Today we will speak about yet another tool Technical Analysis - display binary options VWAP (The weighted average price of light volume). I do not advise to trade only on the testimony of this indicator. He does not give us an idea of the direction of the value of the asset, but only shows the interest of traders in the asset. Use VWAP for better analysis Commodities and stocksWhere the number of transactions is defined more precisely. When trading currency pairs will calculate the indicator readings with an error.
If you set VWAP (The weighted average price indicator PHYSICAL) On a live chart, it appears in the form of a curve over the candles.
Calculate the Binary Options Indicator with the opening of the trading day before closing. Therefore, it is best to use in a given time interval. The curve of the indicator is moving in the direction of the asset value. If the price drops, and the movement of the indicator pointing downwards. If the price increases, then the movement of the indicator points upwards.
As VWAP indicator calculated during the trading day, the trader should take into account that will appear more and more new transactions, new data and calculations that will smooth out the light. You will be able to note that immediately after the opening of trading, the indicator is sensitive and reacts quickly. But in the end of the trading day comes when large amounts of data, the indicator reduces its sensitivity.
What signals can rassmatret a live chartUsing indicator VWAP:
- If the curve indicator passes under the candles chart, it shows oversold asset and not expect a quick growth of the price. Therefore, the option is considered to increase ;
- If the curve indicator passes over the candle chart, it indicates overbought asset and we should expect the imminent collapse of prices. Therefore, the option is considered for a fall .
To summarize, I would like to say that although VWAP indicator does not show the trend of the asset, but it gives an idea of the strength of this trend. Use it in combination with other reasonable indicators for binary optionsAnd if your forecast is more accurate, and therefore profitable!
The weighted average price of the volume clearly demonstrates how high the activity of the participants in the market is at the moment. But it can only act as an auxiliary tool, since the VWAP itself shows a large number of false signals.
He will not be able to show the direction of the trend in the market to the trader and will not be able to predict it in the future, let alone talk about the moments of its reversal and change.
But VWAP can determine the current volume in the market. It is worth noting that in the market analysis of this indicator there is a significant difference between work in the stock and foreign exchange market.
The stock clearly shows how many shares are being sold and which are being bought. But in foreign exchange it is much more difficult to determine which volumes are currently being traded on the market.
Often the VWAP indicator is confused with a simple moving average, since visually on a chart it looks like an MA. But it has one significant difference: it performs an intraday calculation, which is mainly used by HFT algorithms. It is usually used for intraday trading, as it perfectly filters out false signals from other technical tools.
But, like any other indicator of market analysis, VWAP is also not a holy Grail, which can easily predict the direction and signals for 100% deals. Its main disadvantage is a strong delay, which is formed with the cumulative formula used.
This indicator is more created for traders who can intuitively filter out false signals by strategy and compare their own forecasts and opinions.