A moving average is a technical indicator that investors and traders use to determine the trend direction of a stock or to determine its support and resistance levels.
It is a trend-following or lagging indicator because it is based on past prices.
๐Types of Moving Average
๐ Simple Moving Average (SMA): SMA is a technical indicator calculated by adding the most recent data points in a set and dividing the total by the number of time periods.
The Volume Weighted Average Price (VWAP) is a tool which is used for day trading only. It shows the average price of a stock weighted by the total trading volume. The VWAP is used to calculate the average price of a stock over a period of time.
Generally, whenever the price trades below vwap it should not be bought and if trades above vwap it should not be
sold, but it is not always the case.
Vwap is based on historical data and can be used to determine the right intraday trend.