Before diving into strategy, you must understand the tool.
Why it works: AVWAP represents the "true cost" of the stock for everyone who bought since the anchor point. If price is above AVWAP, those holders are in profit (support). If below, they are at a loss (resistance). maximum trading gains with anchored vwap pdf
"Standard VWAP tells you where the day's average price is. Anchored VWAP tells you where smart money is likely to defend their position from a specific decision point—whether that was 3 hours ago or 3 weeks ago." Before diving into strategy, you must understand the tool
By mastering the techniques in this PDF, you will stop trading random support/resistance levels and start trading levels that actually have volume-weighted conviction behind them. Why it works: AVWAP represents the "true cost"
Find a strong directional move (impulse wave). Anchor your VWAP to the start of that impulse.
One of the greatest leaks in trading profitability is being stopped out prematurely due to noise. The AVWAP acts as a dynamic trailing stop. As long as price remains on the trend side of the AVWAP, the structural thesis remains valid. This allows traders to ride trends significantly longer than standard candlestick stops would allow.