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What is VWAP
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What is VWAP

  #1 (permalink)
LIOR
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What is VWAP

Hello everyone I want to ask if someone can explain what is VWAP and how to work with it?

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  #2 (permalink)
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  #3 (permalink)
Elite Member
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liorzuk View Post
Hello everyone I want to ask if someone can explain what is VWAP and how to work with it?

If you like to learn something about Volume Weighted Average Price, this thread might serve as a good starting point:

https://futures.io/elite-circle/5117-using-vwap-volume-weighted-average-price-your-trading.html

You might also look at http://en.wikipedia.org/wiki/Volume-weighted_average_price

There are many other threads concering the use of VWAP, I'd suggest using the forum search function in order to receive more information.

"If you don't design your own life plan, chances are you'll fall into someone else's plan. And guess what they have planned for you? Not much." - Jim Rohn
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  #4 (permalink)
Market Wizard
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This post by @Fat Tails may be the best answer to your question:

https://futures.io/elite-circle/25791-toolbox-2013-trading-session-5.html#post305189

More info is available via the Search box.

Bob.

UPDATE: just saw that @Daytrader999 posted another resource ahead of me. Also a good one.


Last edited by bobwest; January 11th, 2014 at 12:32 PM. Reason: Just saw a prior post that answered the question.
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Market Wizard
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liorzuk View Post
Hello everyone I want to ask if someone can explain what is VWAP and how to work with it?

Hi liorzuk

the question is very good - as Daytrader999 and bobwest have said - there are many sources here on futures.io (formerly BMT).
Only to point out that VWAP is one of the major indicators to "see" the price which is the MOST accepted
over a time. Often price is coming back over and over again - just to this phenomen level named VWAP.

GFIs1

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Market Wizard
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Although i know what is a VWAP, i never really understood why it is said the VWAP is often used by institutions to grade their traders. What does it mean? The idea to use the VWAP to grade myself is unusual. Anyway, there is always one more thing to learn i suppose.

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Market Wizard
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trendisyourfriend View Post
Although i know what is a VWAP, i never really understood why it is said the VWAP is often used by institutions to grade their traders. What does it mean? The idea to use the VWAP to grade myself is unusual. Anyway, there is always one more thing to learn i suppose.

sometimes it does even more than just grade

when orders (left at the traders discretion) are spread over time, could be several hours, the whole day or even more days, the vwap is used to determine how well the trader executed that order. if the execution price of a buy order is below the vwap, that's a good price. above the vwap not so.

some traders guarantee the vwap as the execution price. so if the price is better than the vwap, the trader makes a profit. if it's worth, the trader takes the loss.

you can see, in the world of trading, the vwap is an important member

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  #8 (permalink)
 R.I.P. 1987-2018 
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I use vwap in a vague way like a sailor would use a compass and the real map is volume profile. It's important for me to see how well price is moving to or from the vwap which gives me an idea of which direction to trade in. It's also important to see if price has reacted well with the vwap and/or has been resting on it or it's deviations. I haven't had much success with making trades directly off the vwap as the sole reason for my trades unless it was already an advantageous trade to begin with based in combination with other reasons. It's a good visual indication that plugs into the back of my brain almost subconsciously when making decisions because it overlays a lot of space and appears the same on all charts.

Good to use with Volume Profile / Market Profile

R.I.P. Joseph Bach (Itchymoku), 1987-2018.
Please visit this thread for more information.

Last edited by Itchymoku; January 11th, 2014 at 08:10 PM.
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People can explain what it is, but the only way to learn in trading is hours and hours of observation.

Load up this little gem with a 5 min chart and just watch how price behaves around it.


https://futures.io/download/ninjatrader-7/indicators/674-download.html?view

It is typically the main pivot for the day. Generally, you will go long above it and short below it.

This and Y close are my most closely watched areas


AJ
Nashville, Tennessee


"Life On The Edge of SR"
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  #10 (permalink)
Market Wizard
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How Do I Use VWAP

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liorzuk View Post
...explain what is VWAP and how to work with it?

..the second part of your question is not really answered yet.
Thus I want to give you an example of my attempt using VWAP in trading:

1) Drawing a horizontal line in the chart of where the VWAP (of yesterday's trades) ended at the end of day.
2) Observing the first hour after the opening (initail balance) in order to see what actual price is doing:
a) if price comes back (up or down doesn't matter) to touch yesterday's VWAP again - we might see a ranging day
around VWAP
b) if price comes back but does NOT touch yesterday's VWAP - price should continue into yesterday's direction to
move away from VWAP of yesterday to make a moving day

Try it
GFIs1

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