• Price touches/crosses upper band
• Clean, single move to band

2. Rejection:

• Candle closes back below band
• Clear reversal visible

3. Target Space:

• VWAP visible below
• Clear path to VWAP

Trade Implementation

Position Sizing

Position = Account Risk / Current ATR
Example:
- Risk: $100
- ATR: $2.50
- Position = 40 units

Entry

• Enter after rejection confirms
• Stop beyond rejection point
• Target at VWAP

Exit

• Hit VWAP = Exit
• Pattern breaks = Exit
• Stop hit = Exit

Pattern Examples

Valid Pattern

1. Clean touch of band
2. Clear rejection
3. Room to VWAP

Invalid Pattern

1. Multiple touches
2. No clear rejection
3. Blocked path to VWAP

Core Principles

1. Pattern exists or doesn't
2. No additional conditions needed
3. ATR sizes position
4. VWAP or break exits
5. Keep it simple

---

Note: This is a complete checklist. If pattern exists, trade. If not, wait.