Anchored VWAP is a powerful tool – but it’s not a standalone solution. Relying on any single indicator without understanding the broader picture can lead to poor decisions.

Brian’s approach starts with market structure first, then uses Anchored VWAP to fine-tune execution and risk.

No indicator works in isolation

There’s a common temptation to search for one indicator that does it all. That mindset usually creates tunnel vision.

• Indicators provide information, not answers
• Context determines whether a signal has meaning
• Structure always outweighs signals

Anchored VWAP helps identify short-term supply and demand – but only after the bigger picture is understood.

The 5-day moving average comes first

For intermediate-term decisions, the 5-day moving average plays a critical role.

• A stock below a declining 5-day moving average is not a long candidate
• A stock above an advancing 5-day moving average is not a short candidate
• This simple filter keeps traders aligned with short-term trend direction

This rule alone eliminates many low-quality trades.

Important note

The exact value of Anchored VWAP matters far less if price is fighting the short-term trend.

Trend alignment comes before precision.

How Anchored VWAP fits into the process

Once market structure and short-term trend are aligned, Anchored VWAP becomes a powerful refinement tool.

• Identifies areas of fair value after key events
• Helps define risk with greater precision
• Highlights where supply and demand are shifting

This is where trade plans become tighter and more intentional.

Caution

Using Anchored VWAP without regard for trend often leads to countertrend trades with poor odds. Precision does not compensate for misalignment.

The takeaway

• Anchored VWAP is a tool, not a system
• Market structure sets the bias
• The 5-day moving average defines short-term trend
• Use Anchored VWAP to refine entries and risk

When structure, trend, and supply–demand are aligned, Anchored VWAP becomes most effective – not on its own, but as part of a disciplined process.