VWAP

VWAP calculates the average price a security has traded at throughout the day, weighted by volume. It's crucial for institutional traders as a benchmark for execution quality—trades below VWAP for buys or above for sells are considered good fills. VWAP acts as support/resistance intraday and resets each session. Day traders use VWAP for trend determination: price above suggests bullish sentiment, below suggests bearish. It's often used with standard deviation bands for mean reversion trades. Unlike moving averages, VWAP incorporates volume, making it more representative of actual trading activity. Algorithms often target VWAP for large order execution.