Thread by @ThiccTeddy

VWAP is one of the most common indicators, and most traders have a strong opinion about it

I made a basic thread to help y'all understand it🧵⬇️

VWAP is short for Volume-Weighted Average Price

VWAP measures a stock's average price during a time period, adjusted for volume

The specific formula used to determine VWAP is👇

Traders commonly use VWAP in 2 ways

1) Sentiment tracking
2) Support and resistance

VWAP as a sentiment tracker

When price is above VWAP, it can be considered 'strong'

When price is below VWAP, it can be considered 'weak'

This works on trend days, but can be dangerous on range days

VWAP as support and resistance

Similar to an EMA, lots of traders view a VWAP touch as a buying opportunity. If the trend has been bullish and we pullback to VWAP, many will buy long.

Lots of traders also view VWAP as tough resistance to break, and will take profit near VWAP

VWAP settings

I'm pretty sure this is default (or close) but here are my VWAP settings on TradingView

My opinion on VWAP

I think VWAP is something you can use if you need more key levels, but isn't a necessity

It's very useful for small caps, but that sector isn't particularly hot right now

I prefer to use it like an EMA, don't overcomplicate it

Hope this helped y'all understand VWAP🤝

Check out my discord if you need a small trading group to learn and grow with👇
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