VWAP and How use it

VWAP shows the volume-weighted average price for the selected period. (Value-Weighted Average Price)

This indicator in their analysis and in trading is used by large market players instead of obsolete movings average and their analogs based on incomplete data. Large institutional investors and HFT algorithms pay attention to the level formed by this indicator.
Trading prop companies use VWAP to assess a particular instrument's strengths and weaknesses.
With its help, it is easy to visually assess the predominance of buyers or sellers in the market and move with them and not against them. Below we will show options for its use.

VWAP is calculated using the following formula VWAP = Total (Price * Volume) / Total Volume
Simple at first glance

At first glance, VWAP looks like a regular Moving Average. But how is it different?
Firstly, it is calculated not by price and time, but by the weighted average volume from the CME, FORTS, EUREX, ICE, NYSE, NASDAQ, and MOEX exchanges in price and time. This gives it the advantage of being responsive to "true" price changes in the market.
Secondly, it is calculated for a certain period, namely the period chosen by you in the platform TVT. Which is very convenient for assessing intraday situations.
Thirdly, it is possible to add square deviations + -1, + -2, + -4, + -8, which makes it possible to see a potential channel of movement.
How to apply VWAP

It is important to understand that VWAP does not predict future price movements, it shows the current situation.
With it, traders can easily understand their priority in the market.

Most often, VWAP is used to confirm the trend and as support and resistance levels in the accumulation phase of the market (square deviations).

In a downtrend in the market, if the price is below the VWAP line, then the priority should be left to sales and look for the best short .
On an uptrend, if the price is above the VWAP line, then it is a confirmation for a long trade.

The essence of this approach is not to go against the trend, but rather to help see the direction of movement.
The chart on the left shows how quadratic accumulation lines are applied in the form of support and resistance lines in a flat movement.
Crossing the price with VWAP should not be considered a signal to buy or sell, but only an additional confirmation of your trading scenario. It makes sense to wait for the price to fix yours or below the VWAP lines.
Moreover, this applies to both flat situations and trend situations (in the case of the intersection of the price chart, this does not mean a trend change.)

Culminations on vertical volumes, HFT volumes on market extremes, and cluster holdings perfectly complement this indicator.

Important! We do not recommend using this indicator separately from your trading system, only your weighted average approach to the market and risk will help you achieve trading success.
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