Friday, June 10, 2022

Anchored Volume Weighted Average Price (AVWAP) Indicator for MT4

Welcome to the Anchored Volume Weighted Average Price Indicator, also known as A-VWAP, AVWAP, Anchored VWAP. 

VWAP is calculated by multiplying typical price by volume, and the dividing by total volume. It's different from a typical moving average since it incorporates volume into the calculation. This technique was made popular by Brian Shannon of Alphatrends. It is very simple to use for your analysis. 

The indiator is available on the site.

How the indicator works

1. Select a number from 1 to 9 on the keyboard. 
2. Click the mouse on the chart at the location you have selected to anchor the VWAP. The AVWAP line will be automatically drawn. 
3. Select another different number on the keyboard and click the chart in another location to draw another line. Each number will produce a different coloured line. To clear all the lines, press CNTL (control key) and click the chart. When you switch timeframes the chart will be clear of previously drawn AVWAP lines. 

Additional AVWAP Information

The Anchored VWAP is calculated using the same formula as traditional VWAP. The only difference is in the bars that are included in the calculations. With traditional VWAP, the calculation starts with the first bar of the day and ends with the last bar of the day. Because it only incorporates one trading day of data, traditional VWAP can only be used on intraday charts. With Anchored VWAP, the chartist chooses the first bar to use in the calculation (“anchoring” the indicator to that bar), and the last bar is always the most recent bar available. 

Because of the more flexible starting and ending points, Anchored VWAP is not limited to intraday charts. Like traditional VWAP, the Anchored VWAP overlay can be used to confirm trends and identify areas of support and resistance on the chart. 

The advantage of using Anchored VWAP is that you can set the starting point in order to include only relevant data on your chart. Typically, the chartist chooses a particular event as the starting price bar for the overlay: a significant high or low, an earnings announcement, a gap, etc. These events generally signal a change in market psychology, and the price action prior to that change should be excluded from the calculations since it doesn't reflect the same market psychology. 

Anchored VWAP provides all the same benefits of traditional VWAP in defining support and resistance levels, with the added advantage that you can pinpoint the exact timeframe to study. Starting VWAP calculations at the time of a significant turning point allows you to exclude price action that was driven by a different market psychology. As with all technical indicators, traders should use the Anchored VWAP overlay in conjunction with other indicators and analysis techniques.

Read more here

Intraday AVWAP

AVWAP from an event

How to Use VWAP - Volume Weighted Average Price from Brian Shannon - Alphatrends on Vimeo.

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