VWAP — Trading Wiki

Publisher and editorial transparency

Published by TradeHQ. Site creator: Anuga Weerasinghe. This page has no recorded editorial review date; the About page explains the site's editorial approach.

What VWAP means

VWAP is the average observed trading price weighted by volume over a stated period. Price above or below it describes the sample; the relationship alone does not establish future direction.

In depth

Volume-weighted average price divides the sum of transaction price times quantity by total quantity over a stated sample. It weights trades rather than participants, so it does not reveal how many people are profitable or every investor’s cost basis. A benchmark comparison must specify its venue coverage and window. Some chart implementations use aggregated bars, which can differ from trade-level calculations. Price above VWAP means only that it exceeds that selected average; it need not continue or revert. Anchoring the calculation at another time changes the sample.

TradeHQ does not provide a standard exchange-volume VWAP series.

Key points

• Average price weighted by the selected traded volume and observation window
• Price above or below VWAP describes a reference relationship, not a forecast
• A comparison benchmark whose sample and window must be stated

Why it matters when you are learning

Recalculate the volume-weighted average for the chosen session or anchor. VWAP is a historical benchmark; price crossing it does not prove future support, resistance or profitability.

Worked exercise and its limits

Invent trades of 10 units at $100 and 30 at $104. VWAP = ($1,000 + $3,120)/40 = $103, while the unweighted price average is $102. State the time window and trade sample. TradeHQ does not provide a standard exchange-volume VWAP series.