Learning#03 : VWAP in Intraday Trading
📊 VWAP in Intraday Trading: The Market’s Fair Price GPS
Ever wondered if there’s a level that shows where the real trading action is happening? That’s exactly what VWAP does — it’s like a volume-weighted compass that intraday traders use to orient themselves in the market.
It’s not just another line on your chart. VWAP reflects where institutions and volume-heavy participants are active. That’s why understanding how price interacts with it can give you a serious edge.
Let’s break it down 👇
🧠 What is VWAP?
VWAP stands for Volume Weighted Average Price.
In simple terms, it shows the average price a stock has traded at throughout the day, based on both price and volume.
Unlike a simple average, VWAP gives more weight to prices where more trading volume occurred — meaning it's a better reflection of the market’s consensus value.
Think of it as:
A real-time fair value line for intraday decision-making.
📈 Why VWAP Matters for Intraday Traders
VWAP acts as an intraday anchor. It tells you whether the price is currently trading above or below the day’s volume-weighted average — giving you quick insight into who's in control.
Here’s how to interpret it:
In short, VWAP tells you who’s winning the intraday tug of war — and whether it’s even worth stepping in.
⚙️ How to Use VWAP in Your Intraday Strategy
1️⃣ VWAP as a Trend Filter
Before entering a trade, check where price is relative to VWAP:
🔁 Skip counter-trend trades. Stay with the flow.
This helps in trending markets by keeping you aligned with momentum.
2️⃣ VWAP as Dynamic Support or Resistance
VWAP behaves like a magnet. Price often pulls back to it and either:
Use it alongside:
3️⃣ VWAP Reversion Play (Snapback Trade)
This is a mean-reversion setup:
⚠️ Avoid this in strong trending markets — best used in choppy or fading environments.
4️⃣ VWAP with Price Action for Structure
Pair VWAP with clean price action:
🎯 This adds logic and clarity to your entries — no random trades.
🔍 Bonus VWAP Tips
Combine VWAP with:
These combos create strong, repeatable trade setups.
✅ VWAP Recap: Why It Matters
Here’s a quick breakdown of how VWAP can sharpen your intraday trading game:
✍️ Final Thoughts
VWAP may sound simple, but it brings real structure to intraday trading.
It tells you where volume met price, and that’s powerful. When used with price action, it creates a solid framework for:
VWAP doesn’t predict — it reflects. And in trading, reflection is more useful than prediction.
🛎️ Respect VWAP. Trade with structure.
— Kiran Zatakia
📊 VWAP in Intraday Trading: The Market’s Fair Price GPS
Ever wondered if there’s a level that shows where the real trading action is happening? That’s exactly what VWAP does — it’s like a volume-weighted compass that intraday traders use to orient themselves in the market.
It’s not just another line on your chart. VWAP reflects where institutions and volume-heavy participants are active. That’s why understanding how price interacts with it can give you a serious edge.
Let’s break it down 👇
🧠 What is VWAP?
VWAP stands for Volume Weighted Average Price.
In simple terms, it shows the average price a stock has traded at throughout the day, based on both price and volume.
Unlike a simple average, VWAP gives more weight to prices where more trading volume occurred — meaning it's a better reflection of the market’s consensus value.
Think of it as:
A real-time fair value line for intraday decision-making.
📈 Why VWAP Matters for Intraday Traders
VWAP acts as an intraday anchor. It tells you whether the price is currently trading above or below the day’s volume-weighted average — giving you quick insight into who's in control.
Here’s how to interpret it:
- When price is above VWAP, buyers are in control and the bias is bullish.
- When price is below VWAP, sellers are dominating and the bias is bearish.
- When price is hovering near VWAP, the market is undecided, consolidating, or lacking direction.
In short, VWAP tells you who’s winning the intraday tug of war — and whether it’s even worth stepping in.
⚙️ How to Use VWAP in Your Intraday Strategy
1️⃣ VWAP as a Trend Filter
Before entering a trade, check where price is relative to VWAP:
- Price above VWAP with higher lows → Focus on long setups
- Price below VWAP with lower highs → Focus on short setups
🔁 Skip counter-trend trades. Stay with the flow.
This helps in trending markets by keeping you aligned with momentum.
2️⃣ VWAP as Dynamic Support or Resistance
VWAP behaves like a magnet. Price often pulls back to it and either:
- Rejects (respects the level as support/resistance), or
- Breaks and reclaims (signaling a potential reversal)
Use it alongside:
- Flag patterns
- Inside bars
- Break-and-retest structures
3️⃣ VWAP Reversion Play (Snapback Trade)
This is a mean-reversion setup:
- Price moves quickly away from VWAP at open
- No strong follow-through, signs of exhaustion
- Take a counter-trend trade back to VWAP
⚠️ Avoid this in strong trending markets — best used in choppy or fading environments.
4️⃣ VWAP with Price Action for Structure
Pair VWAP with clean price action:
- Mark support and resistance zones
- Observe price behavior near VWAP
- Look for confirmation: inside bars, rejection wicks, engulfing candles
🎯 This adds logic and clarity to your entries — no random trades.
🔍 Bonus VWAP Tips
Combine VWAP with:
- CPR (Central Pivot Range) for confluence zones
- Opening range for breakout bias
- Volume profile to spot high interest areas
These combos create strong, repeatable trade setups.
✅ VWAP Recap: Why It Matters
Here’s a quick breakdown of how VWAP can sharpen your intraday trading game:
- Bias Building: VWAP helps confirm whether the market structure is bullish or bearish, giving you a reliable directional bias.
- Trend Filtering: It keeps you aligned with the current momentum by filtering out counter-trend trades.
- Pullback Entries: VWAP acts as a dynamic support or resistance level, offering clean zones to enter trades during pullbacks.
- Mean Reversion: In sideways or fading markets, VWAP becomes a natural magnet — allowing you to target price reversions.
- Risk Management: It provides logical reference points for placing stop-losses and defining entry zones, adding clarity to your risk-reward planning.
✍️ Final Thoughts
VWAP may sound simple, but it brings real structure to intraday trading.
It tells you where volume met price, and that’s powerful. When used with price action, it creates a solid framework for:
- Building directional bias
- Finding clean entries
- Managing risk like a pro
VWAP doesn’t predict — it reflects. And in trading, reflection is more useful than prediction.
🛎️ Respect VWAP. Trade with structure.
— Kiran Zatakia
Read my blogs here:
substack.com/@kzatakia
Follow me on Telegram:
t.me/swingtraderhub
Follow me on X:
x.com/kzatakia
substack.com/@kzatakia
Follow me on Telegram:
t.me/swingtraderhub
Follow me on X:
x.com/kzatakia
Related publications
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Read my blogs here:
substack.com/@kzatakia
Follow me on Telegram:
t.me/swingtraderhub
Follow me on X:
x.com/kzatakia
substack.com/@kzatakia
Follow me on Telegram:
t.me/swingtraderhub
Follow me on X:
x.com/kzatakia
Related publications
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.