What VWAP measures
VWAP averages price across a session but weights each trade by its volume, so prices where lots of contracts changed hands count more than thin, low-volume prints. The result is a single line that represents the volume-weighted consensus price so far.
It's calculated cumulatively from the session open, so VWAP is most meaningful intraday and resets each session — unlike a moving average that rolls continuously.
VWAP vs a moving average
A moving average weights every period equally and slides over a fixed lookback. VWAP weights by volume and builds from a session anchor, so it reflects participation, not just price.
Practically, traders read price above VWAP as buyers being in control on the session and below VWAP as sellers in control — a quick read on intraday balance rather than a buy/sell trigger.
How traders use it
Common uses: gauging whether you're getting a better-than-average entry (buying below VWAP), watching VWAP as a dynamic support/resistance reference, and judging execution quality on larger orders.
VWAP is a reference, not a signal. Combine it with market structure and your own risk plan — and remember it's most useful intraday, since its meaning fades as a session ages.