VWMA: Volume-Weighted Moving Average

L’idée en termes simples

A price reached on heavy trading says more than one reached on a quiet candle. The VWMA lets the busy candles pull the average harder, so it hugs the prices where most of the business was done.

Mode de calcul

Multiply every close of the last N candles by its volume, add them up and divide by the total volume of those candles. On CFDs and forex the volume is the tick count: how many price changes there were.

VWMA = Σ(close × volume) ÷ Σ(volume) over the last N candles

Comment l’utiliser

• Read it like any moving average: rising means an uptrend, the price above it means buyers are in control.
• Compare it with an SMA of the same period: VWMA above the SMA means the rises came on more volume than the falls.

Tirer des conclusions

• When VWMA and SMA are nearly equal, volume was spread evenly.
• A big gap between them points to one-sided, heavy trading.

Points de vigilance

• Tick volume is a stand-in for real volume; it works well for comparisons within one ticker, less across tickers.

Un peu d’histoire

Volume-weighted averages grew out of the institutional VWAP benchmark; the moving version became a standard indicator in charting software in the 1990s.