Time-weighted average price

Hey kiddo, do you know what the average is? It's like when you add up a bunch of numbers and then divide them by how many numbers you added.

Now, let's talk about something called Time-Weighted Average Price, or TWAP for short. Say you wanted to know the average price of something over a period of time, like a day. But the thing is, the price changes throughout the day. So we don't just want to add up all the prices and divide by how many there were, because that wouldn't really give us a good idea of what happened during the day.

So instead, we use something called the TWAP. It's like the regular average, but it takes into account the time of day and how long the price was at a certain point. Basically, it gives more weight to the prices that were around for a longer time.

Here's an example: Say you wanted to find the TWAP for a stock over a whole day. You would take the price of that stock every few minutes or so and multiply it by how long it stayed at that price. Then add up all those results and divide by the total time of the day. That's your TWAP!

TWAPs are used a lot in finance to help people understand the average price of a stock or other financial asset over a certain period of time, and can help people make better decisions about buying or selling that asset.