Volume Weighted Average

Volume Weighted Average Price, or VWAP, is a trading benchmark used to determine the average price an asset has traded at throughout a specific period, weighted by the volume of each trade. It provides a more accurate picture of the true market price than a simple arithmetic average because it accounts for the intensity of trading activity at different price levels.

Traders and institutions use VWAP to evaluate whether they have achieved a good execution price for their orders. If a trader's execution price is better than the VWAP, it is considered a successful trade.

In algorithmic trading, VWAP is often used as a target for execution algorithms that aim to minimize market impact over time. It is a fundamental metric for assessing both historical performance and current execution quality.