For example, imagine that almost all the volume during these five hours was transacted at 1.1000. The VWAP will read volume data showing how much EUR/USD was purchased at each of the five prices and give greater weighting to the prices where the most volume was transacted. Now let us compare that to the VWAP applied to the same asset and settings. If the values of these closing prices are 1.1000, 1.1010, 1.1020, 1.1030, and 1.1040, the indicator will show the average price of the last five hours as 1.1020 (the sum of each of the five values, divided by five). We open a simple moving average indicator on the hourly chart and set it to calculate a simple average of the last five hourly closing prices. Let us imagine that we want to analyze what has been going with the price of the EUR/USD currency pair over the past five hours as part of a process in deciding whether to make a trade or not. ![]() ![]() This can be a little hard to understand, so it is best to illustrate with a comparative example using the simple moving average indicator. The VWAP indicator, as the name suggests, shows traders the average price paid for an asset, but weighted by volume. GET STARTED What is the VWAP Indicator in MT4?
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