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Weighted Average Price

Average price computed using weights such as volume or time, providing a representative level for a period.

Weighted Average Price (WAP) is the average price of a commodity or security over a period, adjusted for the quantity traded at each price point.

For example, if 500 barrels of crude oil trade at $70 and 1,500 barrels trade at $72, the WAP would be closer to $71.50, reflecting both price and volume.

WAP is used for performance evaluation, transaction analysis, and portfolio accounting. It provides a more accurate representation of average market activity than a simple arithmetic mean.

Understanding WAP allows traders and analysts to benchmark execution quality, assess market trends, and make informed decisions in commodities, equities, and derivatives trading.

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