VWAP Calculator for Trading

What is the VWAP Calculator?

A VWAP Calculator helps traders determine the Volume-Weighted Average Price (VWAP) of an asset, which shows the security's average price at which it has traded throughout the trading day, weighted by volume.

Unlike a simple average, VWAP gives more importance to prices with higher trading activity, making it a reliable benchmark for identifying fair value. Traders and investors use it for price action intraday analysis, to gauge market sentiment, improve trade timing, and compare current price levels against where most of the trading volume has occurred.

How Does the VWAP Calculator Work?

The VWAP Calculator works by combining price and trading volume to show the average price an asset has traded at throughout the day. Unlike a simple average, it weights prices by how much volume was traded, giving you a clearer picture of the "fair value" in the market.

By adding these parameters to the VWAP calculator: the high price, low price, close price (current price), the interval volume, and the cumulative volume, you can identify whether the volume-weighted average price (VWAP) of a stock is trading below or above its initial price level.

Ultimately, the VWAP Calculator gives you the volume-weighted average price of a security for a chosen period. In other words, it shows the average price traders actually paid, adjusted for how much volume was traded at each price.

Traders use it to:

Spot the market's fair value

Compare current price vs. VWAP (overvalued or undervalued)

Guide entries, exits, and stop levels

Measure trade performance against the day's average

The VWAP Calculator is a powerful tool for traders who want to understand the true average price of a security, factoring in both the security's price and volume. By comparing current market prices to VWAP, you can quickly spot whether an asset is trading at a premium or discount, and thus, make smarter entry and exit decisions, and benchmark your trades against the broader market.

Here are the key benefits of using the VWAP calculator:

Improve Trade Timing

The VWAP Calculator can act like a roadmap for when to enter or exit trades. Since it provides a more accurate representation of market trend and activity, traders often look for opportunities to buy when the price is trading below VWAP (potentially undervalued) and sell when it moves above VWAP (potentially overvalued).

Identify Fair Value

See if the market price is above or below the true average, and identify the price trend. If the asset or stock's price is above VWAP, it suggests buyers are paying a premium, indicating possible overvaluation, and the beginning of a bearish trend. If it's below VWAP, sellers may be accepting a discount, pointing to undervaluation, thus, the start of a bullish trend.

Trading Benchmark Performance

Measure your trades against the day's average price. By comparing your entry and exit points to the VWAP, you can see whether you executed trades better or worse than the overall market.

How to Use Our VWAP Calculator

Using our VWAP Calculator is simple and intuitive. Just enter the following key inputs, and the tool will calculate VWAP for your selected particular period.

Here's how to use our VWAP calculator:

High Price

Enter the highest price during the period.

Low Price

Enter the lowest price for the same period.

Closing Price

Enter the final price at the close.

Interval Volume

Enter the total share/instruments volume traded in that interval.

Cumulative Volume

Enter the running total of all volumes so far.

Get VWAP

The calculator instantly shows the volume-weighted average typical price (VWAP) for your selected time frame to spot fair value, time trades better, and benchmark performance.

FAQs

Read our frequently asked questions below. If you still need help, contact us today.

Do professional traders use a VWAP calculator?

Yes, professional traders frequently use a VWAP calculator as part of their trading toolkit. It helps them gauge the true average price of a security throughout the day, weighted by trading volume, which is crucial for making informed decisions. Institutional traders often rely on VWAP to execute large orders without significantly impacting the market, while active traders use it to identify fair value, time entries and exits, and measure their trade performance against the market average. Essentially, VWAP serves as a trusted benchmark for both strategy and execution.

How is VWAP calculated?

VWAP is the average price a security trades at throughout the day, weighted by volume. The calculator multiplies each price by the number of shares traded, adds up these values, and then divides by the total volume. This VWAP calculation gives a more accurate "true average" price, helping traders spot fair value and make smarter trading decisions.

Does MT5 have a VWAP indicator?

Yes, there are several Volume Weighted Average Price (VWAP) indicators you can use with MetaTrader 5 (MT5). Although MT5 doesn't come with a built-in VWAP technical indicator, traders can access a variety of third-party versions through the MQL5 Market or other trading resource sites like MT4Gadgets and TradingFinder.

Is VWAP good for day trading and scalping?

Yes, VWAP is highly useful for day trading and scalping because it provides a clear view of the market's true average price throughout the trading session. Short-term traders use VWAP on intraday charts to identify whether an asset is trading above or below its fair value, helping them time entries and exits more effectively. Since it reflects both price and volume, VWAP can also act as a dynamic support or resistance level, making it a practical tool for short-term trading strategies where precision and timing are crucial.

What is the best indicator to use with VWAP?

Generally, since VWAP is a lagging indicator, it works best when combined with other technical indicators to confirm trends and signals. Popular choices include Moving Averages to track market trend direction, RSI to spot overbought or oversold conditions, and Bollinger Bands to identify volatility and potential reversal zones. Using these alongside VWAP technical analysis indicator helps traders improve timing, confirm trends, and make smarter decisions.

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