What Is the VWAP Indicator?

Do you want to move beyond moving averages? It might be time to take a look at another great market indicator: The volume-weighted average price (VWAP).

Andrew Moran
By Andrew Moran
Edited by Taj Schlebusch

Published October 30, 2021.

When you are trading in the financial markets, a common trading benchmark that investors use is the volume-weighted average price (VWAP). This VWAP indicator strategy lets traders calculate the intraday average price using price and volume and then determine short-term trends.

What Type of Indicator is VWAP?

While it can seem like any VWAP indicator setting is based on real-time because you are looking at 15-one-minute and 15-minute charts, it really is a lagging indicator because you are pouring through previous data to navigate the stock, exchange-traded fund (ETF), cryptocurrency, or commodity.

Why Do Traders Use VWAP?

Whether you are a day trader or a market analyst, this free VWAP indicator is commonly used to cancel out the noise throughout the trading session so they can secure inexpensive prices and sell at higher prices.

But how does it remove the volatile noise from the opening to the closing bell? For one thing, the average price the investment has traded throughout the session can offer insight as to where the security is headed.

Ultimately, incorporating a VWAP indicator setting into your overall trading strategy can encourage you to employ an active or passive stance to your positions.

Is VWAP a Good Indicator?

Even if you are not a day or swing trader, imposing a VWAP indicator app VWAP indicator MT4 into your investment endeavors can provide you with price points, relative strength, and the best entries and exits. Plus, it is a far more reliable signal than moving averages because it amplifies weight to price points and high volumes.