Volume-Weighted Average Price (VWAP) is calculated by dividing the total value of all trades in a stock by the total number of shares traded over a specific time period. The total value of all trades is calculated by multiplying the price of each trade by the number of shares traded at that price. The result is the average price of a stock over the selected time period, taking into account the volume of each trade. VWAP is a useful indicator for traders as it reflects the actual price of a stock, taking into account both the price and volume of trades, rather than just the average price. It is commonly used as a reference point for traders to execute large trades in a stock, as it provides an objective measure of market price that is not influenced by short-term price fluctuations.

Volume Weighted Average Price (VWAP) is a trading benchmark used in the stock market to provide the average price a security has traded at throughout the day, based on both volume and price. VWAP is calculated by taking the total dollar amount of all trades (price multiplied by the volume of each trade) and dividing it by the total volume of shares traded for the day. The formula is:

VWAP= ∑Volume/∑(Price×Volume)
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VWAP is recalculated throughout the trading day, providing a dynamic indicator. Traders use VWAP to assess the quality of their trades; buying below the VWAP or selling above it indicates a good trade. It helps in executing large orders with minimal market impact.