Indicator Review : VWAP

🔸 The VWAP (Volume-Weighted Average Price) is one of the trend indicators. It only applies in intraday trading, i.e. periods of less than one day. Its calculation is carried out throughout one session and is reset at the next session. it is therefore dedicated to the trader who focuses on short periods of time

👉 Interest

🔸 This is one of the few indicators that takes into account the total volume recorded during a session. The VWAP is relatively unknown to individual investors, professionals use it regularly. They carry out very large transactions in terms of volume and therefore use them to manage their orders as efficiently as possible and try not to delay the market by taking a position. Algorithms also take it into account to optimize order processing and reduce transaction costs.

👉 Use of the system

🔸 As with moving averages, the VWAP can be used in the same way. The indicator has a fairly high latency; it will not move nervously during the session and will therefore allow you to set stop or target levels.For those who want to be buyers, they can expect an upward break in the indicator by prices, allowing them to validate an upward turnaround.

🔸 Nevertheless, like moving averages, in the absence of a trend, the VWAP will be a flat curve that will not provide much information. In addition, it should be noted that it lags behind prices, a delay that increases from hour to hour due to its construction, which integrates all volume data since the opening into the calculation.