Trading Insights and Anchored VWAP

Overview

Brian Shannon, expert trader and author, shares in-depth insights on his trading philosophy, risk management, and the practical application of anchored VWAP (Volume Weighted Average Price) across various asset classes and timeframes in this comprehensive podcast interview.

Core Trading Philosophy

• Emphasizes the principle that “only price pays”—focus on actual price action, not narratives or opinions.
• Advises against blindly buying dips; instead, wait for evidence that buyers have regained control.
• Prioritizes risk management as the top job in trading; quick exits and ability to re-enter are crucial.
• Evaluates trades using risk/reward ratios, preferring setups where potential reward outweighs risk (ideally 1:2.5 or higher).
• Recommends selling into strength and adjusting stops to protect profits.

Breakouts and Trade Entries

• Avoids buying traditional breakouts if the stock has already expended substantial energy to reach that level.
• Always assesses where a move began, where resistance may develop, and if the risk/reward justifies entry.
• Uses higher lows above a rising moving average to identify renewed upward momentum for entry.

Anchored VWAP Application

• Anchors VWAP to notable psychological or fundamental events (IPO, highs/lows, earnings, elections, tariffs).
• Uses multiple VWAP anchors as confluence indicators for support/resistance and to identify a “pinch” (tight range).
• Applies the anchored VWAP on all timeframes and asset types, including equities and crypto.
• Demonstrates the “two-minute exit” strategy for intraday profit-taking as new short-term higher lows form.

Mistakes and Subjectivity in Anchoring

• Common mistake: anchoring from personal buy points rather than significant market events.
• Stresses using “obvious” market events for anchoring because these are universally followed and psychologically meaningful.
• Warns against curve-fitting and overly subjective anchor placements; repeatability and market relevance are key.

Position Sizing and Stops

• Determines position size based on the tightness of the stop, which depends on trend definition and recent higher/lower lows.
• Prefers stops under recent structural lows instead of arbitrary percentages.
• Tightens stops when adding to winning positions to limit potential loss on new shares.

Market and Trade Examples

• Illustrates concepts using recent trades and charts (GM, Hertz, Circle, Box, DOCS, Rocket Lab, Archer, crypto assets).
• Recommends avoiding overly extended stocks and waiting for consolidation before entry.
• Applies the same VWAP anchoring logic to both long-term and short-term trades.

Risk Management and Psychology

• Highlights the importance of managing emotions and not anchoring to hope or bias.
• Encourages taking partial profits and adjusting stops as moves progress.
• Emphasizes discipline to avoid giving back profits and the pitfalls of trying to catch exact tops or bottoms.

Crypto and Alternative Assets

• Uses anchored VWAP and similar event-based anchoring for crypto assets.
• Notes advantages of 24/7 crypto markets for risk management over ADRs with significant overnight gaps.
• Suggests Bitcoin is currently stronger than Ethereum due to lack of overhead supply.

Tools and Resources

• Recommends using simple moving averages for clarity and better interpretation.
• Daily educational updates, trade alerts, and webinars are available through his AlphaTrends.net subscription service.

Decisions

• Use anchored VWAP for all timeframes and asset classes based on significant events.
• Prioritize risk/reward and risk management above all else.
• Wait for confirmation of buyer control before entering trades.
• Adjust stops upward and take partial profits during strong moves.

Action Items

• TBD – Listeners/Traders: Review personal anchoring methods and align with significant market events, not personal entries.
• TBD – Listeners/Traders: Implement disciplined risk management strategies, including using anchored VWAP and calculated stops.
• TBD – Interested Subscribers: Visit AlphaTrends.net for further education, daily updates, and webinars.

Recommendations / Advice

• Focus only on actual price action; ignore stories and personal opinions.
• Avoid trading breakouts after large prior moves; wait for consolidation and confirmation.
• Anchor VWAPs at major psychological and market-moving events for best results.
• Take profits into strength and consistently move stops to protect capital.