VWAP (Volume Weighted Average Price) — Complete Reference
Average price weighted by volume — the institutional benchmark for intraday execution.
What VWAP actually is
VWAP = sum of (price × volume) / total volume, calculated cumulatively from session open. It's the average price weighted by where actual volume occurred. Used by institutional traders as an execution benchmark — they want to buy below VWAP and sell above.
Why VWAP matters
Many large traders are benchmarked against VWAP. Their orders defend VWAP — buyers stop chasing above VWAP, sellers stop hitting below. This creates a real, mechanical reason VWAP acts as intraday support/resistance.
Reading VWAP setups
Price above rising VWAP = bullish intraday trend. Price below falling VWAP = bearish. Pullback to VWAP from above with volume support = standard long entry in an uptrending session.
The VWAP bounce strategy
Trend confirmation: price has been above VWAP all session. Pullback to VWAP. Bounce confirmation (hammer candle, volume spike, break of prior bar's high). Enter long with stop below VWAP. Target the day's high or prior swing high.
VWAP standard deviation bands
VWAP with +/- 1σ and +/- 2σ bands provides intraday volatility context. Price extending beyond 2σ from VWAP is statistically unusual — often a mean-reversion opportunity within a defined range.
VWAP for entries (not exits)
VWAP is great for entries — buying pullbacks to VWAP in trending sessions. VWAP is poor for exits because it lags. Use VWAP to time entries; use chart structure (support/resistance, prior pivots) for exits.
Anchored VWAP
Anchored VWAP starts from a specific event (earnings release, breakout day, news catalyst) rather than session open. Especially useful for swing traders looking at VWAP from significant chart events. Many platforms now support anchored VWAP.
Tools with VWAP
TradingView, ThinkOrSwim, and most charting platforms have VWAP built in. SultraxAI uses VWAP as one input for intraday signal context. See live signals →