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<VWAP, or Volume-Weighted Average Price, is a popular intraday benchmark that shows the average price a security has traded at throughout the day, weighted by volume. Traders and institutions use VWAP to gauge whether current price is trading at a premium or discount to the day’s average flow of orders. When price is above VWAP, it suggests bullish momentum and demand; below VWAP can signal weakness or favorable buy zones for mean reversion. VWAP is calculated by dividing the cumulative sum of typical price times volume by cumulative volume and resets at the start of each session. Unlike a simple moving average, VWAP reflects where the majority of trading actually occurred, making it a preferred benchmark for execution quality and timing entries and exits. Day traders may buy pullbacks to VWAP in uptrends, fade moves far from VWAP, or use it as a dynamic support and resistance line. Always combine VWAP with context, risk management, and confirming signals.

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