The Volume Weighted Average Price, or VWAP, is a trading indicator that calculates the average price of a security based on both its price and the volume of shares traded over a specific period. It helps traders assess the average price at which a stock has traded throughout the day, providing insight into market trends and potential support or resistance levels. VWAP is commonly used by institutional traders to make informed decisions about buying or selling stocks. By comparing the current price to the VWAP, traders can determine whether a stock is overvalued or undervalued, aiding in their trading strategies.