• Thu. Apr 18th, 2024

What is the VWAP indicator in MT4/5, and how to use it?

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What is the VWAP indicator?

The VWAP Indicator is one of the most popular and powerful indicators that traders use to determine when to enter and exit a trade. It’s very easy to use in a chart by using the plugin. It’s also very easy to use during news releases. It automatically tracks the price action rather than hours or days to update like most other indicators (i.e., RSI, MACD, etc.).

How to use the indicator?

VWAP stands for Volume Weighted Average Price. The VWAP indicator can determine where the big players are putting in their orders based on volume and price action. Let’s take a look at how to use this easy-to-use indicator in your trading by following these simple steps:

 

Step 1: Download the VWAP Indicator for MT4 or MT5. If you don’t have Metatrader 4, download and install it before continuing. Once installed, choose “New Terminal” from the File menu to open a new chart window or “New” from the File menu to open a new chart.

Step 2: Once your chart is loaded, choose “Indicators” from the top menu and search for VWAP in the list of available indicators. Click on it to add it to your current chart. Now that you have it added, select any timeframe below 1 minute that you want to trade.

 

Step 3: Now that you’ve added the VWAP indicator, let’s look at how it works. The price action of your chosen currency pair is plotted over time on the chart (see above). The blue line represents the volume-weighted average price for this particular currency pair, or in other words, the price that most of the volume is traded at. This time frame can be changed by right-clicking on the blue line and choosing “Properties.”

 

Step 4: So, what does this indicator tell us? First off, you’ll notice that there are two lines plotted. The red line represents your VWAP (in this case, 0.79151). The green line on the indicator shows the SMA (Simple Moving Average). When the lines are close together, there is less volatility in price action, and when they move further apart, it means there is more volatility in the market.

 

Step 5: Now, let’s look at how to use this indicator as a breakout strategy. When the VWAP line breaks above or below the SMA, it signals that a move is coming soon. This occurs when traders are moving their orders into the market, which increases volatility and pushes price action through this area of recent trading – in both directions.

 

Step 6: You can now click on “Insert” from the top menu, choose “Indicator,” and choose “Applied Price Action Indicators” (see the list below). Here you can change the color of your VWAP Line.

 

Step 7: You can also click on the little arrow next to “Applied Price Action Indicators” and then click on “MAs, Lines, Crossover.” When the window pops up, choose the crossover option (2nd from left) and set it to what you want.

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