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What is the 'Volume Weighted Average Price  VWAP'
The volume weighted average price (VWAP) is a trading benchmark used especially in pension plans. VWAP is calculated by adding up the dollars traded for every transaction (price multiplied by number of shares traded) and then dividing by the total shares traded for the day.
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BREAKING DOWN 'Volume Weighted Average Price  VWAP'
The theory is that if the price of a buy trade is lower than the VWAP, it is a good trade. The opposite is true if the price is higher than the VWAP.
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RELATED FAQS

Why is the Volume Weighted Average Price (VWAP) important for traders and analysts?
Learn how traders use the VWAP to calculate the average price weighted by volume and to analyze the momentum of trading on ... Read Answer >> 
What is a common strategy traders implement when using the Volume Weighted Average ...
Find out about a common strategy that traders use with the volumeweighted average price, including the use of VWAP with ... Read Answer >> 
What is a common strategy traders implement when using the Uptick Volume?
Learn how traders use uptick and downtick volume with VWAP cross to identify trends and momentum and identify points of big ... Read Answer >> 
What is a common strategy traders implement when using the Ultimate Oscillator?
Learn what the ultimate oscillator is and find out about a common strategy traders use with the oscillator to signal entries ... Read Answer >> 
What is a common strategy traders implement when using the Triple Exponential Average ...
Learn a common strategy traders use with triple exponential average and the VWAP cross to identify continuations and reversals ... Read Answer >> 
What is the weighted average of outstanding shares? How is it calculated?
The amount of shares outstanding in a company will often change due to a company issuing new shares, repurchasing and retiring ... Read Answer >>