Quick Scoop

VWAP means **Volume Weighted Average Price**. It shows the average price of an asset, weighted by how much it traded, so larger- volume trades count more than smaller ones.

What it tells you

Traders use VWAP as a benchmark to judge whether price is relatively high or low during the day, and it is especially common in stock trading and algorithmic execution.

A simple way to think about it: if the price is above VWAP , the asset is trading above its average volume-weighted price; if it is below VWAP , it is trading below that average.

Formula

VWAP is commonly expressed as: **VWAP = sum(price × volume) / total volume**

Why people use it

  • It helps compare current price against an average that reflects real trading activity.
  • Institutions and passive investors often use it as an execution benchmark.
  • It can help traders spot whether a move looks strong or weak relative to the day’s volume.

Example

If a stock trades at 100 shares at 10, then 200 shares at 11, VWAP is weighted more toward 11 because more shares traded there.

That makes VWAP more informative than a plain average price when volume changes a lot.

Bottom line

VWAP is a popular trading benchmark that combines **price + volume** to show a more realistic average trading price over a chosen period, usually a day.