VWAP stands for Volume Weighted Average Price: the average price a stock has traded at today, weighted by how much volume traded at each price. It resets every morning and evolves through the session.
Unlike a simple moving average, VWAP counts big prints more than small ones. It answers a precise question: what has the average dollar actually paid for this stock today?
Large funds are often judged on execution quality — whether they filled their orders better or worse than the day's average price. VWAP is that benchmark. Execution algorithms are literally programmed to work orders around it.
That gives VWAP a self-fulfilling quality: because so much automated flow references the line, price tends to react when it gets there.
Price above VWAP: the average buyer today is in profit, and buyers are in control. Price below VWAP: the average buyer is underwater, and sellers are in control.
Strong momentum stocks tend to hold above VWAP and bounce off it on pullbacks — traders call these VWAP reclaims or VWAP bounces. Losing VWAP after a morning run is often the first objective warning that the move is tiring.
Common uses: joining momentum only while price holds above VWAP, treating a failed VWAP reclaim as an exit signal, and avoiding chasing entries far extended above the line, where snap-backs toward the average are common.
VWAP is context, not a crystal ball. It tells you who is winning today — combine it with volume and a catalyst to understand why.
Standard VWAP resets daily, so it is mainly an intraday tool. Swing traders sometimes use anchored VWAP, which starts the calculation from a chosen event like an earnings gap.
A moving average weights every bar equally. VWAP weights each price by the volume that traded there, so it reflects where the real money changed hands.
Because institutional execution algorithms benchmark and work orders around it, there is genuine order flow near the line — not magic, just mechanics.
TheScanner watches premarket gappers, unusual volume, whale flow, insider buying, and news catalysts across the whole market — and logs every alert so the track record is verifiable. Research tool, not investment advice.
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