VWAP (Volume-Weighted Average Price) is a powerful tool that helps traders and investors gauge the average price at which a security has traded over a specific time period, taking both volume and price into account.

By incorporating trading volume, VWAP provides a more accurate reflection of the market's consensus price, offering valuable insights into market trends and price action.

Traders and institutional investors commonly use VWAP to assess the quality of their execution—whether they were able to buy or sell at a favorable price compared to the market's average.

It is often compared to the current market price to determine whether a trade was executed at a price above or below the typical market average.