Volume Weighted Average Price (VWAP)

Volume Weighted Average Price is a trading benchmark that calculates the average price of an asset traded over a specific period, weighted by the volume of trades at each price point. It provides a more accurate representation of the true market price than a simple average, as it accounts for the intensity of trading activity.

Institutional investors use VWAP as a target for executing large orders, aiming to achieve a price that is equal to or better than the daily average. By comparing their execution price to the VWAP, traders can assess the efficiency of their order routing and the impact of their trading activity.

It is a standard metric for measuring the quality of execution in both traditional and digital asset markets.