VWAP (Volume-Weighted Average Price) is the average price at which a stock has traded during the day, weighted by the volume at each price. Because it accounts for volume, it reflects where most of the day's actual business was done.
How traders use it
VWAP acts as an intraday benchmark of fair value. Price trading above VWAP suggests intraday buyers are in control; below it suggests sellers are. Many strategies — including trend-continuation setups — only take long trades when price is above VWAP and shorts when it is below, using it as a trend filter. Institutions also use VWAP to judge whether their own fills were "good".