// 01 What is VWAP?
VWAP is the average price at which a stock has traded throughout the day, weighted by volume. It is calculated by adding up the rupee value of all trades (price × volume) and dividing by the total volume traded.
VWAP resets at the start of each trading day (9:15 AM on NSE) and continuously updates throughout the session. It is not a predictive indicator — it is a benchmark that reflects fair value based on actual transaction data.
// 02 The VWAP Crossover Strategy
Entry (BUY): Price was below VWAP and crosses above it — bullish signal. Institutional buyers are absorbing all selling and taking control.
Exit: Price crosses back below VWAP — the bullish momentum has broken down.
Stop Loss: Fixed rupee stop or place stop below the last swing low before the VWAP crossover.
The strategy is best applied after 10:00 AM when VWAP has enough volume data to be meaningful. Early morning VWAP (9:15–9:30) can be distorted by the opening auction.
// 03 Using VWAP as a Filter (Recommended)
Rather than trading VWAP crossovers alone, experienced traders use VWAP as a directional filter for other strategies:
- EMA crossover above VWAP: Only take EMA buy signals when price is above VWAP — high probability long setups.
- RSI oversold above VWAP: RSI bounce is more reliable when happening above institutional fair value.
- Supertrend + VWAP: Supertrend bullish flip above VWAP — one of the highest quality intraday setups on NSE.
MyAlgoKart supports VWAP as both a standalone strategy and as a filter in AND-logic multi-strategy backtests.
// 04 Best Stocks for VWAP Strategy on NSE
VWAP works best on highly liquid, high-volume stocks where institutional participation is significant:
- RELIANCE, TCS, HDFCBANK, ICICIBANK, INFY — large-cap, institutional dominated
- NIFTY 50 and BANKNIFTY futures — highest VWAP reliability
Avoid mid-cap and small-cap stocks where volume is thin and VWAP can be easily distorted by a few large trades.
// 05 Limitations of VWAP
VWAP is a lagging indicator — it reflects what has already happened, not what will happen. On very trending days, price can stay above or below VWAP for the entire session, making crossover signals rare. On choppy days, price crosses VWAP repeatedly generating false signals.
This is why combining VWAP with a momentum indicator (EMA, Supertrend) gives much better results than trading VWAP alone.