What does VWAP mean?
VWAP stands for Volume-Weighted Average Price. It calculates an average session price that gives greater weight to prices where more volume traded. Traders often use VWAP as an intraday context reference rather than as a standalone buy or sell signal.
Why it matters
- VWAP provides a session-level reference that incorporates both price and volume.
- Price spending sustained time above or below VWAP can help describe directional context.
- Repeated crossings can indicate a more balanced or rotational session.
How it works
- 01
Each traded price contributes to the calculation according to its volume.
- 02
The result updates throughout the session.
- 03
Many platforms reset standard session VWAP at the beginning of a new trading session.
Example
If price remains above a rising VWAP while maintaining higher swing structure, traders may interpret that as one piece of bullish session context. A VWAP touch alone does not establish a complete setup.
Common misunderstandings
- VWAP is not guaranteed support or resistance.
- A price being far from VWAP does not guarantee mean reversion.
- Different session templates can produce different VWAP calculations.
Educational reference
This glossary explains terminology and
general market concepts. It is not a
trading signal or a guarantee of future
results.