VWAP (Volume Weighted Average Price) is calculated by dividing the total dollar value traded by the total volume traded over a given period, typically reset at the start of each trading day. It is widely used by institutional traders as a benchmark — large orders are often executed relative to VWAP to minimize market impact. Retail traders use it as an intraday trend indicator: price consistently holding above VWAP is bullish, while price that keeps rejecting from VWAP from below is bearish. VWAP also acts as a magnet during slow market conditions, with price frequently reverting toward it. Unlike most indicators, VWAP is only meaningful on intraday charts where volume data accumulates from the session open.
