VWAP
VWAP (volume-weighted average price) is the average trade price over a period, with each price weighted by the volume traded at it. It is usually calculated from the start of the trading day.
How it works
VWAP = sum of (price × volume) / sum of volume. For each candle the typical price (high + low + close) / 3 is usually used. Unlike a simple average, VWAP leans toward the prices where the most trading happened. In traditional markets it resets each session; in crypto it most often resets at 00:00 UTC.
VWAP shows the day's fair price from a volume point of view. Large players often benchmark their buys and sells against VWAP: buying below it counts as good execution. So price above VWAP points to buyer strength within the day, below it to seller strength.
Traders use VWAP as intraday dynamic support or resistance and as a level price tends to return to. There is also anchored VWAP, calculated from a chosen point such as a major low or a news event.
In the morning 2 BTC trade at $60,000 and 1 BTC at $63,000. VWAP = (2 × 60,000 + 1 × 63,000) / 3 = $61,000, while the simple average of the two prices would be $61,500. VWAP sits closer to where more volume traded.
The mistake is applying a daily VWAP to weekly or daily charts, where it resets and loses meaning. VWAP is first of all an intraday tool. For longer horizons use anchored VWAP from a meaningful point, and always know where the calculation starts.
Questions and answers
What is VWAP in simple terms?
It is the day's average price, taking into account how much was traded at each price. It shows where most of the trading took place.
How is VWAP different from a moving average?
A moving average counts only prices, while VWAP weights them by volume. VWAP also usually resets at the start of each new session.
What does price above VWAP mean?
It means buyers have been paying more than the volume-weighted average during the day. That is a sign of intraday strength, not a guarantee of a rise.
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Updated: 2026-10-19