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What Is VWAP?

VWAP (Volume Weighted Average Price) is the average price weighted by volume throughout the trading day. It resets at market open and represents the "fair value" of the asset for that session.

💡 Why Institutions Use VWAP: Big players use VWAP as a benchmark. They aim to buy below VWAP and sell above it. When you trade with VWAP awareness, you're trading with the institutions.

🧮 How It's Calculated

VWAP = Σ(Price × Volume) / Σ(Volume)

Unlike a simple moving average, VWAP gives more weight to prices where more volume traded. This makes it a more accurate representation of where "real money" changed hands.

📊 Standard Deviation Bands

TouchGrass plots VWAP with ±1 standard deviation bands. These bands show when price has moved "too far" from fair value.

Upper Band (+1σ)

Price is extended. Potential mean reversion short zone.

VWAP

Fair value. Acts as dynamic support/resistance.

Lower Band (-1σ)

Price is compressed. Potential mean reversion long zone.

🎯 How to Trade VWAP

1. Trend Days

On strong trend days, price stays on one side of VWAP and uses it as support (uptrend) or resistance (downtrend).

• Bullish trend: Buy dips to VWAP, target upper band
• Bearish trend: Sell rallies to VWAP, target lower band

2. Mean Reversion Days

On choppy/range days, price oscillates around VWAP. The bands become targets and fade zones.

• At upper band: Look for shorts back to VWAP
• At lower band: Look for longs back to VWAP

3. VWAP as Reference

Use VWAP to gauge who's in control. Above VWAP = buyers winning. Below VWAP = sellers winning.

📅 Recognizing the Day Type

📈 Trend Day Signs

• Opens near HOD or LOD
• Rarely touches VWAP after first hour
• Momentum MA stays one color all day
• Clear ORB breakout with follow-through

↔️ Range Day Signs

• Opens near VWAP
• Crosses VWAP multiple times
• MA color flips back and forth
• ORB breakout fails and reverses

⚙️ Settings

Setting	Default	Notes
Show VWAP	On	The main VWAP line
Show VWAP Bands	On	±1 standard deviation bands

📋 Quick Summary

• VWAP = Fair value for the day. Institutional benchmark.
• Above VWAP = Bullish control. Look for longs.
• Below VWAP = Bearish control. Look for shorts.
• Bands = ±1 standard deviation. Fade extremes on range days.
• First, identify the day type — trend days trade WITH VWAP, range days fade TO VWAP.

VWAP + Standard Deviation Bands