Volume weighted moving average

A VWMA and a simple-moving-average of the same length diverge whenever volume is unevenly distributed. When VWMA sits above SMA, the higher prices in the window traded on more volume, which is read as genuine participation behind the advance.

Comparing the two lines is the main use, and it is a cheap way to add a volume dimension without a separate indicator panel.

Unlike vwap it has no anchor point and resets nothing, so it is a rolling measure rather than a statement about average traded price since a specific event. Do not substitute one for the other; institutions benchmark against VWAP, not VWMA.

See it drawn

Original diagrams for the ideas on this page. Illustrative, not real market data.

VWAP and its standard-deviation bands. VWAP is the day's average price weighted by how much volume traded at each price, so it shows where the bulk of the day's business was done. The bands sit one standard deviation either side, and price here swings between them all session.