" by Brian Shannon, CMT. This methodology moves beyond traditional session-based indicators by allowing traders to "anchor" the Volume Weighted Average Price (VWAP) to significant market events to reveal hidden support and resistance levels. Foundational Concepts
The primary methodology for achieving maximum trading gains with the Anchored Volume Weighted Average Price (AVWAP) was popularized by Brian Shannon, CMT
To achieve maximum gains, traders must utilize AVWAP to identify trends early and exit before reversals. 1. Trend Continuation Strategy
Even with a high‑probability setup, no single trade should risk more than 1–2% of your trading capital. Anchor VWAP analysis helps you identify tighter, more logical stop levels, which in turn allows you to size positions more aggressively while keeping risk constant. This is the secret to compounding gains over time. maximum trading gains with anchored vwap pdf
After a clear impulsive move. The setup: Anchor to the exact low of a bullish reversal candle (or high of a bearish reversal). The gain: As price retests this level, the Anchored VWAP acts as a magnet. Entering at the VWAP with a stop below the anchor yields a 3:1 or higher risk-to-reward ratio.
Do not chase. Wait for price to correct back down (in an uptrend) to the Anchored VWAP line.
For stocks post-earnings or post-IPO. The setup: Anchor to the first day of trading after the report. The gain: Institutions accumulate over weeks. Buying near the Anchored VWAP on the 4-hour chart allows you to ride the trend for 20-30% moves. " by Brian Shannon, CMT
: The AVWAP from a swing low six months ago aligns perfectly with the AVWAP from an earnings report three weeks ago. A pullback to this dual-AVWAP zone represents a maximum-reward, minimum-risk entry point. 4. Advanced Risk Management Techniques
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Trading with AVWAP requires patience. Because the indicator is designed to track broader trends, it can lag during violent reversals. This is the secret to compounding gains over time
If you want to dive deeper into chart examples, step-by-step calculations, and advanced confluence setups, consider downloading a guide from reputable market psychology and technical analysis platforms. If you'd like, let me know:
Disclaimer: This article is for educational purposes only. Trading financial instruments involves risk. Always use stop losses and consult a financial advisor.
Using the AVWAP formula, we can calculate the AVWAP for the 5-minute period:
Volume Shelves: Use Volume Profile to find high-volume nodes that align with your AVWAP line for "confluence zones."