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VWAP (Volume-Weighted Average Price)

The average price of the day weighted by how much traded at each price.

Technical AnalysisIntermediate

Definition

VWAP resets each session. Institutions often use it as a benchmark for execution, so traders watch whether price holds above it, which is read as intraday strength, or below it.

Formula

VWAP = cumulative (price x volume) / cumulative volume

Watch out for

It is an intraday tool. For multi-day holding periods, moving averages are more common.

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