Definition
VWAP
VWAP (Volume Weighted Average Price) is the average price of a stock over a period, weighted by the volume traded at each price.
VWAP answers 'what was the true average traded price today?' by giving more weight to prices where larger volumes occurred. It resets daily and is widely used as an execution benchmark: institutions aim to buy below VWAP and sell above it to prove good execution.
For traders, a price above VWAP suggests buyers are in control (bullish bias) and below suggests sellers dominate. Many use VWAP as a dynamic intraday support/resistance level rather than a fixed line.
Related terms
- Last Traded Price (LTP)The Last Traded Price is the price at which the most recent trade in a security actually executed, and it is the figure usually shown as the live current price.
- Moving AverageA moving average smooths price data over a set period to reveal the underlying trend.
Plain-English explainer from The Dispatch Investors Encyclopedia. General information, not financial advice.