Kenny Glick, owner of HitTheBid.com, appeared on Stocks In Translation to discuss the significance of the Volume-Weighted Average Price (VWAP) and the implications of mean reversion. Glick notes, “if you have something that’s shooting down, a lot of times, you can expect it to revert back to the mean, and the most important price of the day it’s the VWAP price.”
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This post was written by Neil Mulcahy.
I have a question is mean, reverting a, a bad thing.
Like, usually, like, if I were to think that something is going down, I would think that doesn’t sound good.
That’s bad.
But if it’s going back towards like a historical average, isn’t that kind of just like pricing in what it’s really supposed to be?
You’re right on the cusp.
Am I on it?
Am I getting it right?
You’re right on the cusp of VW?
Oh, no, I thought I’d never hear, I don’t know if it’s VW or VWA, I know I’m going w a, I’m, I’m sticking with the WAP.
I got, yeah, I gotta go with the wop.
But, uh, get into it there.
Right.
Well, that is basically your main price that things want to revert to during the day.
And then again, my godfather of Brian Shannon with multiple time frame.
VW A, you’re going to see that mean revert and over extended period of time as well.
But as the day trader, if you have something that’s shooting down a lot of times you could expect it to then revert back to the mean.
And what is the most important price of the day.
It’s the vy price.
So again, you were right there, you were skating right on the cusp, just like, just like most traders.
You’re right there.
Understanding.