VWAP is one very important indicator. But in many cases the usage is over stressed. I only use it as a line which represents a mean. If you have a mean reversion day price will go back to VWAP.

VWAP is not precise because of error propagating while calculating big sums. What happend to me that I watched VWAP and the Ichimoku Cloud while trading about 8:30 PM. There was shown a short signal in the dow as price was below VWAP and Cloud. When I looked at the chart the next day, VWAP was never crossed by the price.

That's the reason why VWAP should never be used as a trading signal.

Very important: Don't go short if price above and near VWAP! I just wrote about and made this error!!! Look for a minimal distance to allow you to go short if price is over VWAP. I suggest about 40 points in Dax and 60 points in Dow.

Nice shorts, but when price aproachens VWAP it runs slower and bumps.

Dax jumps from 11130 to 11183 in some minutes. It does not go over the VWAP. Wonder if VWAP holds and price stays below in the short bias zone.

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Waiting for VWAP Cross

Dow exactly retraces to VWAP.

Typical use of VWAP. Enter a trade when it is fresh, take profit at VWAP. VWAP is a sort of fair price or equilibrium price. Don't trade near VWAP!

Many traders missunderstand the concept of VWAP. VWAP is no indicator, it is a filter.

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The core meaning of VWAP:

The VWAP can be viewed as the main resistance or the main support of the day. In many cases the VWAP is not crossed. If it is crossed, it means the cange from a short to a long day ore vice versa. In general it is advisable to place the stop loss near avove/below VWAP.

Always keep in mind the main function of VWAP. It displays a dynamic support (if price is above) and a resistance (if price is below). To cross VWAP it needs strong volume. Otherwise a crossing will fail. If you want to short above VWAP there must be a big distance over VWAP and vice versa.

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