VWAP is a key tool in trading strategies as it helps traders identify market trends and determine whether an asset is trading at a fair value. A price above VWAP suggests a bullish trend, while a price below it indicates a bearish trend. Institutional traders use VWAP to execute large orders without significantly impacting market prices. VWAP-based trading can improve entry and exit points, reducing the likelihood of buying at overvalued levels or selling at undervalued levels. Additionally, VWAP is widely used in intraday trading strategies to assess market strength and potential reversals.