Courses / Volatility and Volume Indicators

VWAP: Volume Weighted Average Price

The average price weighted by volume, a favourite intraday benchmark.

VWAP sums price times volume and divides by total volume since the session start. It resets each day. Institutions use it as a benchmark for execution quality.

Price above VWAP suggests buyers are in control for the session, below suggests sellers. Many intraday traders look to buy pullbacks to VWAP in an uptrend and sell rallies to it in a downtrend.

It is an intraday tool for markets with real volume, such as stocks and futures.

Key takeaways

• VWAP resets each session
• Above = buyer control, below = seller control
• Used for pullback entries intraday

Quiz

• VWAP weights price by: Answer: Volume. It is volume weighted.
• VWAP resets: Answer: Each session. It restarts daily.
• Price above VWAP suggests: Answer: Buyer control. Buyers are paying above average.

Educational content, not financial advice.