Module 3 · Lesson 5 of 7

VWAP

By the end, you can explain what VWAP is and use it as context, not a magic line.

Mental model

The day's centre of gravity. VWAP is the average price everyone actually paid, weighted by volume. Institutions use it to judge whether they're getting a good fill — so price tends to relate to it.

Core explanation

VWAP (volume-weighted average price) is the average traded price of the session, weighted by how much traded at each price. It's a common institutional reference — big players judge their fills against it.

Use VWAP as context, not a decision-maker. Price above VWAP means buyers have paid up on average today; below means sellers have. But VWAP is not a magic line that price must bounce off — like any level, what matters is the reaction there.

Beginner vs professional

Beginner thought

“Price touched VWAP, so it has to bounce.”

Professional thought

“Price is back at VWAP, the day's average. I'll note whether it's accepted or rejected there — it's context, not a command.”

Mastery check

Mastery check · 1 of 2

What is VWAP?

Takeaways

VWAP is the volume-weighted average price of the session.
It's an institutional reference — context, not a signal.
Read the reaction at VWAP; it's not a magic line.

Up next — Levels tell you where to watch for reactions — and also where to aim. Next: targets and extensions.