VWAP — Volume Weighted Average Price

Overview

VWAP calculates the average price weighted by volume throughout the trading session — it is the institutional benchmark that separates winners from losers on every intraday chart. Understanding VWAP is essential for trading stocks and crypto at the same levels the big players target. Combine VWAP with tools like the Volume Profile for a more complete picture of institutional activity. Set it up on TradingView and pair it with your favourite momentum indicator for high-probability intraday setups.

How It Works

VWAP = cumulative (typical price × volume) / cumulative volume, resetting each session. Typical price = (High + Low + Close) / 3. It creates a single line on intraday charts.

Key Signals

• Price above VWAP = bullish intraday bias; below = bearish.
• VWAP acts as a magnet — price tends to revert to it given enough time.
• Institutional algorithms use VWAP as their execution benchmark.
• Anchored VWAP (from a specific event) reveals hidden support/resistance.

Common Mistakes

• Using VWAP on daily or higher timeframes — it's an intraday indicator only (unless anchored).
• Fading strong trends just because price is far from VWAP.
• Ignoring VWAP standard deviation bands for measuring extension.