The VWAP indicator is a tool that professional traders have been using for years. Now as the information about real trading volume is available in MetaTrader 5, the user of this platform can also benefit from it.
VWAP stands for Volume Weighted Average Price. It is a moving average similar to other ones available in MetaTrader 5 by default, but with one big difference. The VWAP indicator reacts to big changes in price much faster than any normal moving average. The reason for this is that volume is a big part of what drives large price movements, and it is simply not considered by the built-in moving averages.
Just take a look at the screenshots. The VWAP indicator is shown alongside a standard SMA. Look at how faster the VWAP curve reacts to the large price movements.
There is an extra parameter in this indicator called Volume Power which allows you to change volume weight at altering the curve. The default value of the parameter is 1, however, if you change it to 2 or 3, volume will move the curve much more quickly.
This indicator will be invaluable, if you are a trader or an Expert Advisor creator, because it will give you an edge over the market and your competitors.