HowtouseVolumeWeightedMovingAverageinCharts×CloseWehopeyouenjoyreadingthispost.Doyouwanttotakeyourtradingtothenextlevel?DayTradeTheWorld™»TradingBlog»HowtouseVolumeWeightedMovingAverageinChartsMovingaverageisthemostcommontechnicalindicatorsinthetradingworld.Ifyouwatchfinancialtelevisionorreadfinancialcontent,youhavelikelyheardthecommentatorsandanalyststalkaboutit.Wehavecoveredmovingaveragesinthepast.Inourpastarticle,weguidedyouonhowtocalculatetheaveragesandhowtousetheminthemarket.PageContentsTheconceptofVolumeinTradingWhatistheVWMA,VolumeWeightedMovingAverageHowitisCalculatedVWMAFormulaVMWAstrategy:howtotradewiththisindicatorAnExampleinChartsAdvantagesoftheVolumeWeightedMovingAverageTheconceptofVolumeinTradingVolumeisanotherimportantconceptinthefinancialmarket.Tradersusethisconcepttoidentifythestrengthofatrend.Inherbook,Acompleteguidetovolumepriceanalysis,AnnaCoulingwritesthatvolumeisthekeyfoundationtoanytrader’ssuccess.Agoodwaytolookatthisistoconsideranexampleofastock.ThestockpriceofcompanyAcansoarby20%today.Ifthispriceactionisnotsupportedbymosttraders,thepricewillmostlycomebacklowerinthefollowingday.WhatistheVWMA,VolumeWeightedMovingAverageInthisreport,wewilllookatthevolumeweightedmovingaverage(VWMA),anindicatorthatcombinestheconceptofmovingaveragesandvolume.Wewilllookathowitiscalculatedandhowyoucanuseitinthemarket.HowitisCalculatedInourpreviousarticleonmovingaverages,wefoundthattheprocessofcalculatingasimplemovingaverageisrelativelyeasy.Youjusttaketheclosingpricesofanasset,addthem,andthendividebythenumberofperiods.Thevolumeweightedmovingaverageisrelativelydifferentbecauseitconsidersthevolumes.Herearethestepsyouhavetofollow:First,youneedtocalculatethetypicalpriceofanassetinaday.Youdothisbyaddingtheasset’shighest,lowest,andclosinglevel,andthendividethenumberbythree.Thesecondstepiswhereyoumultiplytheansweryougotinthefirststepbytheperiod’svolume.Youthendothisforalltheperiodsthatyouarecovering.Afterthis,youaddthesevalues,whichisknownasthecumulativetotal.Inthenextstep,