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VWAP

Volume Weighted Average Price. Volume Weighted Average Price. Volume Weighted Average Price is equal to the sum of the volume of every transaction multiplied by the price of every transaction divided by the total volume for the trading day.A trading benchmark particularly used in pension plans. Calculated by adding up the dollars traded for every transaction (price times shares traded) and then divide by the total shares traded for the day. 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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