VWAP — volume-weighted average price — is the session's true average trade price, weighting each price by the volume done there. It is the line institutions are judged against, which is precisely why it matters intraday.
VWAP = Σ(price × volume) ÷ Σ(volume), accumulated from the session open. Unlike a moving average, it never "forgets" — a high-volume burst at 9:20 keeps influencing the line at 15:00. That property makes VWAP the session's centre of traded gravity rather than a smoothing of recent prices.
Execution desks are routinely benchmarked on whether they filled orders better or worse than VWAP; execution algorithms are literally named after it. This creates a reflexive effect: because large participants work orders around VWAP, price behaviour near the line reflects genuine institutional activity — not chart-pattern folklore.
Price holding above a rising VWAP describes a session where the average buyer is winning; repeated rejections at VWAP from below describe persistent supply at the average. Combining VWAP location with delta — who is aggressing while price sits above or below the line — is a standard order-flow workflow.
Yes. VWAP is a session statistic — it accumulates from the open and resets next session.
A moving average weights recent closes equally and forgets old data as its window slides. VWAP weights every trade of the session by its volume and never drops data until reset.
Its primary use is intraday. Multi-day anchored versions exist, but the classic VWAP answers a session-level question: what is today's fair traded price so far?