Why the weighted average price is important for market participants
In financial markets, there are many technical indicators for analysis—from momentum oscillators to indicators for identifying reversal points. But one of the most practical and underrated is the indicator that combines two key components: price and trading volume.
VWAP (weighted average price) is an indicator that calculates the average cost of an asset over a selected period, with each trade weighted according to trading volume. Its main advantage is that it does not simply average prices but takes into account the actual pressure from buyers and sellers through volumes.
How the weighted average price is structured
The VWAP calculation is based on a simple logic: first, the typical price of each candle is determined as ( high + low + close, divided by 3), then this price is multiplied by the trading volume for the period.
The formula has the form:
View Original
This page may contain third-party content, which is provided for information purposes only (not representations/warranties) and should not be considered as an endorsement of its views by Gate, nor as financial or professional advice. See Disclaimer for details.
VWAP: volume-weighted average price as a trading tool
Why the weighted average price is important for market participants
In financial markets, there are many technical indicators for analysis—from momentum oscillators to indicators for identifying reversal points. But one of the most practical and underrated is the indicator that combines two key components: price and trading volume.
VWAP (weighted average price) is an indicator that calculates the average cost of an asset over a selected period, with each trade weighted according to trading volume. Its main advantage is that it does not simply average prices but takes into account the actual pressure from buyers and sellers through volumes.
How the weighted average price is structured
The VWAP calculation is based on a simple logic: first, the typical price of each candle is determined as ( high + low + close, divided by 3), then this price is multiplied by the trading volume for the period.
The formula has the form: