The VWAP or volume weighted average price has become an important indicator for traders in many financial markets.
The volume weighted average indicator is plotted directly onto your chart and reveals some important trends.
The VWAP indicator is meant for intraday traders who are looking to find the trend and value of an asset, security or Forex pair.
In this post we go through exactly what the volume weighted average indicator is, how to trade with it and how you can use an indicator to quickly find it in MT4 and MT5.
Table of Contents
What is the VWAP Indicator?
The VWAP trading indicator is a trading benchmark that you can use to get an average price an asset or security as it has been trading through the day. These indications are based of volume and price.
The volume weighted average price indicator can provide you with a clear insight into the trend and the current value of an asset, currency or financial market.
Whilst some of the calculations are a little complicated, you can quickly and easily add the indicator onto the chart and it will show you the volume weighted average price.
This indicator can help you quickly make decisions on when the best times to enter and exit the markets are. The VWAP can also help you decide what sort of trading approach you should be taking on a certain financial asset or currency pair.
The calculation for the volume weighted average is as follows;
VWAP= ∑Price * Volume/ ∑Volume
What are the Best Markets to Use the VWAP?
The volume weighted average price (VWAP) indicator can be used in many different financial markets. Traders use it to trade stocks, Forex, cryptocurrencies and futures. These four markets are the most popular financial markets for trading with VWAP.
Simple VWAP Trading Strategies
Traders use the VWAP to trade the shorter term time frames. If you are a bull and looking for new long trades a simple strategy is to wait for a volume weighted average price cross above, then enter the trade long.
When you see a VWAP cross above it indicates that the buyers may be stepping in to buy an asset. This could signal that there might be an new push higher and it is a time to start looking for long trades.
If you are bearish and looking for short trades, you could use the same strategy, but in reverse. You would start looking for short trades when you see you see a VWAP cross below. A VWAP cross below shows that the buyers are exiting the market and taking profits and it could be time to look for short trades.
VWAP Indicator for MT5 Free Download
This MT5 VWAP indicator is free to download and use.
This indicator helps you with the intra-day calculation of VWAP, which is a useful measurement that will allow you to assess where an asset is trading relative to the volume weighted average of the asset for the day.
With this indicator you can choose the different time frames you want to use it on and adjust other settings.
You can get the VWAP MT5 indicator here.
VWAP Indicator for MT4 Free Download
The PipTick VWAP MT4 is a free volume weighted average indicator for the MT4 trading platform.
This free indicator works in five modes. These modes are; morning, daily, weekly, monthly, and session time.
Unlike the MT5 VWAP indicator, this indicator has calculations built over more than a single day.
You can get the VWAP MT4 indicator here.
Note: Don’t know how to install and use these indicators? Read How to Download, Install and Use MT4 and MT5 Indicators.
The VWAP indicator can provide you with the volume average price of an asset or security for the day.
It is designed for intraday trading and allows you to monitor the trends of an asset relative to the volume-weighted average.
This indicator can help you get a clearer picture of the trend of an asset and its value.