FAQs
VWAP (Volume-Weighted Average Price) is a technical indicator that shows the average price of a security during the day, considering both price and volume. Traders and investors in the Indian financial markets routinely use various fundamental and technical indicators to formulate strategies and make trading decisions.
How do you calculate volume weighted average price VWAP? ›
VWAP is calculated by multiplying the typical price by volume and then dividing by total volume. A simple moving average incorporates price but not volume. The SMA is calculated by totaling closing prices over a certain period (say, 10 days) and then dividing the total by the number of periods (e.g., 10).
What is the best indicator to use with VWAP? ›
There are many ways to trade with the VWAP. Again, it works best when combined with other complementary indicators including momentum indicators like MACD or stochastic.
What is VWAP in Indian stock market? ›
Volume Weighted Average Price. Volume Weighted Average Price. Volume Weighted Average Price is equal to the sum of the volume of every transaction multiplied by the price of every transaction divided by the total volume for the trading day. A trading benchmark particularly used in pension plans.
Why is VWAP not working in Zerodha? ›
As indices do not have actual trades taking place, there is no available volume data. Consequently, it is not possible to add volume-based indicators to the charts for indices due to the absence of trading activity.
Is the VWAP indicator accurate? ›
Since it uses historical data, it is a lagging indicator. Although some traders still consider the VWAP to be fairly accurate, it may be prudent to use it with other technical tools to ensure that your trading strategy is on the level.
How to use VWAP indicator in Zerodha? ›
Note, VWAP can be applied only on an intraday time frame and cannot be applied on EOD data. Once you select the time frame (1 min, 5 mins, 10 mins etc.), the engine calculates the VWAP and plots it on the chart as an overlay. You can now visualize the VWAP and the current market price and plan your trades accordingly.
How to calculate VWAP of Nifty 50? ›
The steps to calculate VWAP are as follows: Calculate the Typical Price (TP) for each period by adding the high, low, and closing prices and dividing them by three: (H+L+C)/3(H + L + C) / 3(H+L+C)/3. Each candlestick represents a timeframe, such as 5 minutes or 30 minutes. Multiply TP by Volume (V) for each period.
Is VWAP good for swing trading? ›
Swing trading strategies benefit from the incorporation of VWAP, as it aids in identifying optimal entry and exit points by highlighting underlying market momentum and potential reversals.
Should I buy above or below VWAP? ›
Traders typically use VWAP as a benchmark for their trades, aiming to buy below VWAP and sell above it. This approach can be particularly effective in trading large volumes of shares, as it enables traders to execute trades while minimizing the impact of their orders on the market.
I conducted a VWAP test on the Dow Jones Industrial Average's 30 stocks across 68 days with 400 trades. The Volume Weighted Average Price (VWAP) indicator didn't yield profits for day traders using standard candlestick/OHLC charts, resulting in a 30% win rate.
Is VWAP good for scalping? ›
Using the Volume Weighted Average Price (VWAP) in scalping offers traders a powerful tool for enhancing their trading strategies. By providing a weighted average price that considers both volume and price, VWAP serves as a crucial benchmark for making informed trading decisions.
Does VWAP work on Nifty? ›
Traders often use VWAP Nifty as a trend confirmation tool. If the price is above VWAP, the intraday trend is considered up.
When should I buy VWAP indicator? ›
If the price is above VWAP, it is a good intraday price to sell. If the price is below VWAP, it is a good intraday price to buy. However, there is a caveat to using this intraday. Prices are dynamic and what appears to be a good price at one point in the day may not be by day's end.
Is VWAP good for intraday? ›
VWAP is the average price of a stock weighted by volume. By monitoring VWAP, a trader might get an idea of a stock's liquidity and the price buyers and sellers agree is fair at a specific time. The VWAP indicator can be used by day traders to monitor intraday price movement.
What is volume weighted average price in Sebi? ›
Volume Weighted Average Price (VWAP) is a technical indicator used to determine the average price at which a security has traded throughout the day, factoring in the volume of each trade. Unlike traditional average price calculations, VWAP places more weight on periods of higher trading volume.
How to check VWAP in NSE? ›
To find the VWAP, you need to add the high, low, and close price, then divide by three, multiply this volume for that period, and add the result in the spreadsheet, under the volume column PV. After that, you need to divide PV by the volume for that period.
What does the VWAP tell you? ›
VWAP is the average price of a stock weighted by volume. By monitoring VWAP, a trader might get an idea of a stock's liquidity and the price buyers and sellers agree is fair at a specific time. The VWAP indicator can be used by day traders to monitor intraday price movement.
How to use VWAP in Bank Nifty? ›
Traders often use VWAP Nifty as a trend confirmation tool. If the price is above VWAP, the intraday trend is considered up. If the price is below VWAP, the trend is down. Traders may buy below VWAP and sell above VWAP to capture mean reversion plays.