Volume-weighted Average Price (VWAP) is an indicator that provides the average price in a trading session, using both price and volume.
VWAP is calculated by taking the dollar value of trading in any given asset and dividing it by the volume of trades during that session.
The indicator will do all of the calculations for you. But for those interested, the formula is as follows:
VWAP =
Volume-weighted Average Price (VWAP) is an indicator that provides the average price in a trading session, using both price and volume.
VWAP is calculated by taking the dollar value of trading in any given asset and dividing it by the volume of trades during that session.
The indicator will do all of the calculations for you. But for those interested, the formula is as follows:
VWAP =
∑ Volume
------------------
∑ Price * Volume
VWAP can be used as an additional confluence for trade entries, as it will locate areas where high volume has been transacted.
This can be useful for filling large position sizes with little slippage.
Of course, there are additional benefits and uses for VWAP as you will discover in this tutorial.
Key Points of the Lesson
UTILITY
Volume-weighted Average Price (VWAP) ⇒ combines price and volume.
Acts as a dynamic support/resistance line.
Can be used on all time frames.
Session VWAP is great for scalping.
IMPLEMENTATION
Activate VWAP tool on Tradingview ⇒ choose anchor period (session, weekly, yearly..).
Use VWAP together with confluence such as Fibonacci, POC, VAH, VAL.
Anchored VWAP ⇒ flexible time periods using significant pivots.
PRACTICAL EXAMPLE VWAP
PRACTICAL EXAMPLE ANCHORED VWAP
TIPS & TRICKS VWAP
High time frame VWAP is a strong S/R line ⇒ expect strong reaction on the first touch.
Good confluence examples: VWAP + CC, VWAP + POC (or VAH,VAL).
Vwap can also be viewed on Exocharts and Atas.
TAKE HOME MESSAGE
VWAP ⇒ dynamic support/resistance line.
Can be used on all the time frames ⇒ session VWAP is great for scalping.
Confluence is needed.