1. What is a VWAP Calculator?

Definition: VWAP (Volume-Weighted Average Price) is the average price of a security weighted by trading volume over a specific time period.

Purpose: It helps traders assess the true average price of a stock and is commonly used as a benchmark for institutional trading.

2. How Does the Calculator Work?

The calculator uses the formula:

Where:

• \( VWAP \) — Volume-weighted average price (currency)
• \( P_i \) — Price at time i (currency)
• \( V_i \) — Volume at time i (dimensionless)

Explanation: The calculator multiplies each price by its corresponding volume, sums these products, then divides by the total volume.

3. Importance of VWAP Calculation

Details: VWAP is important for traders to determine whether they got a better or worse price than the market average during their trading period.

4. Using the Calculator

Tips: Enter comma-separated prices and corresponding volumes. Both lists must be of equal length and contain positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What time period should I use for VWAP?
A: Typically one trading day, but can be any period you want to analyze.

Q2: How is VWAP different from simple average price?
A: VWAP weights prices by volume, giving more importance to prices where more shares traded.

Q3: What does it mean if my trade price is below VWAP?
A: You got a better price than the volume-weighted market average for that period.

Q4: Can I use VWAP for any security?
A: Yes, it works for any traded security where you have price and volume data.

Q5: How do institutional traders use VWAP?
A: They often try to execute large orders at or better than VWAP to minimize market impact.