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A VWAP is a term for 'Volume-Weighted Average Price,' which is a technical indicator that is primarily used in intraday charts and resets at the beginning of each new trading session. In layman's terms, it is a trading benchmark that indicates the average price of a financial asset depending on criteria such as volume and pricing.
Trading Sessions Minute by VWAP For Apr 28, 2024
| INDEX | LTP | VWAP* |
|---|---|---|
| Nifty Bank | 48201.05 | 583.65 |
| Nifty 50 | 22419.95 | 1121.14 |
| Nifty Financial Services | 21354.05 | 1296.99 |
| Nifty Midcap 50 | 14083.25 | 44.1 |
| Company | |
|---|---|
| BAJAJ-AUTO | ₹8974.3 (2.74%) |
| DIVISLAB | ₹4016.35 (4.49%) |
| LTIM | ₹4788.05 (3.31%) |
| TECHM | ₹1278.75 (7.43%) |
| DRREDDY | ₹6252.1 (0.54%) |
| Nifty Bank | 47970.45 45.55 (0.10) |
| Nifty 50 | 22368 31.60 (0.14) |
| Nifty Financial Services | 21334.2 7.70 (0.04) |
| Nifty Midcap 50 | 13780.65 99.40 (0.73) |
Volume Weighted Average Price (VWAP) helps everyday traders comprehend the average price that the asset traded during the day by taking volume and price into consideration. It is an essential trading benchmark that is charted daily, beginning with the opening price and finishing with the closing price.
The computation begins with the market's opening bell and concludes with the closing bell. As the VWAP is an intraday indicator, it is calculated using intraday data.
Today, owing to technology improvements, you can quickly add any popular technical indicator, such as the VWAP, to a price chart with a few clicks. That being stated, the next section will go into depth on how to compute the VWAP manually.
The mathematical method for calculating the volume-weighted average price is:
VWAP = Typical Price*Volume/Cumulative Volume
VWAP is used differently by different sorts of traders. For example, they may utilise the VWAP to corroborate trends. A trader who uses the VWAP as a trend confirmation tool may utilise it to initiate trading positions. So, if the price falls below the VWAP and rises above it, the trader may enter long bets.
On the other hand, if the price above the VWAP drops below it, the trader may go short. Institutions such as insurance firms, mutual funds, and hedge funds may utilise the VWAP to conduct transactions with little market effect.
