Technical analysis - Indicators
2021, May 20
I’ve been learning about technical analysis and how is expected that some scenarios repeat
VWAP
Volume Weighted Average Price (or VWAP) is a trading bechmark that will give you the average price a security has been traded through the day. This value also takes into account the volume and not only the price, therefore if an stock is traded more often at a certain price it will have more weight. For example:
| Price | Volume |
|---|---|
| 10 | 5 |
| 12 | 5 |
| 14 | 10 |
The formula is: 
In this scenario the VWAP will be: ((10 * 5) + (12 * 5) + (14 * 10)) / 20 = 12.5
When to use it
The theory here suggest that institutional owners will use the VWAP as reference for long or short trading, and the VWAP will act as a resistance because of the large buys or sells.