The indicator for binary options VWAP takes into account not only prices, like a simple moving average , but also transaction volumes, which makes it even more informative. Thanks to this feature, large institutional investors can determine who currently controls the market.
It is important to understand that the indicator for binary options VWAP does not predict the price movement of a financial instrument, but only assesses its current state relative to the influence of sellers or buyers on it. It is typically used to confirm a trend and determine support and resistance levels. Like any other technical analysis tool, the free VWAP indicator has its own application features. If you want to easily navigate the current market situation and make informed decisions about opening trades, do not miss the chance to understand its capabilities.
Content:
- Characteristics
- Installation
- Overview and Settings
- VWAP Trading Rules
- Application specifics
- Conclusion
- Download VWAP
Characteristics of the indicator for binary options VWAP
- Terminal: MetaTrader 4
- Timeframe: H1
- Expiration: 4 candles
- Option Types: Call/Put
- Indicators: VWAP.ex4
- Trading instruments: currency pairs , commodities, cryptocurrencies , stocks
- Trading time: 8:00 - 21:00 Moscow time
- Recommended brokers: Quotex , Pocket Option , Deriv , Binarium
Installing the indicator for binary options VWAP
The VWAP indicator is installed as standard in the MetaTrader 4 platform. To do this, you need to add it to the root folder of the terminal by selecting “File” in MT4 and then “Open data directory”. In the directory that opens, you need to go to the “MQL4” folder and then to “Indicators”, and then move all the files there. Templates are installed in exactly the same way, but are placed in the “templates” folder. For more detailed installation instructions, see our video:
Review and settings of the indicator for binary options VWAP
Note: VWAP is an abbreviation for “Volume Weighted Average Price”, which means “Volume Weighted Average Price”.
VWAP displays the average rate of a currency pair over a certain period, taking into account the weight of the transaction volume. This indicator consists of three lines representing monthly, weekly and daily periods.
Externally, it resembles moving averages or Bollinger Bands . The main difference between VWAP and moving averages is that the former places more emphasis on weighted volume. It calculates the average price based on it, which helps to accurately determine support and resistance levels, as well as places to enter and exit trades.
The indicator gives medium-term signals when the weekly and monthly lines cross, which opens up opportunities for concluding transactions for both Call and Put purchases. For a shorter-term strategy, you should wait until the daily and weekly lines cross. Moreover, for purchases, the monthly VWAP must be lower than both of these values, and for sales, on the contrary, higher.
Although it works on any time frame , it is most effective when used on the hourly chart to minimize false signals. VWAP has practically no parameters. All its values are calculated using the formula:
Price = (Total Price for the period * Current Volume)/Total Volume for the period.
All that is available to the user is turning on and off lines of different periods: from daily to monthly.
Trading rules using the indicator for binary options VWAP
The VWAP indicator can be a good alternative to standard support and resistance levels. It is often used during pullbacks, which is especially useful for trend-following traders. If you are having difficulty identifying the main trend in the market, we recommend reading these articles. In them we talk about alternative tools that do a good job of this task:
- The best trend indicators
- PZ Trend Trading indicator
- Trend lines indicator for MT4
- TJ10X Forex Indicator
- Fxaccurate Larna MT4 indicator
To increase the percentage of profitable trades, we will use a volatility filter based on the Standard Deviation indicator. We will react only to those intersections of daily and weekly VWAP that are accompanied by an increase in StdDEV(7) relative to the moving average with a period of 21, constructed from its values.
Buying a Call Option
- Weekly VWAP is above Monthly
- Daily crosses Weekly from bottom to top
- StdDEV(7) is greater than SMA(21) (built from StdDEV(7))
- At the opening of a new candle buy a Call option
Buying a Put Option
- Weekly VWAP is below Monthly
- Daily crosses Weekly from top to bottom
- StdDEV(7) is greater than SMA(21) (built from StdDEV(7))
- At the opening of a new candle, buy Put option
It is recommended to select the expiration time of 4 candles. Select the period for holding positions depending on the financial instrument and the results of testing on historical data.
Specifics of using the indicator for binary options VWAP
To improve trading results, you can use not only StdDEV, but also other tools for assessing trend strength, such as the ADX indicator . When a currency pair's quotes are in a range, the VWAP appears as a horizontal line, allowing it to be used as a support and resistance level. At the same time, on trend days, the indicator lines will be directed up or down, and their angle of inclination will change depending on the strength of the trend.
Pros of the VWAP indicator
It is an excellent alternative to classic moving averages and is often used by investors to determine when to buy or sell assets. Additionally, traders can use this indicator to identify strong price levels as well as confirm the current trend. This feature makes it a useful technical analysis tool in various trading strategies.
Disadvantages of the VWAP indicator
Disadvantages of VWAP include its dependence on trading volume, making it less effective during periods of low liquidity. It is also worth taking into account the lag of its values from the price, which may make it difficult to use it for precise entry or exit from transactions. Therefore, a volatility filter was added.
During a flat, this indicator may provide insufficient information or create false signals, since it often looks like a regular horizontal line. Another disadvantage is its sensitivity to the calculation period: using different intervals to calculate indicator values can lead to different results, which complicates the interpretation of signals and application in different market conditions.
Conclusion
The indicator for binary options VWAP is a fairly important tool in the arsenal of traders and investors. It is an excellent alternative to the classic moving average and is widely used to determine when to buy or sell assets. Additionally, VWAP allows traders to identify important price levels as well as confirm the current trend. Don't forget - this indicator is available for free, which makes it even more attractive.
If you want to get more information about binary options trading and learn about other useful tools, follow the links in this review. On our website you will find many articles, tips and recommendations that will help you become a successful trader. In the meantime, we suggest you practice ona demo account opened with one of the brokers with a minimum deposit . Trade while following the rules of risk and capital management. We wish everyone a favorable trend!
Download binary options indicator VWAP
See also:
How to make money on binary options
How do binary options brokers make money?
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