What is time-weighted average price (TWAP)?

TWAP, or time-weighted average price, is one of the simplest and most widely used execution strategies in algorithmic crypto trading. 

At its core, TWAP helps traders break down a large order into smaller trades, executed evenly over a set period of time — regardless of market volume. The goal? To get an average price that reflects time, not market activity, and to avoid causing sudden price moves.

This strategy is especially useful in two scenarios: when you’re trying to quietly execute a large trade without alerting the market and when you’re trading in low-liquidity environments where even moderate orders can move prices. By pacing your trades, TWAP helps reduce slippage and keeps your activity under the radar.

Its biggest strength is its simplicity — it’s easy to implement and understand. But that simplicity also comes with a tradeoff: TWAP doesn’t account for trading volume. So, during high-volatility periods or sudden market shifts, it might miss key signals and give you an execution price that doesn’t reflect the true state of the market.

In short, TWAP is a great option when you need to trade steadily over time, especially in quieter markets. But if volume and volatility are major concerns, it might not always give you the best result.

Did you know? You can easily add TWAP (time-weighted average price) to your trading setup on platforms like TradingView by simply opening your chart, clicking “Indicators” and searching for “TWAP.” 

How to calculate TWAP

To calculate TWAP, you take the price of the asset at regular time intervals, add them all up, and divide by the number of times you checked the price.

Here is the formula to calculate TWAP:

In layman’s terms, the formula looks like this:

TWAP = (Price₁ Price₂ … Priceₙ) / n

Let’s walk through an example.

Say you check the price of Bitcoin (BTC) every 10 minutes and get the following:

90,000 → 90,100 → 89,900 → 90,050

Now add them together:

90,000 90,100 89,900 90,050 = 360,050

Then divide by the number of intervals (4):

TWAP = 360,050 ÷ 4 = 90,012.5

What is volume-weighted average price (VWAP)

VWAP stands for volume-weighted average price, and it’s a go-to metric for traders who want a more realistic sense of an asset’s average price throughout the day. 

Unlike TWAP, which just averages prices over time, VWAP factors in how much volume was traded at each price. That means prices with more trading activity carry more weight in the final average — making it a better reflection of where the market actually values the asset.

Traders often use VWAP as a benchmark. If you buy below VWAP, you’re likely getting a better-than-average deal compared to the rest of the market. It’s also handy for spotting trends — if the current price is above VWAP, the market’s probably bullish; if it’s below, that could be a bearish signal.

VWAP has its advantages: It gives a more accurate picture of market value and can help identify when an asset might be overbought or oversold. But it’s not perfect. It’s more complex to calculate and can get thrown off by a few unusually large trades, which might skew the average.

All in all, VWAP is a powerful tool for traders who want deeper insight into market dynamics, but like any indicator, it works best when used alongside other signals.

Did you know? ​The term volume-weighted average price (VWAP) was first introduced to the trading community in a March 1988 Journal of Finance article titled “The Total Cost of Transactions on the NYSE” by Stephen Berkowitz, Dennis Logue, and Eugene Noser Jr. In this paper, the authors presented VWAP as a benchmark for assessing the quality of trade executions by institutional investors.

How to calculate VWAP

VWAP works a bit differently. Instead of treating each price equally, it gives more weight to prices where more trading volume occurs. 

Here is the formula to calculate VWAP:

In plain terms, the formula is:

VWAP = (Price × Volume at each point, all added up) ÷ Total Volume

Let’s go through an example.

Say you have this data for BTC:

• 90,000 at 10 trades
• 90,100 at 20 trades
• 89,900 at 5 trades
• 90,050 at 15 trades

First, multiply each price by its volume:

• 90,000 × 10 = 900,000
• 90,100 × 20 = 1,802,000
• 89,900 × 5 = 449,500
• 90,050 × 15 = 1,350,750

Now add those results:

900,000 1,802,000 449,500 1,350,750 = 4,502,250

Then calculate the total volume:

10 20 5 15 = 50

Finally, divide the total value by the total volume:

VWAP = 4,502,250 ÷ 50 = 90,045

When to use TWAP vs. VWAP?

It really comes down to what kind of trade you’re making and what the market looks like at the time.

If you’re trading during busy hours and want to make sure you’re not overpaying — or underselling — compared to where most of the action is happening, VWAP is your friend. It gives you a sense of the market’s “true” average price by factoring in volume, so it’s great for benchmarking your trades or timing your entry and exit in line with market momentum. If you’re buying below VWAP, you’re likely getting a solid deal.

TWAP, on the other hand, is better when you’re trying to stay under the radar. Maybe you’re dealing with a less liquid coin, or you’re trading at a quieter time of day when volume is all over the place. In that case, TWAP helps you slowly work your way into or out of a position without spooking the market. It doesn’t care about volume — it just paces your trade out over time in equal chunks.

So, big picture: Use VWAP when you’re following the crowd and want to time things smartly. Use TWAP when you’d rather move quietly and keep things simple.

TWAP vs. VWAP: Key differences to be aware of

TWAP and VWAP in crypto trading

Traders and institutions use TWAP and VWAP to minimize market impact and secure better execution prices. 

Let’s look at two real-world examples that show how these algorithms perform when the stakes are high.

1. Strategy’s $250-million Bitcoin buy with TWAP

Back in August 2020, Strategy (called MicroStrategy at the time) made headlines by announcing a $250-million investment in Bitcoin (BTC) as a treasury reserve asset. Rather than entering the market all at once — and risking a sharp price jump — they partnered with Coinbase and used a TWAP strategy. 

By spreading the purchase out over several days, Strategy was able to blend into market activity, minimizing slippage and securing a favorable average price.

2. Definitive’s TWAP strategy for Instadapp (INST)

A major crypto VC firm used TWAP to handle a large position in Instadapp (INST), a decentralized finance token known for its low liquidity. Over two weeks in July 2024, it executed the trade in small chunks using Definitive’s TWAP algorithm. 

The result was a 7.5% improvement over what it would’ve paid using VWAP, and gas fees made up just 0.30% of the $666,000 order. It was a clear win in terms of both cost-efficiency and stealth execution.

3. Kraken Pro and the use of VWAP

Kraken offers advanced trading capabilities through its Kraken Pro platform, which includes VWAP as a built-in technical indicator for traders. On Kraken Pro, users can access VWAP directly in the charting interface, powered by TradingView integration, to analyze crypto assets across various timeframes.

For instance, a trader on Kraken Pro might use VWAP to optimize a Bitcoin trade. They could set up an order to buy BTC when the price dips below the daily VWAP — indicating it’s trading below the volume-weighted average and potentially undervalued — and sell when it rises above, suggesting overvaluation or profit-taking opportunities. 

Institutional clients and high-volume traders, in particular, rely on Kraken’s VWAP functionality for precision in the fast-moving crypto market.

Whether you’re managing a big order or just trying to get a fair entry, knowing when and how to use both TWAP and VWAP can give you a serious edge in the market.

Happy crypto trading! 

Trade wars’ impact on stocks

Markets don’t like surprises – and they really don’t like trade wars. 

When the US announced its 145% tariff on Chinese imports in April 2025, the response from Wall Street was swift and brutal. The S&P 500 tanked more than 10% in just two days. Tech stocks took it even harder, with the Nasdaq shedding nearly 20% since the start of the year.

Still, if you’ve watched the markets through past trade fights, this was all pretty familiar. In 2018–19, during the first round of US-China tariff battles, every tweet about negotiations or new duties sent stocks whipsawing. And if you zoom way out, the Smoot-Hawley Tariff Act of 1930 is one of the earliest and most notorious examples as tariffs piled up, global trade shrank and the Great Depression got worse.

So why do stocks get hit so hard? A few reasons. Tariffs raise the cost of imported goods, which squeezes profit margins for companies that rely on international supply chains. When a carmaker or electronics brand has to pay more for components, that cost either eats into profits or gets passed on to customers. Either way, it’s bad news for earnings, and earnings are what drive stock valuations.

There’s also the fear factor. Trade wars inject a lot of uncertainty into the economy. Will more tariffs follow? Will other countries retaliate? That kind of unpredictability causes companies to delay investments and hiring, while consumers may start pulling back on spending. This shows up as increased market volatility, often tracked by the VIX, Wall Street’s so-called “fear index,” which tends to spike in times like this.

Central banks sometimes try to cushion the blow by tweaking interest rates or injecting liquidity. But there’s only so much they can do when the root of the problem is political. 

Did you know? On April 9, 2025, Trump announced a 90-day pause on new tariffs for most countries. He explained the pause by saying people were getting “a little bit yippy,” his way of describing nervousness in the markets.

When tariffs hit, crypto takes a punch, then bounces back

The tariffs hit crypto, too, but the market recovered just days later, reflecting crypto’s volatile yet responsive nature during global uncertainty.

After Trump’s new tariffs were announced, Bitcoin slid to around $76,000. Ethereum and other major tokens followed suit, and around $200 billion was wiped off the total crypto market cap in a few days.

Again, this kind of sell-off isn’t unusual. When uncertainty spikes – like during a sudden escalation in global trade tensions – investors tend to play it safe. That means pulling out of more volatile assets, including crypto, and moving into what’s seen as safer ground, like cash or bonds. It’s a classic “risk-off” move.

But as you’ve seen before, crypto doesn’t stay down for long. By mid-April, Bitcoin had bounced back and was trading at just under $85,000. Ether (ETH), XRP (XRP) and other major altcoins also recovered some ground. For many investors, this rebound was a reminder that while crypto is volatile, it’s also increasingly viewed as a valuable hedge, something outside the reach of any government or policy decision.

In 2018–19, during an earlier round of US-China tensions, Bitcoin showed similar patterns: short-term drops followed by fast recoveries. And earlier in 2025, new tariffs on Canadian and Mexican imports triggered a dip that quickly reversed.

Stocks, meanwhile, tend to have a tougher time recovering. As of April, the S&P 500 is down nearly 9% for 2025, and the Nasdaq is off more than 13%. There was a brief lift after the US paused some tariffs for 90 days, but overall, the mood in equity markets remains shaky. 

What trade wars mean for supply chains and consumers

The ripple effects of the 2025 trade war are grinding through global supply chains, one industry at a time. 

From electronics to autos to medicine, the cost of moving goods worldwide is rising. Let’s talk about a few industries in particular. 

Trade wars’ impact on electronics and semiconductors

Electronics are at the heart of it. In 2024, the US imported $146 billion of electronics from China. With tariffs on those goods jumping, companies could be looking at an added $182 billion in annual costs if these rates stick around.

This is also a problem for consumers. Take Apple, for example. With no lasting exemption for phones, an iPhone 16 Pro Max could climb from $1,199 to over $1,800. Add in uncertainty about future duties on laptops, chips and smart devices, and the entire sector is on edge. 

Trade wars’ impact on the automotive industry

Carmakers are in a similar bind. The US has raised tariffs on Chinese-made vehicles from 25% to more than 100%. And it’s not just the finished cars — batteries, chips, and other parts sourced from China are also caught in the crossfire.

For electric vehicle manufacturers, in particular, this is a serious hit. Chinese battery components are essential for many US and European EV brands. With supply chains suddenly tangled in red tape and higher costs, some automakers are pausing production or switching suppliers.

Trade wars’ impact on pharmaceuticals

Even the healthcare system is feeling it. The US depends heavily on China for key medical supplies and pharmaceutical ingredients. With new tariffs, prices are climbing, and existing shortages are worsening.

Industry experts are warning of major disruptions. Everything from common medications to hospital-grade equipment is likely to get more expensive. And in a healthcare system already under pressure, even a small bottleneck can cause big problems down the line.

Did you know? European markets are already seeing signs of a spillover. Chinese exporters, locked out of the US by tariffs, are redirecting goods to Europe, especially in tech and consumer goods.

Rising tariffs, shaky markets, what’s next?

The big picture regarding the 2025 US-China trade war still looks hazy amid real implications for investors, business leaders and policymakers worldwide.

Let’s examine the short-, medium- and long-term outlooks. 

Short-term

There’s been a bit of short-term relief. When the US announced exemptions on some tech products – like smartphones and laptops – from the harshest tariffs, markets breathed a sigh of relief. The S&P 500 saw an uptick, and global markets followed suit. Tech-heavy Asian indexes rallied, and European markets, including Germany’s DAX and the UK’s FTSE 100, climbed. Even US bank earnings helped push optimism a bit further.

Still, it’s probably temporary. These exemptions are under review, and the bigger trade policy feels like shifting sand. 

Medium-term

Looking ahead a bit further, the risks start to grow. If the trade conflict drags on, it could seriously slow down global growth. JPMorgan recently raised its global recession risk to 60%, and that’s no small thing. Central banks are already weighing their next moves; interest rate adjustments, coordinated actions, and contingency planning are all back on the table.

Some voices, like former UK Prime Minister Gordon Brown, call for a global response similar to what we saw during the 2008 financial crisis. Meanwhile, businesses are rethinking their supply chains and scrambling to find alternatives, something that’s easier said than done.

Long-term 

You’re seeing a pivot with nations exploring new trade deals and trying to reduce reliance on traditional powerhouses. China, for example, is pushing harder to internationalize the yuan and accelerate its Belt and Road Initiative. Conversely, the US is leaning into domestic manufacturing and trying to reduce its dependence on imports.

And the consequences could be massive. The WTO has warned that trade between the US and China could shrink by as much as 80%. That’s a huge shift, considering these two countries account for about 3% of global trade. If that drop materializes, it could rattle the global economy.