Intraday Trading with VWAP

The Volume Weighted Average Price (VWAP) is one of the most trusted tools for intraday traders. Used by institutional and retail traders alike, VWAP helps identify fair value during the trading day and can act as both a dynamic support/resistance and trend guide.

What is VWAP?

VWAP stands for Volume Weighted Average Price. It gives the average price a security has traded at throughout the day, weighted by volume. It resets at the start of each trading session.

Why VWAP Matters in Intraday Trading

• Price above VWAP: Suggests a bullish bias; buyers are in control.
  
• Price below VWAP: Indicates bearish sentiment; sellers are dominating.
  
• VWAP as Support/Resistance: The line often acts as a natural support or resistance throughout the session.
  

How Intraday Traders Use VWAP

• Trend Confirmation: Combine VWAP with price action. For example, if price is consistently above VWAP and making higher highs, the trend is strong.
  
• Entry/Exit Signals: Enter long positions near VWAP support in an uptrend or short positions near VWAP resistance in a downtrend.
  
• Mean Reversion: In range-bound markets, traders buy below and sell above VWAP assuming price will revert to the mean.
  

Using VWAP on TradingView

• Go to the Indicators tab and search “VWAP.”
  
• It automatically plots the daily VWAP line.
  
• You can also try Anchored VWAP to align with specific events like earnings or large candles.
  

Conclusion

VWAP is not just for institutions it can be a powerful ally for retail traders too. It’s simple, effective, and offers real-time insights into market sentiment. Use it with price action or other indicators to fine-tune your strategy.