VWAP

What the volume-weighted average price is, how it is calculated, and why day traders and big institutions watch it so closely.

The average price everyone paid

VWAP stands for volume-weighted average price. It is the average price of every share traded during a session, weighted by how many shares traded at each price. If most of the day’s volume happened near $50, the VWAP will sit near $50 even if the stock briefly spiked to $52 on light trading.

VWAP is mainly an intraday tool. It usually starts fresh at the open each day and updates with every trade, drawn as a line on intraday charts.

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