VWAP (Volume-Weighted Average Price)

VWAP is the volume-weighted average price of an asset for a given session. It calculates the average price each contract has traded at during the day, weighted by how much volume occurred at each price. Institutions use VWAP as a benchmark for execution quality — if a fund manager bought below VWAP, they got a "good" fill. If they bought above VWAP, they paid "too much." For traders, VWAP acts as a dynamic support/resistance line. Price above VWAP = bullish bias for the day. Price below VWAP = bearish bias. Many intraday strategies are built around buying VWAP touches in uptrends and shorting VWAP touches in downtrends. VWAP resets at the start of each session, so it's primarily a day-trading tool. For multi-day analysis, anchored VWAP (which can be reset to any historical point) is more useful.