At this time, purchasing EASY Bot items is not available to all members. Read more - how to get access to purchase

Volume Weighted Average Price

What is Volume Weighted Average Price (VWAP)?

The Volume Weighted Average Price (VWAP) is a trading benchmark used by traders that gives the average price an instrument has traded at throughout the day, based on both volume and price. It provides traders with insight into both the trend and value of the instrument. VWAP is calculated by summing up the total dollars traded for every transaction (price multiplied by the number of shares traded) and then dividing by the total shares traded.

How VWAP is Calculated

The formula for VWAP is:
  • VWAP = (Cumulative (Price * Volume)) / Cumulative Volume
This calculation starts at the beginning of the trading day and ends at the close. The cumulative price-volume products are divided by the cumulative volume to provide the VWAP.

Applications of VWAP

VWAP is used by traders and institutions in various ways:
  • Institutional traders use VWAP to ensure they are executing large orders at the best possible average price without significantly impacting the market.
  • Retail traders use VWAP as a trend confirmation tool, where prices above VWAP indicate a bullish trend and prices below VWAP indicate a bearish trend.
  • VWAP is also used to identify support and resistance levels dynamically.

VWAP vs. Moving Averages

While both VWAP and moving averages provide average price information, VWAP incorporates volume, making it more reflective of the actual market activity. Moving averages, on the other hand, simply average the price over a set period without considering the volume.

VWAP in Trading Strategies

Traders often use VWAP in their strategies:
  • **Mean Reversion**: Traders might buy when the price is below VWAP and sell when it is above, betting on the price reverting to the mean.
  • **Trend Following**: Traders might use VWAP to confirm trends, buying when the price is above VWAP and selling when it is below.
  • **Support and Resistance**: VWAP acts as a dynamic support and resistance level, helping traders to make decisions on entry and exit points.

Advanced VWAP Variants

There are several advanced variants of VWAP:
  • **Anchored VWAP (AVWAP)**: Unlike the traditional VWAP that starts at the beginning of the day, AVWAP can be anchored to any point in time, providing flexibility in analysis.
  • **Moving VWAP (MVWAP)**: This version works like a moving average but with volume weighting, useful for longer-term analysis.
  • **VWAP Bands**: Similar to Bollinger Bands, VWAP bands use standard deviations to create upper and lower bands around the VWAP, indicating potential reversal points.

Limitations of VWAP

Despite its usefulness, VWAP has some limitations:
  • **Intraday Only**: VWAP is typically reset at the start of each trading day, making it less useful for longer-term analysis.
  • **Volume Dependency**: In markets with low volume, VWAP might not be as reliable.
  • **Lagging Indicator**: Like all moving averages, VWAP is a lagging indicator and might not react quickly to sudden market changes.

VWAP in Automated Trading

VWAP is widely used in automated trading systems:
  • **Execution Algorithms**: Many execution algorithms use VWAP to minimize market impact and achieve better execution prices.
  • **Trading Robots**: Robots can be programmed to trade based on VWAP signals, automating the process of buying and selling based on predefined criteria.

Conclusion

VWAP is a versatile and powerful tool in the trader's arsenal, providing a more accurate reflection of the market's average price by incorporating volume. Whether used for trend confirmation, support and resistance, or in automated trading systems, VWAP helps traders make more informed decisions. 🚀📈

Allow me to introduce you to the VWAP Gedhusek, a piece of code masquerading as a trading wizard. Apparently touted as the 'best tool for day trading'—at least according to its creator, Krystof Zak. Sounds like the perfect recipe for success, wouldn't you agree? But hold on to ...

Release Date: 21/03/2024

Welcome to the potentially exciting world of the Weekly Session Lines With VWMA! Think this could be the answer to your Forex prayers? Spoiler alert: it might just be another color-coded labyrinth. Developed by Nithin Paul Elbin Sudakar Paul, this indicator claims to combine week ...

Release Date: 22/10/2024

Is the Multi Anchored VWAP the magic bullet for traders seeking to master market dynamics, or just another overhyped indicator? As we peel back the layers of this intriguing tool developed by Brian Derich, we invite you to challenge your own perceptions of its effectiveness. Prep ...

Release Date: 10/06/2022

Are you ready to elevate your trading with Sweet VWAP MT5? This indicator claims to unlock institutional trading insights and improve your investment accuracy. But does it actually deliver? Dive into this critical review where we dissect every claim, weigh user feedback, and comp ...

Release Date: 01/04/2023

Ah, the VWAP With Alerts MT4 indicator, another shiny object to distract traders from the riveting world of candlestick patterns! This ‘simple’ VWAP tool comes with alerts, which is fantastic for those who enjoy notifications more than actual market analysis. Let’s see if t ...

Release Date: 02/12/2023

VWAP Cloud promises to be the neatest shelf display of trading analytics — but is this tool the holy grail or just a shiny object to tempt unsuspecting traders? Let's dive in and unpack the layers of this indicator, with three levels of skepticism, of course. Because who wouldn ...

Release Date: 28/04/2020

Is VWAP RSJ the Holy Grail of Forex trading, or just another shiny object? This article peels back the layers of this trading system, examining not just its mechanics but also user sentiment and performance compared to its peers. Prepare for a critical look that could challenge y ...

Release Date: 18/02/2021

When it comes to trading tools, VWAP With Alerts may have the bells and whistles, but can it truly deliver the goods? Let's dive into what makes this tool tick (or alert, in this case), without getting lost in a sea of marketing jargon. Spoiler alert: It's free and comes highly r ...

Release Date: 16/11/2023

The VWAP Indicator purports to be a trader's guiding light, but is it truly reliable? This article dives deep into the intricacies of the VWAP, revealing both its strengths and its pitfalls through critical analysis. Join us as we sift through user reviews, compare strategies, an ...

Release Date: 23/04/2020

Ah, Sweet VWAP — the promise of clarity amidst the chaos of the Forex market! Discover where the big players trade, and conveniently ignore the cacophony of your average price charts! But, will this indicator truly change your trading game or is it another flashy tool in a sea ...

Release Date: 21/04/2023

VWAP Simple

Easy Rating: 5/1

MQL Rating: 4.03/37

Ah, VWAP Simple! The magical formula that dances around numbers like a jittery trader on caffeine. Promised to tell you what the price should be, but can it really save your trading day? Join me as we plunge headfirst into this labyrinth of calculations and user opinions. Will VW ...

Release Date: 24/01/2019

Is Full VWAP MT4 the holy grail of trading tools, or just another flashy indicator in the crowded digital marketplace? Spanning from its foundation in volume-weighted analysis to the many flattering reviews it garners, this tool strives to claim its space in the hearts of traders ...

Release Date: 11/09/2021

Isn't trading supposed to be exhilarating? Yet, not all indicators bring joy — some more resemble the dull hum of a broken calculator than a potent trading ally. Enter Touch VWAP, a tool that flips the script on the traditional, clunky VWAP! Imagine having the power to calculat ...

Release Date: 29/01/2024

Welcome to the whimsical world of VWAP Bands WTC, where the Forex market dances to the beats of volume-weighted averages and price deviations! Ever felt lost in the sea of trading indicators? Fear not! This guide promises to unveil the secrets of VWAP Bands in a way even your pet ...

Release Date: 14/04/2023

Ah, the Forex market. A whimsical playground where dreams of riches dance with the grim reality of losses. Enter the Blahtech VWAP MT5, your shiny new toy that promises to be the magic wand of trading! With promises of accurate average prices over time and a slew of features pack ...

Release Date: 30/05/2023

Ah, the world of Forex trading—a place where dreams are made, and sometimes shattered, faster than you can say 'pip.' Enter the Full VWAP MT4 indicator, a tool that promises to be your guiding star in this chaotic universe. But does it really live up to the hype? Let's dive in ...

Release Date: 11/09/2021