VWAP (Volume-Weighted Average Price)

How VWAP is calculated

Typical price = (High + Low + Close) ÷ 3
VWAP = Σ(Typical price × Volume) ÷ Σ(Volume)

The sums run from the start of the period (usually the start of the trading session) up to the current bar, so VWAP is cumulative: it moves less and less as the day goes on and more volume builds up.

Why VWAP resets

Standard VWAP starts fresh each session. For US stocks that’s the regular market open; for markets that trade around the clock, platforms use a fixed daily reset time. Because of this, VWAP is mostly an intraday tool.

How it’s used

• Execution benchmark: institutions often measure whether they bought below or sold above the day’s VWAP.
• Intraday reference: price above VWAP means the average buyer of the session is in profit; below means they’re at a loss. Many intraday traders treat VWAP as a dynamic support or resistance level.
• Bands: VWAP is often shown with standard deviation bands above and below.

Anchored VWAP

Anchored VWAP starts the calculation from a point you choose instead of the session open, for example a major high or low, an earnings release or the start of a trend. It shows the volume-weighted average price paid by everyone who has traded since that event.

VWAP vs moving averages

A moving average uses a rolling window of closing prices and ignores volume. VWAP uses all bars since the anchor and weights them by volume. VWAP needs volume data, so on spot forex, where there’s no central volume, platforms use tick volume or the broker’s own volume instead.

On TradingView

Click Indicators and search for VWAP. Its settings let you change the anchor period (session by default) and add bands. For a custom start point, use the Anchored VWAP drawing tool and click the bar to anchor from.

Educational explanation only. ChartWatch is independent and doesn’t give trading or investment advice. Trading carries a risk of loss.

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