What It Means
VWAP (Volume Weighted Average Price) is the average price a stock has traded at during the day, weighted by how much volume traded at each price. It resets fresh at the start of every session.
How It Works
Unlike a simple average of the day's high and low, VWAP gives more weight to prices where heavier volume actually changed hands, making it a closer approximation of the "real" average price most participants paid that day. Intraday traders and institutions use it as a fairness benchmark: a large buy order filled below VWAP is considered a good execution, and one filled above VWAP a relatively worse one. It's also used as a simple trend gauge — price consistently trading above VWAP through the session is often read as intraday strength, and below it as weakness, though VWAP is descriptive of the day's activity rather than a predictive signal on its own.