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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
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.
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.
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
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.
Exported using NT Version 7.0.1000.26
Indicator will only run on NT 7.0.1000.5 or later
The indicator displays the Volume Weighted Average Price of the selected session. It can be used on all types of charts.
You can apply the indicators to …
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
..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
