Trends/Moving averages

Volume-weighted moving average

A moving average where each close counts in proportion to how much traded that day.

Moving averagesBest on 3M, 6M, 1YAlso called VWMA

Illustration of the volume-weighted moving average shape. It is a sketch, not real price data.

What it shows

A volume-weighted moving average multiplies each close by that bar's volume, adds them up, and divides by total volume over the window. Bars with heavy trading count more.

If heavy volume happened at higher prices, the VWMA is above the SMA, and the reverse.

How we find it

The same code that draws it on your chart follows these steps, with the same result every time.

Choose N.
Multiply each of the last N closes by its volume and add the results.
Divide by the sum of the last N volumes.
Plot it.

Starting values: N 20. These are proposed and will be tuned on real price data before launch.

How to read it

The blue line is the VWMA and the gray dashed line is the SMA.
The gap between them shows where the volume was.
VWMA above SMA means heavier volume came at higher prices.

Status labels you may see

Label	What it means
VWMA above SMA	Heavier volume at higher prices.
VWMA below SMA	Heavier volume at lower prices.
Near equal	Within 0.2% of each other.

What cancels it

Nothing cancels it.

What traders check next

Which days had heavy volume.
The gap between VWMA and SMA.
Whether volume spikes distort the line.

Limits

Needs reliable volume data.
A volume spike can pull the line.
Less common.

Try it in forecastviz

Open any ticker and choose Moving averages → Volume-weighted moving average in the left menu.
Switch between 3M, 6M, 1Y to see how the picture changes.
Compare with Simple moving average and VWAP on the same chart.

Open on a ticker

Questions

How is it different from VWAP?

VWAP resets and covers one period. VWMA is a rolling average.

Does it work on all stocks?

It needs good volume data. It is less useful for thinly traded stocks.