Volume Weighted Average Price

Volume-Weighted Average Price (VWAP) is a trading indicator used by traders that gives the average price an asset has traded at throughout the day, based on both volume and price.

Traders may use VWAP as a trend confirmation tool and build trading rules around it. For example, when a price is above VWAP, they may prefer to initiate long positions. When a price is below VWAP, they may prefer to enter short positions.

VWAP is important because it provides traders with an insight into both the price trend and value of an asset.

Calculation

VWAP=(∑Price * Volume)/∑Volume

VWAP is calculated by taking the total quote value of trading in the asset and dividing it by the volume of trades during that period.