Time-Weighted Average Price

TWAP (time-weighted average price) is a patient way to trade big. Instead of dumping a 100-million order at once and shoving the price, an algorithm breaks it into small, equal pieces and sends one every few minutes over, say, two hours. The result is an average price close to the market's average over that window.

It is simple and predictable, which is both its strength and weakness: savvy traders can sometimes spot the steady rhythm. Its cousin VWAP adjusts slice sizes to match trading volume instead.