Question 1

What is VWMA?

Accepted Answer

Volume Weighted Moving Average (VWMA) is a moving average that gives more weight to candles with higher trading volume. Unlike SMA, which treats all bars equally, VWMA emphasizes price levels where the most trading activity occurred.

Question 2

How it works

Accepted Answer

VWMA is calculated as the sum of price multiplied by volume, divided by the sum of volume: ``` VWMA = SUM(Close x Volume, period) / SUM(Volume, period) ``` In essence, VWMA is an SMA where each price point is weighted by its corresponding volume. Candles with higher volume pull the average more toward their price level.

Question 3

Key features

Accepted Answer

- **Volume-weighted** — high-volume candles have proportionally more influence - **Trend indicator** — acts as dynamic support/resistance like other moving averages - **Period parameter** — default 20 bars, adjustable - **Comparison with SMA** — divergence between VWMA and SMA reveals volume-price dynamics

Question 4

Price vs. VWMA

Accepted Answer

- **Price above VWMA** — bullish bias, buyers are in control - **Price below VWMA** — bearish bias, sellers are in control - **Price crosses above VWMA** — potential buy signal - **Price crosses below VWMA** — potential sell signal

Question 5

VWMA vs. SMA divergence

Accepted Answer

- **VWMA above SMA** — higher volume on up moves (bullish volume confirmation) - **VWMA below SMA** — higher volume on down moves (bearish volume confirmation)

Question 6

Parameters

Accepted Answer

| Parameter | Default | Description | |-----------|---------|-------------| | Period | 20 | Number of candles for calculation |

Question 7

Example conditions

Accepted Answer

| Condition | Meaning | |-----------|---------| | `close cross_over VWMA(20)` | Price crosses above VWMA — buy signal | | `close cross_under VWMA(20)` | Price crosses below VWMA — sell signal | | `close > VWMA(50)` | Price is above long-term VWMA — uptrend | | `VWMA(20) > SMA(20)` | Volume favors up moves — bullish |

Question 8

Tips

Accepted Answer

- VWMA is most useful for crypto and stocks where volume data is reliable - When VWMA and SMA converge, volume is evenly distributed — no strong bias - Use VWMA as a trend filter: only take longs above VWMA, shorts below - Shorter periods (10-15) for scalping, longer (50-100) for swing trading - VWMA reacts faster than SMA during high-volume breakouts