Volume-Weighted Average Price (VWAP)

VWAP is the average price of an asset over a period, weighted by the volume traded at each price. It gives more importance to prices where more trading occurred, producing a benchmark that reflects true average cost. Intraday traders and institutions use it to gauge fair value during the session.

Use VWAP as an intraday benchmark: prices above it suggest buyers are in control, while prices below suggest sellers dominate. Large institutions often try to buy below VWAP and sell above it to achieve good execution. It resets each session, so it is mainly a short-term, intraday tool rather than a long-term signal.

If a stock trades at 102 dollars while its VWAP for the day is 100 dollars, intraday traders see buyers in control and may treat a pullback toward 100 as potential support.