Description:
The Volume Weighted Average Range (VWAR) by Donovan Wall is a multifaceted indicator that builds upon a conventional VWAP, adjusting its color based on the price's position relative to the VWAP. It incorporates the volume-weighted average range to gauge the typical price range, adjusted by volume, and establishes lines above and below the VWAP based on this range, utilizing Fibonacci multiples for calculation. This innovative approach allows for a nuanced understanding of price movement and volume's role in defining support and resistance levels.
Input Parameters:
- Mult 1, 2, 3, 4: Fibonacci multipliers that dictate the levels painted by the indicator.
- Price Source: The specific data points (such as open, high, low, or close) from each candle in a financial chart that an indicator uses for mathematical computations, enabling the calculation of metrics like the average over a specified period.
Use Case:
- Market Volatility Analysis: VWAR provides insights into market volatility, helping traders identify periods of increased or decreased price movements.
- Risk Management Tool: Traders use VWAR to set stop-loss orders and adjust position sizes based on current volatility levels, enhancing risk management strategies.
- Trade Signal Generation: VWAR can signal potential entry and exit points for trades, with expanding VWAR suggesting increasing market participation and contracting VWAR indicating potential consolidation or trend reversal.
This feature can be used in:
- Market Scanner
- Strategy Tester
- Dynamic Alerts
- Multi-Factor Alerts
- Smart Checklist
Do you want to learn more? Check out our blogpost.