Vwap Full form VOLUME WEIGHTED AVERAGE PRICE ( VWAP) is the cumulative average price of a stock traded during one day.

The calculation of the VWAP begins the moment the market opens, builds throughout the day, and concludes at the close of the session the daily VWAP resets at the start of each new day.

Vwap Example :

How to Select Vwap

1. open Trading view.
2. click on the indicator section.
3. SEARCH VWAP.
4. click on Volume weighted average price.

Why Institutions Use Vwap

As you guys know VWAP full form is volume-weighted average price was first referred to in March of 1988 in the Journal of Finance article entitled ” The Total Cost of Transactions on the NYSE” by Stephen Berkowitz, Dennis Logue, Eugene Noser Jr.This is essentially when the VWAP was invented

The VWAP was a benchmark to measure whether an institutional customer received a fair execution of their order by the broker who bought or sold a stock on their behalf. The difference between the reported price of a trade to the institutional customer and the VWAP let the customer objectively determine if their broker did a fair job in the execution of their order.

EXAMPLE :

If the broker purchased 5 LAKH shares at an average price of Rs1500 and the VWAP during that time was Rs1550, Then the customer should be happy they paid Rs 50/share less than the average transaction during that time.

If, however, the customer order was purchased at Rs1600 when the VWAP was Rs1550, the customer would be Unhappy with the broker. Nobody wants to pay more price than the average price.

VWAP Formula

We multiply the price of the trade by the total number of shares traded at each price, and that number is then divided by the total number of shares tarded to come up with VWAP.

The VWAP starts at the first data point (whether it is 1min, or 15min) and builds with each new trade. The more volume traded at a certain price level, the greater the weighting( and more impact) that price has on VWAP. Similarly the larger the timeframe calculated, the less impact each new period will have on the weight.

Even Warren Buffet Uses VWAP

Warren Buffet sold his entire position at Southwest Airlines over a two-day period. The reported price he received from the sale of his 2.3 million shares was $32.22, which was the exact VWAP for those two days.

It is likely that Mr. Buffet negotiated a “Guaranteed VWAP” price for his ale with the broker.

This whole article was written from a book called: Maximum Trading Gains With Anchored VWAP

VWAP acts as a Support

VWAP acts as Resistance

What is AVWAP?

VWAP full form is volume-weighted average price and AVWAP full form is anchored volume-weighted average price

The AVWAP is the same as the VWAP except that the starting point ( the anchor) for the volume-weighted average price calculation is set by the user at a specific meaningful point; that is, it is not simply the start of the trading day.

In simple language when we start the VWAP calculation at a point other than the start of the current day, it becomes “anchored” to that first point and we call it an AVWAP.

VWAP Strategy for Profits in Stock Markets:

I think the best explanation of VWAP and AWAP you guys can get from this video MUST WATCH !!!

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