Author: STS
The VWAP Close is a powerful tool displayed right on your price chart, giving you a clear view of liquidity points and the average closing price weighted by volume. Designed specifically for intraday trading, this indicator works its magic throughout the entire trading session.
To calculate VWAP, we take a cumulative value of the volume multiplied by a typical price and divide that by the total cumulative volume. What does this mean for you? Well, the current price in relation to VWAP can provide clues about the day's market direction. If prices sit below the VWAP, it suggests a prevailing downward trend, while prices above the VWAP indicate stronger upward momentum. This volume-weighted approach means that VWAP values are most relevant during high-liquidity timeframes, allowing you to identify potential activity points for major market players.
Now, it’s important to note that while VWAP doesn’t directly indicate large orders moving in one direction or another, it does highlight price levels associated with significant trading volume. This is key for understanding where major players are likely to make their moves.
Additionally, VWAP can be a valuable tool for determining market entry levels. For instance, if you're considering a long position, entering below the VWAP might be a smart move, as it means you're buying below the average price level. Conversely, if you're looking to short, entering above the VWAP indicates you're selling at a premium over the average price level.
This handy indicator was originally implemented in MQL4 and first published on Code Base at mql4.com on May 10, 2016.
Fig.1. VWAP_Close
Related Posts
- Mastering the Multi-Day Dynamic VWAP Indicator for MetaTrader 5
- Master Your Weekly Trading with VWAP: A Key Indicator for MetaTrader 5
- Mastering the Open Range Breakout Indicator for MetaTrader 5
- Mastering Daily VWAP: Your Go-To Tool for Intraday Trading Success
- Understanding Monthly VWAP: Your Go-To Indicator for Long-Term Trading