VWAP- Volume weighted average price

General
1

Hi,

Can anyone explain VWAP in simple words , Even though i understand the definition , I cant get the application of it.

2

Read this.

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3

Can you Please give me a real time example.

4

According to me, VWAP represents the average value of the stock price at the time of checking the data.

Example

We have the market price of stock at any given time on any trading day. This price keeps going up or down based on demand vs supply. Now at 12 noon assume you get a VWAP of 3200, at the same time the market price was 3250, this means until 12 noon, the average price of the stock traded from market opening till the time you checked of the stock was 3,250 versus the market price being 3,200.

This is how I understand VWAP, I hope some expert would clarify.

I think it is something similar to iNAV for an ETF. iNAV is an indicator which tell you the real time value of the underlying security in an ETF. This amount can be compared to the current market price and a decision of buy or sell can be taken.

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5
  1. Its applicable only intraday.
  2. its volume weighted average price.
  3. VWAP= Sum of all trades from SOD to that point each tranction price*volume/total volume

​eg: Trade 1 = 50 Quantity at 100 ; Trade 2=100 quantity at 110 rs so vwap=(( 50x100)+(100x110))/(50+100)

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