25/08/2025
**VWAP - a solid foundation for an intraday trading strategy**
VWAP stands for the volume-weighted average price - it’s an indicator that we deem to be superior to many other charting tools because it takes into account both the trading volume and the price of a currency. It is calculated by multiplying the sum of price by trading volume and then dividing that number by total volume.
The inclusion of volume in calculations is the trait that makes VWAP a very powerful indicator - and in our opinion, often underused - alternative to the 9-day and 25-day moving averages since VWAP is considerably slower, thus providing far less false Forex trading signals. The indicator’s other significant feature is that it’s often used as a guiding landmark for big market players like institutions and pension funds, whereas retail traders often disregard VWAP when devising the intraday Forex trading strategy while focusing on popular indicators that often lead them astray.
The rule of thumb for using VWAP is rather simple: a trader must give preference to long trades when the price action occurs above the indicator and consider taking short trades when the price dives below the line. But remember that it should be included in the currency trading strategy only for a single day of trading as it reboots every day prior to the market open, so avoid building the mid-term, and especially long-term trading strategies on Forex, on the basis of VWAP showings.
However, VWAP works best when used in combination with the actual volume indicator, the 9-period moving average, and a momentum oscillator like MACD since they provide sufficient confirmation for entering a trade. The EUR/USD chart above provides an example of how the Forex strategy that incorporates VWAP can be applied. Here we see the price dropping below 9MA and VWAP, signifying a strong selling pressure, which is confirmed by the bearish MACD and the mounting bearish volume. According to this trading strategy, you should make th
