Indicator Overview
VWAP Bands Indicator plots a volume-weighted average price (VWAP) along with multiple deviation bands above and below it. By anchoring the bands to VWAP, the indicator reflects where price is trading relative to volume-weighted fair value.
Unlike simple moving average bands, VWAP-based bands adapt to real trading activity, making them useful for understanding intraday balance, overextension, and mean reversion behavior.
How to Use It in Practice
In practical trading, the VWAP Bands Indicator can be used to:
- Identify whether price is trading at a premium or discount relative to VWAP.
- Spot mean-reversion opportunities when price reaches outer bands.
- Gauge intraday trend strength by observing how price behaves around VWAP.
- Use inner and outer bands as dynamic support and resistance zones.
The indicator works best as a context tool, helping traders judge market balance rather than issuing direct buy or sell signals.
Parameter Explanations
Volume weighted average period
Defines the calculation window used for the VWAP. Shorter periods make VWAP react faster to recent price and volume changes, while longer periods smooth the reference level.
Price
Selects which price value is used for VWAP calculation, such as Close or other applied prices.
Use real volume?
Determines whether real volume data is used. When disabled, tick volume is applied instead.
Deviation with sample correction?
Controls whether statistical sample correction is applied when calculating band deviations, slightly affecting band width.
First band(s) deviation
Sets the distance of the first set of bands from VWAP, representing mild price deviation.
Second band(s) deviation
Defines a wider deviation level, often used to identify stronger extensions from VWAP.
Third band(s) deviation
Specifies the outermost deviation bands, highlighting extreme price moves relative to VWAP.
