A VWAP stands for volume-weighted average price, a technical analysis tool that shows the ratio of an asset's price to its total trade volume. Traders and investors use it to determine the average price at which a stock is traded over time. Investors who are more passive in the market - usually pension funds and mutual funds - and traders who want to determine whether a stock was bought at a good price use VWAP as a benchmark.

VWAP, or Volume Weighted Average Price, is a trading benchmark that shows the average price of an asset based on both volume and price throughout a trading session. It helps traders understand whether the current market price is relatively high or low compared to the day’s average. Institutional traders often use VWAP to gauge fair value and plan large orders without moving the market too much. When prices are above VWAP, it indicates bullish sentiment; when below, it suggests bearish conditions. Day traders also use VWAP as a dynamic support or resistance level. Overall, VWAP provides a balanced view of price action, helping traders make more informed entry and exit decisions during the trading day.