The volume weighted average price is a trading standard which traders can use. It gives average of a price and security has been traded all the day, it is based on volume and price. It is an indicator that shows the exact price of the stock in the market. It takes the volume of transactions that are collected in the account and gives the precise measurement of specific price that take place.
Volume Weighted Average Price Indicator (VWAP)
This indicator is a single day indicator it means that it gives you the value of only one. It uses time frames of only one day. It starts new trading values for every new day. Professional traders use this indicator for ease in their trade and for determining every day VWAP values.
Volume weighted average price indicator is an intra-day calculation indicator. It uses algorithms to check that where the stock is traded according to the relative volume and volume weight average. It gives analysis on daily basis. Day traders can also use this indicator for detecting market direction and can also indicate the trading signals. Before using this indicator you have to know that how to calculate the average value from this indicator. Below are the steps to calculate volume weighted average price:
- The first step is to find average price of first five minute period of the day. To do this, add high, close and low ranges and then divide by three. Multiply the answer with the volume of that period. Keep this record in price volume (PV) column.
- The second step is to divide the value with PV; it will give you the value for volume weighted average price.
- The last step is that if you want to maintain these VWAP values then you have to revise the above two steps all day for every time.
Formula for VWAP value
VWAP= ∑Volume/∑Price * Volume
VWAP INDICATOR CHARACTRISTICS
Volume weighted average indicator has following characteristics. It can be used with any currency pair. This indicator is designed for Meta trade 4 platforms. This indicator is also designed for Forex trading. It creates a chart pattern on the screen. It also has some customization options like colours, width, style, and variables. Colours used in this indicator are green and red. Red dotted line is also appears on the chart. This dotted line is below the candlestick pattern. This indicator also has a specific pip. Specific pip for this indicator is 4.1455.
BENEFITS of Volume weighted average indicator
Volume weighted average price indicator has too many advantages. It is a unique and decent indicator that is used for daily volume analysis. This indicator can be used for identifying average price and securities of the averages that is traded whole day. It is one of the best indicators because professional traders are using this indicator for benefits in their trade. This indicator is specially designed for Meta trader 4 platforms and for Forex trading system.It uses average formula for VWAP calculation. It is available for only one day trading. This indicator is used to measure the perfect price of the trade. It is one of the best volume indicators.
• Volume weighted average indicator (VWAP) is used to indicate strength trend in the trade.
• Its calculations are based on moving average price.
• It is used to differentiate between trending and non-trending conditions.
• It helps to identify profitable trade.
• From the rise and fall of lines in the Volume weighted average indicator (VWAP) graph, the traders sense the price climax.
HOW TO INSTALL Volume weighted average indicator (VWAP):
• First step: – Download the Volume weighted average indicator (VWAP) for Meta Trader 4 platform.
• Second step: -Copy Volume weighted average indicator (VWAP) for Meta Trader 4. mql4 to your Meta trader Directory/experts/indicators/
• Start or restart your Meta trader 4 Client.
• Select Chart and Timeframe where you want to test your MT4 indicators.
• Search “Custom Indicators” in your Navigator mostly left in your Meta trader 4 Client.
• Right-click on Volume weighted average indicator (VWAP) for Meta Trader 4.mq4.
• Attach to a Chart
• Modify settings or press ok
• In the end, the Volume weighted average indicator (VWAP) for Meta Trader 4.mq4 is available on your Chart.
How to remove Volume weighted average indicator (VWAP) :
• First step: Select the Chart where is the Indicator running in your Meta Trader 4.
• Second Step: Right-click into the chart.
• Third step: Indicators list.
• At the last: Select the indicator and delete it.
These are simple and easy steps that you need to follow before starting trade because it gives you buy and sell zone indicator with almost 90% precision.
Ahead you are going to begin in real account trading you need to trade at the minimum for one month as a demo in any MT4 or MT5 brokers. It awards you more potential for getting quality payback in long or short term trading across also moving average.