VWMA — Volume Weighted Moving Average

Overview

The Volume Weighted Moving Average weighs each price bar by its volume before averaging, so high-volume bars have more influence on the average than low-volume bars. VWMA gives traders a truer picture of the "agreed-upon" price compared to a standard SMA. It is especially useful in stock and crypto trading on TradingView, and can be explored alongside other volume tools in our indicator guide library.

How It Works

VWMA = Sum(Price × Volume for N periods) / Sum(Volume for N periods). When VWMA diverges significantly from the SMA of the same period, it indicates that high-volume bars pulled the average in a particular direction. The spread between SMA and VWMA reveals volume-price bias.

Key Signals

• Price above VWMA = bullish bias weighted by volume participation.
• VWMA above SMA = volume is heavier on up-bars (accumulation).
• VWMA below SMA = volume is heavier on down-bars (distribution).
• VWMA crossover with SMA signals potential volume-driven trend shift.

Common Mistakes

• Using VWMA interchangeably with VWAP — VWMA is a moving average; VWAP resets each session.
• Applying VWMA on assets with inconsistent or manipulated volume.
• Not comparing VWMA vs SMA spread to gauge the volume bias direction.