VWAP
Definition
Volume-Weighted Average Price — the average price of a security weighted by the volume traded at each price level throughout the day.
Explanation
VWAP is the primary benchmark for institutional trade execution quality. If an institution bought 1 million shares at an average price below VWAP, the execution was good (they bought cheaper than the market average). VWAP algorithms break large orders into smaller pieces, timing execution to match the stock's typical volume profile throughout the day. Day traders also use VWAP as a dynamic support/resistance level — stocks above VWAP are in bullish territory; below VWAP, bearish.
Formula
VWAP = Σ(Price × Volume) / Σ(Volume)
How Stoquity Uses This
Stoquity incorporates vwap analysis across its portfolio management platform, providing real-time monitoring and AI-powered insights for every portfolio.