VWAP (Volume Weighted Average Price)

VWAP is calculated by taking the cumulative total of price multiplied by volume, divided by the cumulative total volume for the session. It creates a single line on the chart that represents the volume-weighted average price from the session's open. Unlike a simple moving average, VWAP gives more weight to price levels where the most trading activity occurred.

Institutional traders treat VWAP as a key benchmark. Buying below VWAP and selling above VWAP is considered getting a favorable price. According to Greenwich Associates (2022), approximately 32% of all institutional equity orders in the U.S. use VWAP as their primary execution benchmark, making it one of the most important intraday indicators in professional trading.

In crypto, VWAP is particularly useful for day trading and scalping. When price is above VWAP, buyers are in control and the asset is trading at a premium to the session average. When below, sellers dominate. VWAP often acts as dynamic intraday support or resistance, especially during ranging markets.

Anchored VWAP (aVWAP) extends the concept by letting traders set a custom start point — such as a major low, earnings announcement, or listing date — rather than the daily session open. This variation has become increasingly popular for identifying longer-term value areas and institutional cost basis zones in both equities and crypto markets.