Last Updated on March 27, 2025 by Arif Chowdhury
Ever wondered how successful traders spot smart money activity?
You’re not alone.
Many traders struggle with understanding market movements and identifying who’s really driving the price.
Let’s crack this code together.
We’re diving into the Footprint Chart and VWAP (Volume Weighted Average Price), two powerful tools that can help you see beyond the noise.
What is a Footprint Chart?
A Footprint Chart gives you a detailed view of market activity.
It shows:
- Volume at each price level: This helps identify where the most transactions are happening.
- Buy and sell imbalances: You’ll see whether buyers or sellers are dominating.
Imagine looking at a map of where the money is flowing.
That’s exactly what a Footprint Chart does!
Why Use VWAP?
VWAP is your average price over the trading day, weighted by volume.
It’s a benchmark traders use to gauge whether they’re buying at a good price.
Here’s why it’s essential:
- Smart money often buys below VWAP: If the price is below VWAP, it indicates potential buying opportunities.
- Identifies trend direction: When price is consistently above VWAP, the trend is bullish; below, it’s bearish.
Combining Footprint Chart and VWAP
Using these two tools together can be a game changer.
Here’s how you can use them to identify smart money activity:
- Monitor the Footprint Chart: Look for areas with high volume and significant buy/sell imbalances.
- Check the VWAP: If price is near or below VWAP and you see strong buying on the Footprint Chart, it’s a signal that smart money might be entering.
- Look for divergences: If the price is moving in one direction but the volume is showing something different, pay attention. This could indicate that smart money is stepping in.
Example: Putting It All Together
Let’s say you see a significant buy imbalance at a price level that’s just below VWAP.
This could mean smart money is accumulating positions, setting you up for a potential bullish move.
Why I Trust This Approach
As a seasoned Forex trader since 2015, I’ve honed my strategy through rigorous exploration of both fundamental and technical analysis.
This approach has led me to develop a portfolio of 16 sophisticated trading bots that utilize various strategies, including the Footprint Chart and VWAP.
These bots are specifically designed for major currency pairs like EUR/USD, GBP/USD, USD/CHF, and USD/JPY, creating a robust trading portfolio that maximizes profitability while minimizing risks.
My bots trade on H4 charts, aiming for long-term gains of 200-350 pips.
What’s even better?
I offer this entire EA portfolio for FREE!
You can check it out here: Explore My Trading Bots.
Statistical Insights
Did you know that studies show about 70% of retail traders lose money?
Understanding tools like Footprint Charts and VWAP can significantly improve your chances of success.
Another interesting fact: Markets tend to follow a mean reversion pattern about 60% of the time.
This means understanding where smart money is can help you capitalize on those moves.
Tips for Using These Tools Effectively
- Stay disciplined: Stick to your strategy and don’t let emotions dictate your trading.
- Keep learning: The market is always evolving. Stay updated with new strategies and tools.
- Practice: Use demo accounts to refine your skills without risking real money.
Finding the Right Broker
To implement these strategies effectively, you need a reliable broker.
I’ve tested several and recommend checking out the best Forex brokers available.
You can find a curated list here: Top Forex Brokers.
These brokers stand out for their tight spreads and outstanding customer support, which can significantly enhance your trading experience.
Conclusion
Using the Footprint Chart and VWAP together can transform the way you trade.
By identifying smart money activity, you’re not just following the crowd.
You’re strategically placing yourself in the path of where the real money is moving.
And remember, my 16 trading bots are ready to assist you in this journey, equipped with the same strategies we just discussed.
Check them out for free and take your trading to the next level!