Trading Strategies and VWAP Analysis

Overview

Brian Shannon joined the show to discuss practical trading strategies, focusing on price action, VWAP (Volume Weighted Average Price), and market resilience amid high volatility. The conversation covers trading timeframes, risk management, and interpreting multiple VWAP anchors for intraday and swing trading.

Market Environment and Approach

• Markets remain volatile and resilient, often rising despite negative news.
• Emphasis on "only price pays"—prioritizing price action over trying to rationalize market moves based on news.
• Advocates for creating a disciplined strategy centered on price and volatility awareness.

VWAP and Intraday Analysis

• Uses multiple VWAP anchors: week-to-date, contract/session highs, overnight session, and NYSE open to provide context for trade decisions.
• Recommends comparing VWAPs from different timeframes, especially after significant overnight ranges.
• Watching for VWAP convergences/divergences can highlight potential support/resistance zones.

Trade Execution and Risk Management

• Prefers to buy after price shows strength above VWAP rather than on pullbacks.
• Uses a two-minute stop below the relevant bar for day trades; swing trades require a broader perspective and stops.
• For shorts, looks for confirmation as the price fails to reclaim VWAP after a bounce.

Timeframes and Charting Practices

• For intraday trades: starts with a one-minute chart for the first 15 minutes, then shifts to a two-minute chart.
• During unusual volatility, has used even shorter timeframes like 15 seconds.
• Swing trades are preferred, typically lasting a few days to several weeks.
• Uses 30-minute charts and a true five-day moving average for intermediate trend analysis.

Additional Techniques and Tips

• Confirmation is key: waiting for a clear move or “confirmation candle/bar” before entering a trade.
• In downward markets, anchors VWAP from recent lows for short setups.
• Highlights the importance of both regular trading hours and overnight VWAPs for a full picture.
• Advises managing trades based on market structure and not chasing moves without confirmation.

Recommendations / Advice

• Monitor both session and overnight VWAPs for context, especially during volatile or news-driven periods.
• Use precise, shorter timeframes for entries, then quickly switch to higher timeframes for position management.
• Combine technical anchors with awareness of macro events (e.g., Fed meetings, contract rollovers).

Questions / Follow-Ups

• Explore best practices for adjusting stops and scaling out during rapid volatility.
• Consider further education on combining multiple VWAP anchors for advanced strategies.