VWAP Calculator
Unlock smarter trading decisions with our free VWAP Calculator – the go-to tool for spotting true average price levels and refining your entries and exits.
Disclaimer: Please note that there are risks involved when trading financial instruments and all information presented here is for educational purposes only. It is not intended to provide financial advice.
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. Using our VWAP Calculator is simple and intuitive. Just enter the key inputs, and the tool will calculate VWAP for your selected particular period.
VWAP Method
Step-by-Step
1. Enter high price
Enter the highest price during the interval.
2. Enter low price
Enter the lowest price for the same interval.
3. Closing price
Enter the final price of the interval.
4. Interval Volume
Enter the total shares/contracts volume traded in that interval.
5. Cumulative Volume
Enter the running total of all volumes so far.
6. Get VWAP
The calculator instantly shows the volume-weighted average typical price in a new trading session, helping you spot fair value, time trades better, and benchmark performance.
Why use the VWAP Calculator?
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. Here are the key benefits of using the VWAP calculator:
Key Benefits
- 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.
Frequently Asked Questions
Read our frequently asked questions below. If you still need help, contact us today.
Do professional traders use a VWAP calculator?
How is VWAP calculated?
Does MT5 have a VWAP indicator?
Is VWAP good for day trading and scalping?
What is the best indicator to use with VWAP?
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