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TheVWAP In-depth education focusing on the market’s most overlooked technical indicator — volume weighted average price.
Why use VWAP?
By incorporating additional concepts like standard deviation bands and longer-term anchored VWAPs, you’ll start to uncover otherwise hidden levels of support and resistance that are hiding in plain sight.
Meet our founder, Zach Hurwitz.
A full-time trader since 2008, Zach has dedicated nearly his entire career to studying and using volume-weighted average price.
This calculation allows traders to determine the average price at which the stock has traded, considering the volume traded at each price level.
Traders use VWAP in several ways:
Benchmarking: Traders compare the current price of a stock to its VWAP to determine whether it is trading above or below the average price.
Execution: Traders may use VWAP as a benchmark for executing large orders. They aim to execute their trades at a price close to or better than the VWAP to minimize slippage and impact on the market.
Trend Identification: By observing the relationship between the current price and VWAP, traders can identify potential trends. If the price consistently stays above the VWAP, it suggests bullish sentiment, while prices consistently below the VWAP may indicate bearish sentiment.
Support and Resistance Levels: Traders often consider the VWAP as a significant support or resistance level. The VWAP can act as a point of equilibrium, where buyers and sellers may enter or exit positions.
