medium · Order Flow Analysis market-mechanics-execution
What is the primary limitation of using VWAP as a standalone signal in the final hour of the trading session?
- The session VWAP calculation automatically resets to zero at the start of the final 'Power Hour' of trading.
- Institutions supposedly abandon VWAP entirely and switch to using only the 'Opening Range' as their benchmark after 3:00 PM.
- The massive volume accumulated during the day makes VWAP extremely laggy and slow to respond to late-day price shifts.
- Standard session VWAP only calculates data gathered during the first four hours of the trading session, then stops updating.
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