Volume Weighted Average Price Definition
Volume Weighted Average Price (or VWAP) is a trading benchmark used in pension plans. It is calculated by adding the amount traded for every transaction, (price times the number of traded shares), and then dividing by the total shares traded in a given day. This price is useful in determining good trades. If the price of a buy trade is the lower than the VWAP, it is considered a good trade. If the price of a buy trade is higher than the VWAP, it is considered a poor trade.