Volume-Weighted Average Price (VWAP)

A trading benchmark that calculates the average price a security has traded at throughout the day, weighted by volume at each price level. Institutional traders use VWAP to ensure they are getting a fair execution price -- buying below VWAP or selling above it is considered a good fill. Day traders treat VWAP as a dynamic support/resistance level, often going long when price holds above VWAP and short when it trades below.