What it means
VWAP resets each session. Anchored VWAP starts from a candle you choose, such as a big swing low.
Example
100 shares at $10 and 300 at $12: VWAP = $11.50.
In practice
VWAP is the average price paid by everyone who traded during the session, which makes it a benchmark for large funds. Intraday traders use it as a dividing line: longs are favoured while price holds above it, shorts while it holds below.
Pullbacks to VWAP in a trending session are common entry points. Anchored VWAP shows the average price paid since a chosen event, such as an earnings release or a major low.
What to watch for
On a choppy day price crosses VWAP repeatedly and the line means little. Because it resets every session, it is an intraday tool; its value late in a quiet day is mostly as an average, not as a signal.