Beyond the Daily Reset: Master Your Strategy with the Anchored VWAP

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• What is the Anchored VWAP?
• Achieve Trading Gains with Anchored VWAP
• Anchored VWAP vs. Moving Averages
• Common Mistakes to Avoid
• Conclusion
• Frequently Asked Questions

Many traders using standard Volume-Weighted Average Price (VWAP) is a staple of their intraday charts. It is considered the “fair value” that helps determine if you’re buying a premium or getting a deal. But there is a limitation: traditional VWAP resets every single morning. What happens if a massive trend started three days ago after an earnings report? Or what if a stock has been trending since the first of the year? 

This is where anchored vwap comes into play. It allows you to pick up the exact starting point of the calculation; this tool transforms a simple intraday average into a powerful psychological map of the market.  

What is the Anchored VWAP? 

The anchored vwap is a technical analysis indicator that calculates the average price of an asset, weighted by volume, starting from a specific point in time chosen by the trader. While the standard VWAP tied to the market open, the anchored version is tied to a significant event, such as; 

✅ Major swing highs or lows 

✅ Earnings announcements 

✅ Significant news events 

✅ Start of a month, quarter or year 

When you use the anchored vwap indicator, you are asking: “What is the average price paid by every trader who has entered this stock since this specific event happened?” 

Why the “Anchor” Matters? 

The anchoring vwap power lies in market psychology. A major event like earnings report changes the sentiment of stock. The people who buy after that report are part of a “new” group of investors; by anchoring the calculation to that date you can see the average cost basis of that specific group.  

If the price remains above that line, the majority of people who bought since the earnings report are in profit. If it dips below, they are “underwater.” 

Achieve Trading Gains with Anchored VWAP 

To reach maximum trading gains with anchored vwap, you shouldn’t just slap a line on a chart and hope for the best. Here you can see three high-probability strategies: 

Note: The strategies discussed below are for educational purposes only and do not constitute financial advice. 

The Pullback Play (Support/Resistance)	In a strong uptrend, look for the most recent major swing low or breakout candle, place your anchor there. As the stock rallies and eventually pulls back, the anchored vwap indicator will often act as a “moving floor.”
The Earnings Anchor	Earnings gaps are the ultimate “change in character.” Anchor your VWAP to the high-volume gap-up candle. If the stock drifts back toward that gap over the next few weeks, the anchored line provides a high-confidence entry zone.
The “Pinch” Strategy	Use multiple anchors. For example, anchor one line to the Year-to-Date start and another to a recent major low. When these two lines converge (the “pinch”), it creates a zone of confluence. A breakout or bounce from a confluence zone is significantly more powerful than a signal from a single line.

Anchored VWAP vs. Moving Averages 

Traders mostly ask that “Why not just use a 50-day moving average?”. The difference is the volume. A Simple Moving Average (SMA) treats a day with 1 million shares traded the same as a day with 10 million shares. The anchored vwap gives more weight to the 10-million-share day. It reflects where the money is, not just where the time has passed. Let’s see some of the differences between VWAP and Moving Averages.  

Feature	Moving Average	Anchored VWAP
Purpose	Identifies the general “direction” or smooth path of the price.	Identifies the true “average cost” of all shares traded.
Calculation	Price over Time	Price x Volume since Anchor
Starting Point	Fixed Period (e.g., 50 days)	Custom (Event-based)
Accuracy	Lags during high volume	Dynamic and precise
Reset Period	It is continuous and does not reset based on the time of day.	Typically resets daily at the market open (Intraday).
Sensitivity	Sensitive only to price spikes, regardless of how many shares were traded.	Very sensitive to large block trades or high-volume bursts.
Timeframe Use	Effective on all timeframes, from 1-minute to Yearly charts.	Primarily an Intraday tool (unless using “Anchored VWAP”).

Common Mistakes to Avoid 

To ensure the right use of the tool, it is necessary to keep some tips in mind: 

🔸 Don’t Anchor Random Spots: An anchor is only as strong as the event it’s tied to. Use clear “turning points” on the chart. 

🔸 Check Different Timeframes: An anchor that looks significant on a 5-minute chart might be invisible on a Daily chart. For swing trading, stick to higher timeframe anchors. 

🔸 Volume is Key: If you anchor to a point with very low volume, the resulting line won’t have much “weight” behind it. Look for the “volume spikes.” 

Conclusion 

The anchored VWAP is not just an indicator; the tool brings context to the noise of the market. Understanding where the “average” trader positioned relative to a major event will help you predict support and resistance levels. Whether you are a day trader by analyzing the latest news or swing trader by analyzing long-term breakout, mastering this tool will help you fast track to maximum trading gains with anchored vwap.  

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DISCLAIMER: Investment in securities market are subject to market risks, read all the related documents carefully before investing. The securities quoted are exemplary and are not recommendatory. Full disclaimer: https://bit.ly/naviadisclaimer.