Thread by @OmkarBanne

📊 Exploring the world of trading indicators

Curious about VWAP, MVWAP, and AVWAP ? 🤔

Let's dive into the differences between these volume-weighted average price variants and see how they can supercharge trading 🔋

✅ TradingView Indicator

✅ Zerodha Indicator https://t.co/weMHLSINMgtwitter.com/i/web/status/1…

✨ VWAP

🖊️ Volume Weighted Average Price

- One of the simplest indicators

- It gives traders an overview of the stock's trading activity for the day

- It's a line that starts new on every trading day
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👉 How to calculate VWAP

VWAP  = Σ (Price * Volume) ÷ Σ (Volume)

👉 How to use VWAP

- VWAP is mainly used for intraday trading

- VWAP is used to determine intraday direction.

- If the price is below the VWAP, the perception is that the intraday trend is Bearish

- If the price is higher than the VWAP, it is said that the stock is Bullish

- VWAP Breakout

When a stock price crosses the VWAP line and closes strongly, this is referred to as a "VWAP breakout."

- VWAP as Support & Resistance

The VWAP line is used for identifying an area of support or resistance in a market.

✨ MVWAP

🖊️ Moving Volume Weighted Average Price

- VWAP is an intraday-day indicator used by short-term traders

- MVWAP is a better choice for long-term traders as it provides signals over a longer time frame

- MVWAP is the VWAP value averaged over time

👉 How to use MVWAP

- The MVWAP is used by traders to take reversal trades

It can be customised to meet particular requirements.

- It may be modified to be more responsive to market movements for short-term trades

- If a longer period is chosen, it can smooth out market noise

👉 How to add MVWAP in Zerodha

- Go to 'Studies' on the top ribbon

- First, add VWAP

- Then add the Moving average

- Go to 'Moving Average' settings ➡️ Select 'Period' of your choice

- In 'Field', select 'VWAP'

- 'Type' can be anything like simple/exponential

✨ AVWAP

🖊️ Anchored Volume Weighted Average Price

- Anchored VWAP is an upgraded version of the VWAP

- AVWAP can be used for more than one trading session

- AVWAP can have any starting point unlike VWAP

Where to Anchor VWAP from?

🎯 Always try to anchor from significant events

👉 Swing High/ Swing Low

- An anchor from the previous low would tell us the average price that traders paid during the run-up

- When the price tries to go below it, it should act as support

Because people who bought during the rise don't want to lose money and will come in to defend their position.

- As retail traders, we may simply draw AVWAPs and trade depending on the levels, i.e. buy when we reach a support level and sell when we reach a resistance level

👉 Gaps

- When a price gap comes up, if a large number of buyers or sellers enter aggressively and the price continues to move in the gapped direction, the anchoring VWAP from the gap point might be an excellent level for traders to monitor

👉 Earnings

- VWAP can be anchored from the day after earnings to track users who bought or sold the stock following earnings

- This might occasionally correlate with gaps up/down because they happen shortly after earnings

👉 How to plot them?

- AVWAP can be plotted from the ribbon on the right side

- Also, I have this TradingView indicator but sometimes fails to plot the AVWAP

Here is the link 👇



Add it to your favourites and start using it! https://t.co/7IbXZkhGSIin.tradingview.com/script/vfLqBSz…

⚡️ Some folks were unsure about how to use them

I hope it helps them, if not let me know in comments/ DM🤝

https://t.co/Nld2bWcyNE

https://twitter.com/OmkarBanne/status/1688864783184097280?s=20