Hey trader,

If you’ve ever watched me trade, you probably noticed one key thing: I like to keep my charts as simple as possible. 

That means making sure crazy indicators and complicated tools are at a minimum. 

I want to be able to focus on what’s really important. 

And one of the most important things I watch each day is Volume-Weighted Average Price, or VWAP.

Before your eyes glaze over at that long-form name, have no fear: VWAP isn’t that complicated. 

And it’s definitely not boring, especially when you’re racking up gains. 

But what the heck does “Volume-Weighted Whatever” even mean, anyway — and why does it matter so much?

Let’s break it down in simple terms.

VWAP in a Nutshell

Volume-Weighted Average Price sounds fancy, but it’s really not. 

All it means is: What’s the average price people have been paying for a particular stock today… based on volume?

It’s like asking: “What’s the fair price everyone’s agreed on so far?”

If a lot of people are buying at $5 per share, and a few people are buying at $6, VWAP helps show where the “real” action is happening. 

Not just the price … but how much volume is behind that price. 

In other words, volume is the number of shares or contracts of a security traded during a certain period, like a trading day.

Why I Use VWAP

I’m not into guessing when I trade. 

I’m using patterns, setups, and tools that help me find the best odds, and VWAP gets at three very important things:

1. Who’s winning — buyers or sellers?

If a stock is trading above VWAP, it means buyers are in control. If it’s below VWAP, sellers might be taking over.

That little line tells me which team is winning the tug-of-war.

2. Should I wait — or go?

Sometimes a stock looks exciting because it’s up a lot and it’s moving fast … but it’s still under VWAP. 

That tells me: “Hey, maybe the move’s not ready yet. Just chill.”

But if the price breaks above VWAP with volume? That’s a green light for a possible move.

3. Where should I risk-off (or sell risky assets)?

VWAP gives me a simple risk level. 

If I buy just above VWAP and it drops back below, I cut it fast. 

How You Can Learn From This

You don’t have to be a full-time trader to use VWAP. 

Even if you’re just getting started, it’s a great way to keep your charts clean and your plan simple.

Here’s how to use it:

Tip 1: Add VWAP to your chart

Most free platforms let you do this with one click. 

It’s just a line that updates throughout the day, with no math required.

Tip 2: Use it as a filter

Before you jump into a trade, ask yourself: “Is this stock above or below VWAP?”

Doing that will help you avoid chasing weak moves.

Tip 3: Respect the line

VWAP can act like support or resistance.

If a stock keeps rejecting VWAP and falling, that’s not strong.

If it holds VWAP and bounces, it’s a sign buyers are stepping up.

But It’s Not Magic

VWAP won’t make you a millionaire by itself. I didn’t make my first million just by watching that one line.

But it’s a tool — a simple, powerful one — that helps keep me on the right side of the trade.

The cool part is that you can use it too, and you don’t need fancy software or a bunch of paid indicators. 

(But I do encourage you to try out my PowerSignal Indicator, a special scanner that alerts you to big potential moves.)

So, next time you’re watching a stock bounce around, ask yourself: “Where’s VWAP?”

It might just save you from chasing a weak move, or help you catch the next breakout before it runs.

Stay sharp,
Jack Kellogg

Past performance does not indicate future results, results not typical. All trading carries risk