VWAP keeps coming up in trading talks and I’m a bit lost on it.
I see it on charts, but I’m not clear on how it can be useful. Is it crucial for trading, or just another tool that may not matter much?
Lost 300 bucks last month ignoring VWAP on a GBP/JPY trade. Price was way below the line and I went long anyway.
VWAP shows where most volume traded at during the day. When price moves far from it, there’s usually a pullback coming.
Now I check if price is stretched from VWAP before entering any position.
Volume Weighted Average Price shows the average price paid for a stock during a specific time. When the price sits above VWAP, buyers tend to control the market. Conversely, when it falls below, sellers usually take charge.
It performs best on higher timeframes since it might lag on quick trades, making it less effective.
Many institutional traders pay attention to VWAP, so it often serves as support or resistance.
VWAP represents average price based on volume. I rely on it for timing trades.
VWAP calculates price weighted by trading volume throughout the session.
• Acts as dynamic support/resistance
• Helps identify fair value zones
• Most effective on 1-hour+ timeframes
Price above VWAP indicates bullish sentiment. Below suggests bearish momentum.