VWAP or the volume-weighted average price only looks at one day at a time due to its intraday calculation which acts as a benchmark for traders who wish to estimate if they had good execution or poor execution on their orders. If you are an intraday trader then this indicator will be good for finding the trend direction as this gives a complete picture of the market by using the high, low and close prices if a symbol plus the volume and not just a single price series like with moving averages.
The actual VWAP price line is the single white line shown below, you can change its colour from the settings. This trading indicator averages the closing price during a time period while at the same time putting watching the periods that have a higher volume which makes it more of a lagging indicator due to the fact it is based on historical data.
When you attach the indicator to a chart you will see the indicator settings which allow you to configure it.
Shift - this allows you to shift (move) the indicator left or right of the current candle.
Days - used to calculate additional days for the VWAP formula.
Deviation Cloud - if selected will show the upper and lower standard deviations with a shaded cloud area.
Source - the input source price data for the deviation calculation.
Multiplier - the number used to multiply the standard deviation.
VWAP can add more value than your standard moving average indicators of 10, 50 & 200 because it will react to price movements based on the volume during any given period instead, this makes the indicator perfect for day or swing traders. The formula is shown below.
VWAP = (Cumulative typical price x volume)/cumulative volume
How To Install & Open
First, make sure you have the cTrader trading platform installed and then simply unzip the file and double-click on it to automatically install it onto the platform.
Instant Chat Support
If you want a speedy reply to your questions just post your questions on our Telegram chat group.