Anchored VWAP helps answer one of the most important questions in trading: where are participants positioned? It gives context to price by showing the average price paid since a specific event.

This insight helps traders understand sentiment before committing risk.

What Anchored VWAP actually represents

Anchored VWAP reflects the average price where traders have transacted since the anchor point.

• The average price for long participants
• The average price for short participants
• A reference for who is under pressure and who is comfortable

This creates a more complete picture than price alone.

Why sentiment matters

Understanding where participants are positioned helps frame expectations.

• Longs below their average price may feel pressure
• Shorts above their average price may feel vulnerable
• Sentiment shifts as price moves away from the average

These dynamics influence behavior around key levels.

Important note

Anchored VWAP does not predict direction. It provides context for decision-making.

Context improves risk placement – not certainty.

Using Anchored VWAP to frame risk

Once context is clear, Anchored VWAP can help define low-risk areas.

• Potential entries occur near the average price
• Stops can be placed against nearby structure
• Confirmation allows traders to lean into positions

Risk is defined by structure, not by hope.

Example

A long trade may be considered near Anchored VWAP once price shows strength, with risk defined below a nearby intermediate-term low. A short trade may use the same logic in reverse.

Caution

Anchored VWAP is not a standalone signal. Without confirmation from price and trend, it is simply a reference.

The takeaway

• Anchored VWAP shows where participants are positioned
• It helps assess sentiment and pressure
• Low-risk areas emerge with confirmation
• Structure and price behavior come first

Anchored VWAP helps traders see the market from both sides – long and short – before acting.