VWAP
The average price over a session, weighted by the volume traded at each price.
Also called: volume weighted average price
In plain language
VWAP weights every price by how much actually traded there, so it reflects where business was really done rather than where price merely visited.
It resets each session, which makes it an intraday reference rather than a trend tool.
Institutions use it as an execution benchmark — filling below VWAP is a good buy by that standard — which is part of why price so often reacts around the line.
The formula
VWAP
Σ (Price × Volume) ÷ Σ Volume
- Σ
- Summed across the session so far
Why it matters
VWAP provides an objective intraday reference for whether buyers or sellers currently have the upper hand, and a natural level to place stops beyond.
Common mistakes
- Using VWAP on a daily or weekly chart, where the session reset makes it meaningless.
- Treating it as support or resistance without watching how price actually behaves at it.
Keep exploring
These concepts are connected. Understanding one usually makes the next one easier.
The number of shares, contracts or units traded during a period.
A histogram showing how much volume traded at each price level rather than in each period.
The average price over a set number of periods, recalculated as each new period closes.
How easily an asset can be bought or sold without moving its price.
The period each candle on a chart represents, from one minute to one month.