This podcast interview featured Brian Shannon, a veteran trader and author, focusing on his expertise with anchored VWAP (Volume Weighted Average Price) as his primary trading tool.
Brian discussed the rationale and techniques behind using anchored VWAP across various markets and timeframes, emphasizing confirmation entries, supply and demand, and risk management.
The conversation covered algorithmic trading, emotional discipline, data-driven strategies, and the importance of adapting to changing market conditions and trader experience levels.
Action Items
no explicit action items were assigned during this meeting
Anchored VWAP Overview and Principles
Brian Shannon identifies price as the foundational market truth, with anchored VWAP as the essential tool combining price, volume, and time.
Anchored VWAP is described as the ultimate sentiment tool, indicating whether buyers or sellers are in control from any chosen point in time (e.g., earnings, IPO, or major event).
Unlike standard daily VWAP, the anchored VWAP can be applied from any significant market event or time and across different timeframes and asset classes.
The tool is valuable for identifying levels of support and resistance, and for understanding control dynamics in various market conditions, including stocks, cryptocurrencies, and other instruments.
Confirmation, Trade Management, and Risk
Brian stresses the importance of confirmation entries rather than buying at perceived support without evidence; confirmation trading limits unnecessary losses.
Multiple timeframes and observing shorter-term behaviors around key levels (VWAP, moving averages) help identify low-risk entry points and appropriate stop placements.
Trade management involves scaling out of positions, raising stops as trades become profitable, and never relying solely on price targets.
Effective risk management and strict adherence to predefined rules are described as crucial for longevity and consistency in trading.
Data, Algorithms, and Journaling
The majority of market volume is driven by algorithmic trading, particularly VWAP-based programs used by large institutions to minimize market impact while executing big orders.
Recognition of algorithmic behavior (such as price action around daily pivot points or VWAP) can inform retail trading strategies and increase edge.
Brian notes the criticality of collecting and reviewing trade data for new traders, though he admits to a less systematic approach personally due to experience and preferences.
Tools like trading journals and analytics platforms can help identify edge and optimize strategies, especially for beginners.
Adapting to Market Conditions and Trader Experience
Brian observes that many retail traders are attracted to day trading and high-volatility stocks without proper skill or experience, leading to frequent losses.
He recommends swing trading as a preferable timeframe for most, allowing time to plan, confirm entries, and manage trades methodically.
Beginner traders should follow structured rules strictly before gradually learning to adapt and optimize their approach; veteran traders often operate differently from widely taught retail "rules."
Social media and the low barrier to market entry present both opportunities and risks, especially from hype-driven, high-volatility themes.
Chart Patterns, Simplicity, and Strategy Development
Emphasis is placed on understanding the rationale behind chart patterns rather than executing based on visuals alone; patterns represent shifts in supply/demand dynamics.
Simplicity is regarded as key to effective trading, focusing on core principles—supply, demand, and market structure—rather than overcomplicated indicators.
Having multiple trading strategies is important because markets display different behaviors across conditions; adaptability is necessary.
Brian developed his approach to anchored VWAP independently, contributed to its adoption in trading platforms, and encourages further education via his book and online resources.
Emotional Discipline and Career Longevity
Emotional discipline is best maintained by controlling trade size and being aware of volatility; increased emotion signals excessive risk.
Losses are inevitable; sticking to rules and quickly exiting trades that violate one’s criteria is critical, as is learning from past mistakes.
A sustainable trading career builds on disciplined risk management, adaptability, and continuous learning from both market data and personal results.
Decisions
Anchored VWAP identified as Brian Shannon's primary and recommended trading tool — due to its ability to objectively indicate control between buyers and sellers, its adaptability across assets and timeframes, and its role in professional and algorithmic trading.
Open Questions / Follow-Ups
No specific open questions or follow-ups were raised during the conversation.