Back Issues Archive Traders' Glossary Novice Traders' Notebook Products Store. Here's what the pros use. It's hard enough to make those decisions, but it's even harder when you aren't using numbers that truly represent the market. On the brokers' floor, VWAP is the benchmark for rating trades.
Brokers use the number to know whether their trades are above or below market value.
Analysts know the closing price is often the result of a variant trade and may not represent the real market. Many times, a stock will trade within a certain price range throughout the trading day, only to have an oddly priced trade come through at day's end, setting the closing price outside that range. Sometimes, investors intentionally buy shares at a higher than market value at the close of trading in an attempt to inflate the value of the shares they already own. This type of market manipulation, known as marking or price pumping , is illegal but difficult to prove. Investors may try to mark shares at a higher price for tax purposes.