VWAP - Sab Ka BAAP ho ta hai

For those of you who are not familiar with concept of VWAP, just wanted to introduce it..

Investopedia defines VWAP as http://www.investopedia.com/terms/v/vwap.asp

What Does Volume Weighted Average Price - VWAP Mean?
A trading benchmark used especially in pension plans. VWAP is calculated by adding up the dollars traded for every transaction (price multiplied by number of shares traded) and then dividing by the total shares traded for the day.

The theory is that if the price of a buy trade is lower than the VWAP, it is a good trade. The opposite is true if the price is higher than the VWAP.

On a daily chart the way to calculate VWAP using this formula (V1*P1+V2*P2 ...... Vn*Pn) / (V1+V2+V3 .....)

And here comes the surprise part - if you are owning some stocks that are ramped up too far away from VWAP, this is what can happen ...

So, pay attention to VWAP when your favorite stocks in your portfolio are rising and you are getting too excited abt holding it for next 5 years where it will give 10X returns ... 
There will be someone who might want to unload a whole bunch of the same stock before the excitement dies down...