📘 What is VWAP?
VWAP stands for Volume Weighted Average Price. It is the average price of a coin over a period, but candles with more volume count more.
Think of it as the "fair price" of the session. Funds and big traders use it to judge if they bought well. If you paid less than VWAP, you got a good fill. If you paid more, you overpaid.
There is also Anchored VWAP (AVWAP). Instead of resetting every day, you start it from one candle you choose: a big top, a big low or a news event. It then shows the average price of everyone who bought since that moment. Right now $BTC gives a clean live example.
📊 Live chart in the cover and in the image post below.
🔍 How it is calculated
• For each candle: typical price = (high + low + close) / 3
• Multiply the typical price by that candle's volume
• Add these up and divide by the total volume
• Daily VWAP resets every day at 00:00 UTC. Weekly VWAP resets on Monday
• Anchored VWAP starts from the candle you pick and never resets
🔍 How to read it
• Price above VWAP: buyers are in control of the period
• Price below VWAP: sellers are in control
• Price crossing back and forth: no clear winner, range day
• A rising VWAP shows steady buying. A flat one shows balance
📈 How traders use it
• Entry: in an uptrend, wait for a pullback to VWAP and a bullish candle before buying. In a downtrend, sell a weak bounce into VWAP from below
• Stop-loss: a few candles' range on the other side of VWAP. If price closes clearly through it, the idea is wrong
• Target: the last swing high or low, or the next anchored VWAP
• Anchor tip: draw an AVWAP from the last big top and the last big low. The price usually reacts between them
🧪 Live example: $BTC 4H
• Anchor: the Sep 21 top at $87,396. The AVWAP from that candle shows the average price of all buyers since the top
• Oct 3-6: BTC traded above this line. Buyers since the top were in profit
• Oct 7: the 4H candle closed at $84,150, under the AVWAP at $84,747. It has not closed back above since
• Oct 12: the bounce topped at $84,352. The AVWAP was $84,334. A rejection just $18 away
• Today (Oct 14): the pre-CPI high was $84,147, again just under the line (about $84,240)
• After the hot CPI print, BTC dropped to about $81,600. The CPI 4H candle had 3.6x the average volume
• BTC now trades under the AVWAP ($84,185), under the weekly VWAP ($83,089) and under today's VWAP (about $82,800). 4H RSI is 37
• What to watch: a 4H close back over the weekly VWAP ($83,089) is the first sign of strength. A close over the $84,185 AVWAP would flip it to support. While under both, sellers stay in control
⚠️ Common mistakes
• Using daily VWAP for swing trades. It resets each day, so use weekly or anchored VWAP for longer trades
• Anchoring on a random candle. Use a clear top, bottom or news event that everyone saw
• Buying just because price touched VWAP, with no confirming candle
• Forgetting volume. On weekends and holidays, low volume makes VWAP less reliable
✅ Quick checklist
• Is price above or below VWAP right now?
• Is VWAP rising, falling or flat?
• Did you anchor it to a clear high, low or event?
• Did a candle close and retest the level, not just touch it?
• Is your stop on the other side and your risk 1-2% of your account?
💬 Do you use daily VWAP or anchored VWAP in your trading? 👇
Not financial advice. DYOR.