VWAP (Volume-Weighted Average Price)

VWAP, or volume-weighted average price, is the average price at which an instrument has traded over a chosen period, with each price weighted by the volume executed there. It is normally calculated cumulatively from the session open, so it reflects where most of the period's business was actually done rather than a simple average of closing prices. Institutional desks use VWAP as an execution benchmark — buying below it or selling above it counts as a good fill — while intraday traders use it as a dynamic reference level, treating price holding above VWAP as constructive and price below it as weak. In spot forex there is no central exchange, so platforms compute VWAP from broker tick volume, which is only a proxy for true traded volume.