Anchored VWAP (Volume Weighted Average Price) is a trading tool that shows the average price of a stock based on both price and volume, starting from a specific point in time. It helps traders find important support and resistance levels. It is more accurate than normal VWAP because you can set it from any high-impact event like earnings, news, or breakouts.

What is Anchored VWAP in Trading?

Anchored VWAP is a special version of VWAP that starts from a point you choose on the chart. It shows the average price of a stock with volume included, from that point forward. Traders use it to see if the current price is above or below the average price since a major event. This helps them understand market sentiment and make better trades.

Why is Anchored VWAP Important in Trading?

Anchored VWAP is important because it gives more accurate price levels after key events. It helps traders see the fair value of a stock since a certain day or moment. This is better than normal VWAP, which resets every day. Traders use it to find good places to buy or sell based on the average cost of traders in the market.

How Does Anchored VWAP Work?

Anchored VWAP calculates the average price by combining volume and price starting from a point you select. You can set the anchor on a specific date, candle, or event. The line then shows how the average price moves from that point. If the price stays above the line, buyers are in control. If it's below, sellers are stronger. It helps you follow the real market direction.

When Should You Use Anchored VWAP?

You should use Anchored VWAP after big events like earnings, breakouts, breakdowns, or news. Set the anchor at the point where the event happened. It will show the average price from that time. This helps you know if buyers or sellers are in profit, and gives you a better idea about future price moves.

What are the Advantages of Anchored VWAP?

Anchored VWAP gives more control and flexibility. You can decide where to start the calculation. It helps you see the real cost of traders after big moves. It works well on all timeframes – daily, weekly, or intraday. It helps you avoid fake breakouts and gives you a better view of market structure. Traders love it because it works in both trending and sideways markets.

Can Beginners Use Anchored VWAP Easily?

Yes, beginners can use Anchored VWAP easily. Most trading platforms like TradingView have a built-in Anchored VWAP tool. You just right-click on a candle and choose "Add Anchored VWAP." Start from a big move or event and follow how the price behaves around the line. It helps new traders avoid wrong entries and understand support/resistance better.

How is Anchored VWAP Different from Regular VWAP?

Regular VWAP starts from the market open and resets daily. Anchored VWAP can start from any candle or date you choose. This makes it more powerful for swing and positional traders. Regular VWAP is better for intraday trades, while anchored VWAP works well after news, earnings, or chart patterns. Anchored VWAP is like setting your own starting point.