VWAP Mastery: The Institutional Benchmark
VWAP (Volume Weighted Average Price) is not just an indicator; it is the price benchmark for Institutions.
What is VWAP?
Unlike a simple Moving Average (which treats every candle equally), VWAP gives more weight to candles with higher
volume.
It tells you the True Average Price of the day.
The Institutional Edge
Why FIIs use it?
Institutional algorithms are programmed to buy below VWAP (undervalued) and sell above VWAP (overvalued) to get the best execution price for large orders.
Strategies
1. The VWAP Pullback (Trend Continuation)
- Bullish Trend: Price is above VWAP. Wait for price to come down and touch VWAP. If it shows a Pinbar/rejection, BUY.
- Bearish Trend: Price is below VWAP. Wait for price to bounce up to VWAP. If it rejects, SELL.
2. The VWAP Cross (Trend Reversal)
When price has been far away from VWAP and suddenly crosses it with a Big Volume Candle, it signifies a change in control.
AlgoStraddle Charts: Our charts have VWAP enabled by default because it is the single most important line on an Intraday chart.
*Disclaimer: NSE/BSE frequently revise Lot Sizes and Expiry Days (e.g., SEBI Circulars 2024/2025). Always check the latest circular on nseindia.com before trading.
Standard Disclosure: Investment in securities market are subject to market risks. Read all the related documents carefully before investing. The content provided here is for educational purposes only and does not constitute financial or investment advice. AlgoStraddle Academy is not a SEBI registered investment advisor. Trading options involves high risk and capital can be lost.