Search
Generic filters
Filter by Categories
Accounting
Banking

Exchanges




Disadvantages of VWAP


VWAP (volume-weighted average price) is the ratio of the value of securities traded to the total volume traded over a given period of time (usually one day). In other words, it is the dollar amount traded for every transaction (price times shares traded) related to the total shares traded for a specific period of time. It is used to gauge the average price of a security traded at over the period of choice.

The disadvantages of VWAP are:

  • It does not account for opportunity cost.
  • It can be used to manipulate trading by placing trades only when market prices are at levels favorable with VWAP.
  • It may be inaccurate or misleading for large orders that require many days to fill.


Tutorials
This section contains quite a vast collection of easy-to-understand explanatory manuals, practical guides, and best practices how-tos covering the main themes of this ...
Watch on Youtube
Remember to read our privacy policy before submission of your comments or any suggestions. Please keep comments relevant, respectful, and as much concise as possible. By commenting you are required to follow our community guidelines.

Comments


    Leave Your Comment

    Your email address will not be published.*