VWMA (Volume Weighted Moving Average)

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.

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.

• 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

Price vs. VWMA

• 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

VWMA vs. SMA divergence

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

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

| 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 |

• 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