What is volume weighted average price MT4 INDICATOR?
VWAP or volume weighted average gives traders a knowledge of the average price that investors are ready to pay or paying for a security within trading duration. VWAP is more advanced a technical indicator.
Introduction of Volume Weighted Average Price MT4 INDICATOR:
Volume weighted average price (VWAP) is an indicator which identifies the average price of an investment and stock at a specific time. The VWAP is useful as some traders believe that the average price grounded on the closing value. It depends on size of transaction take place and provide different view of market. Itgives idea of closing price by providing true average price of asset. The VWAP is only a way to detect average price for day to day traders of investment.
Characteristics of VWAP indicator.
Platform are: MT4, MT5
Use charted graph for presentation.
Use different color line (any color)
Timeframe: short term few minutes, few hours
Not really Work for any pair of currency. (EUR/USD, GBP/USD, USD/JPY, USD/CAD, AUD/USD, NZD/USD, EUR/GBP, GBP/JPY, EUR/JPY, AUD/JPY, USD/CHF, XAU/USD)
Advantage of VWAP
- Due to diverse nature of price in trading it was difficult to analyses accurate volume of transaction. VWAP are help to predict volume and future of stock.
- It represent the closing price of stock in better way than other indicators (MA).
- The VWAP point average price at weighted volume and work same for stock and securities on MT4 trading plat form.
- It allow to trade on MT5 that trade for future.
- The VWAP is often used with trading a large number of trades during a given session.
- The VWAP is primarily suited for the day traders.
- It gives idea about large markets and range.
- VWAP work on most logical, algorithm, systematic trades. A trading algorithm can also mechanically break the large portions of trade into smaller spots.
- It minimize the risk because VWAP is a technical indicator.
Disadvantage of VWAP:
- Most important disadvantage is that it does not accurately predict true value of currencies.
- The VWAP is used in short time frames.
- The VWAP does require a lot of practice.
- Does not generate buy and sell signals.
- Require advance knowledge of market.
How to use the free Volume weighted average price (VWAP) Indicator?
When the price of a security is trading below VWAP the security is trading at discount on other hand when the security is trading above the VWAP security is trading at premium.
The VWAP calculation of the prices.
- TPxV then divided by cumulated volume
- Where TP is typical price (average of the High, Low and Close) and V is Volume
- These values are posted on price graph.
Volume weighted average price (VWAP) indicator Conclusion
Moving VWAP tracks end-of-day VWAP averages over timeframe. The VWAP is a technical indicator to day traders. Whereas it requires a lot of effort and practice to make an effective use of VWAP. It helps to calculate liquidity. This can’t be use individually you must built strategies along it. It is best indicator in term of trend entry and price level. Usually take trades minutes to hours.
Uses of Volume weighted average price (VWAP) Indicator:
Currency pairs: All
EURUSD, GBPUSD, USDCHF, USDJPY, AUDUSD, NZDUSD, USDCAD,EURJPY, EURCHF, EURGBP, EURAUD, EURNZD, EURCAD,GBPJPY, GBPCHF, GBPAUD, GBPNZD, GBPCAD AUDCAD, AUDNZD, AUDJPY, CHFJPY, NZDJPY, CADJPY, CADCHF, NZDCHF
Trading Time: 24 Hours
Timeframe: Volume weighted average price (VWAP) Indicator
Recommended broker: All trusted brokers
Remember, Before use Volume weighted average price (VWAP) Indicator you can test on Demo account. When you will expert then you will use in Real account of trading.