{"id":368,"date":"2021-10-26T09:28:36","date_gmt":"2021-10-26T09:28:36","guid":{"rendered":"https:\/\/gauravheera.com\/sharemarket\/?p=368"},"modified":"2021-10-26T09:28:36","modified_gmt":"2021-10-26T09:28:36","slug":"vwap-volume-weighted-average-price-indicator","status":"publish","type":"post","link":"https:\/\/assetscholars.com\/blog\/vwap-volume-weighted-average-price-indicator\/","title":{"rendered":"VWAP &#8211; Volume Weighted Average Price Indicator"},"content":{"rendered":"<h2>Volume Weighted Average Price (VWAP)<\/h2>\n<p>VWAP is a very simple indicator. It works based on the average price of the traded volume. Let us understand this with an example.<\/p>\n<p>The trades done in Infy on 2nd November 2016 between 14:30 to 14:35 are shown in the table below \u2013<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter size-full wp-image-369\" src=\"https:\/\/gauravheera.com\/sharemarket\/wp-content\/uploads\/2021\/10\/infy-nov.png\" alt=\"\" width=\"382\" height=\"163\" srcset=\"https:\/\/assetscholars.com\/blog\/wp-content\/uploads\/2021\/10\/infy-nov.png 382w, https:\/\/assetscholars.com\/blog\/wp-content\/uploads\/2021\/10\/infy-nov-300x128.png 300w\" sizes=\"auto, (max-width: 382px) 100vw, 382px\" \/><\/p>\n<p>You will see that 2475 shares were traded at 14:32. It made a high of 983.95, a low of 983, and its closing in this minute was 983.1<\/p>\n<p>Now based on this data we calculate VWAP price. For this we-<\/p>\n<ul>\n<li>Simple Price = This is the average price of the high, low, and close.<\/li>\n<li>Volume Price \/ Price (VP) = For this we need to multiply the simple price by the volume.<\/li>\n<li>Total Volume Price \/ Total VP = This is an increasing number (cumulative number) formed by adding the current VP and the previous VP.<\/li>\n<li>Total Volume = This is also an increasing number obtained by adding the current volume and the previous volume.<\/li>\n<li>VWAP = We get this number by dividing the total VP by the total volume.<\/li>\n<\/ul>\n<p>Let&#8217;s look at the data of Infy based on this-<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter size-full wp-image-370\" src=\"https:\/\/gauravheera.com\/sharemarket\/wp-content\/uploads\/2021\/10\/infy-data.png\" alt=\"\" width=\"807\" height=\"160\" srcset=\"https:\/\/assetscholars.com\/blog\/wp-content\/uploads\/2021\/10\/infy-data.png 807w, https:\/\/assetscholars.com\/blog\/wp-content\/uploads\/2021\/10\/infy-data-300x59.png 300w, https:\/\/assetscholars.com\/blog\/wp-content\/uploads\/2021\/10\/infy-data-768x152.png 768w\" sizes=\"auto, (max-width: 807px) 100vw, 807px\" \/><\/p>\n<p>You can see that this number is a constantly changing number depending on the number of transactions that are taking place at that time.<\/p>\n<h2>How to use VWAP?<\/h2>\n<ul>\n<li>VWAP is an intraday indicator. It should be used on minute charts. When you put it on the chart you will see that at 9:15 minutes there is a jump in it when you are comparing it with the previous day. This jump makes no sense. Don&#8217;t pay attention to this.<\/li>\n<li>The VWAP is an average and like any indicator based on the average, it tends to lag behind the current price.<br \/>\nVWAP is used for 2 specific reasons \u2013 to know the intraday direction and to understand the success of your order.<\/li>\n<li>If the current price is below the VWAP then the intraday trend is considered to be in a downtrend.<\/li>\n<li>If the current price is above the VWAP then the stock is considered to be trending up.<\/li>\n<li>If VWAP is between high and low, then the stock is expected to remain volatile.<\/li>\n<li>If you want to short a stock, then shorting at a price higher than VWAP is considered appropriate.<\/li>\n<li>Similarly, if you want to go long on the stock, then going long at a price lower than the VWAP is considered appropriate.<\/li>\n<\/ul>\n<h2>Using VWAP<\/h2>\n<p>Open the chart of your choice and select VWAP from the studies.<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter size-full wp-image-372\" src=\"https:\/\/gauravheera.com\/sharemarket\/wp-content\/uploads\/2021\/10\/cipla-vwap.png\" alt=\"\" width=\"876\" height=\"532\" srcset=\"https:\/\/assetscholars.com\/blog\/wp-content\/uploads\/2021\/10\/cipla-vwap.png 876w, https:\/\/assetscholars.com\/blog\/wp-content\/uploads\/2021\/10\/cipla-vwap-300x182.png 300w, https:\/\/assetscholars.com\/blog\/wp-content\/uploads\/2021\/10\/cipla-vwap-768x466.png 768w\" sizes=\"auto, (max-width: 876px) 100vw, 876px\" \/><\/p>\n<p>Keep in mind that VWAP can only be used on intraday time frames and not on EOD data.<\/p>\n<p>Once the time frame (1 min, 5 min, 10 min etc.) is selected, the VWAP is calculated and displayed on the chart.<\/p>\n<p>You can now view the VWAP with the current market price and place your trades.<\/p>\n","protected":false},"excerpt":{"rendered":"Volume Weighted Average Price (VWAP) VWAP is a very simple indicator. It works based on the average price of the traded volume. Let \n<a class=\"moretag\" href=\"https:\/\/assetscholars.com\/blog\/vwap-volume-weighted-average-price-indicator\/\"> [...]<\/a>","protected":false},"author":1,"featured_media":372,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-368","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-technical-analysis"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.2 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>VWAP - Volume Weighted Average Price Indicator<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/assetscholars.com\/blog\/vwap-volume-weighted-average-price-indicator\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"VWAP - Volume Weighted Average Price Indicator\" \/>\n<meta property=\"og:description\" content=\"Volume Weighted Average Price (VWAP) VWAP is a very simple indicator. 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