A moving average starts wherever its lookback happens to start. An anchored VWAP starts at the event that matters: the earnings release,
or the moment a catalyst hit. It measures the average price everyone has paid since then, weighted by volume, so it tells you
whether buyers or sellers have been in control since the news. Buy the dip into it that reclaims, risk the trade to it, and trail with it.
An earnings report is the cleanest one: a fixed moment when the whole market reprices the stock.
Check how much traded on the release. You want at least 20% of the stock's average daily volume in the after-hours session; 50 to 70% is better.
Best of all is a daily chart breaking out of a long, clean base on that news, on volume.
How much volume a stock does on its report tips you off to how significant the news is, and to the kind of participants who'll be there when the bell rings.
2
Anchor the VWAP on the release candle
Click the candle where the news hit: that's where the buyers came in and where the move started. Any timeframe works; a 15-minute chart with extended hours on shows the after-hours reaction.
For a strong stock in an uptrend, change the source from the usual price to the low of each bar.
The low-source line runs a little under the normal one, roughly half an intraday ATR, and it's often a better picture of support.
The anchor turns the line into a question with a clear answer: on average, is everyone who has traded since the news making money or losing it?
3
Read who's in control
Price holding above the anchored VWAP: buyers are still in control of the move the news started.
A messy first day is fine as long as it holds the line. Zoomed in, a weak close looks bad; zoomed out, the daily chart is still breaking out.
Price holding below it: there's no reason to think buyers are in control, however good the report sounded.
This is context, not a signal. It frames the trade, shows likely support, and shows how far the stock can trade without breaking the momentum from the news.
4
Buy the dip and reclaim into the line
On day one or day two, the stock dips off the open toward the anchored VWAP and immediately reclaims.
It doesn't have to touch the line exactly. Getting close is enough to give the trade its shape.
A dip and reclaim at the open is a common setup on its own. Into the VWAP from the report, it's a much better one.
Don't buy the dip; buy the strength after the dip. The reclaim is the strength.
5
It has to hold here
The line is where the trade is wrong. If the stock is going to stay strong, it has to hold the VWAP from the report.
Put the stop under the line, not at some random percentage. The closer the entry is to the line, the smaller the risk and the better the reward.
Bought far above the line, the same idea carries much more risk. That's a chase, not this setup.
Knowing exactly where it has to hold is what turns a strong stock into a trade with defined risk and reward.
6
Trail it on daily closes
Once you're in the swing, the anchored VWAP becomes the trailing stop.
The rule: when a daily bar closes below the line, cut at least half the position.
Take profits along the way if you like. For the runner, the line is how you stay in. If a stock that broke down later reclaims it, the trade can come back on the table.
The best ones hold this level and keep going. A rule tied to the line saves you from full losses and keeps you in the winners.
Where to anchor
One anchor per idea: the moment the move began. Move it and you've changed the question.
Earnings release
The candle where the report hit, after hours or before the open. The more volume on the release, the better the anchor.
A market-wide catalyst
The bar where a big event started the move, like an election-night rally that began overnight. Every name it broke out gets the same anchor.
A swing high or low
The last major turn. SMB's own tools anchor these automatically, alongside the normal and the high or low-source VWAPs.
What kills it
Any one of these and there's no trade, a smaller one, or a cut.
A thin reaction
Under 20% of an average day trades after hours. The report didn't bring in real size, so the line carries little weight.
Below 20%: lower expectations or pass.
No base, no breakout
A choppy daily chart with no long base to break. The catalyst has nothing to release.
No daily breakout: it's just news.
Holding below the line
Price closes and stays under the VWAP from the report. Sellers have taken control of the move.
Below it: no long until it reclaims.
Far from the line
The dip never comes near the anchored VWAP, so the stop would have to be miles away.
Too far: the risk and reward are gone.
Why not just use a moving average?
On a strong stock it can look like a moving average. It isn't one, and the differences are the whole point.
01
It counts volume
Prices that traded on big volume weigh more; quiet prices weigh less. The result is the average transaction in the stock, the price the crowd actually paid.
02
It starts at an event
It's cumulative from one inflection point, not a rolling window. Nothing drops off the back, so it keeps answering one question: who has been in control since the news?
03
The source is yours to set
The normal VWAP uses the bar's typical price. For a strong stock in an uptrend, calculating it from the lows sets the line a little lower, closer to where buyers really defend.
How the line is built: four made-up 15-minute bars from the anchor on. Each bar adds its price times its volume; the line is the running total divided by the running volume.
Bar
Low
Volume
Low × volume (running)
Volume (running)
AVWAP, source low
The release
46.80
1,150k
53,820k
1,150k
46.80
After hours 1
49.90
520k
79,768k
1,670k
47.77
After hours 2
50.20
360k
97,840k
2,030k
48.20
After hours 3
50.20
300k
112,900k
2,330k
48.45
The heavy release bar keeps pulling the line back toward 46.80 even as price climbs above 50. That's the volume weighting at work: the biggest
crowd bought down there, and the line remembers it.
Grade the report first
After-hours volume as a share of the average day is a metric SMB has tested and uses in its live models. Type in your stock's numbers, in millions of shares.
It starts with the walkthrough's.
0%20%50%80%+
The more volume on the release, the better
A report that trades half a normal day before the market even opens has pulled in the funds that move a stock for weeks. A report that
trades a sliver of it hasn't, and its anchor means less.
20% is the minimum. 50 to 70% is better.
Then look at the daily chart. A long base breaking out on the news is the textbook version: something you'd want to own, framed on a shorter timeframe by the line.
The trail: the best ones hold the line
Trend trades are hard to get into, hard to stay in, and hard to know when to leave. The same line does all three jobs. On the left, a stock that holds it
for weeks. On the right, one that closes below it.
Hold: closes above
A pullback that tags the line and closes above it is the trend doing its job. No reason to think sellers have taken over.
Cut: a close below
The first daily close under the anchored VWAP. Cut at least half, whatever the intraday wiggles looked like.
Back on: a reclaim
A stock that breaks down and then reclaims the line can come back on the table. Until it does, buyers aren't in control.
The two charts are illustrative. The rule is about the daily close, not intraday pokes through the line: the left chart wicks into it four times and never closes below.
Size it off the line
The stop goes under the anchored VWAP. Pick how far under (the walkthrough uses a dime) and what you're willing to lose, and the size falls out.
The default numbers are the walkthrough's, and the dollar risk is only an example.
Cut at least half on a daily close below
That's the systematic trailing stop for the swing. It doesn't need an opinion about the news, the market or the analyst calls. The line answers whether
buyers are still in control.
The best ones hold this level and keep going.
The rest of the position is your call. Many traders give it one more day to reclaim, others trail it under the next higher low. Write your rule down
before you're in the trade.
One pattern, over and over
The video walks through recent earnings and catalyst trades. The same picture keeps showing up: a dip toward the VWAP from the event, and a reclaim.
Here's what each one showed, as told in the video.
Stock
Catalyst
What it showed
Twilio
Earnings
A multi-year base broke out on the report. Day one was messy with an ugly close but held the line; day two dipped off the open into it and reclaimed.
Oracle
Earnings
Respected the VWAP from the release for months. Bought on day one and trailed on closes below the line, it kept the trade on.
Palantir
Earnings
A day-one dip and reclaim at the open, heading toward the line without quite reaching it. Long from day one, there was no reason to think sellers had taken over.
AppLovin
Earnings
Looked extended on the daily after a big gap. It tested the line on day one and rallied into the close, then dipped toward it and reclaimed at the day-two open.
Root
Earnings
Ran from about 80 to 160 before it topped. It broke down from a lower-high consolidation through the line and kept holding below it: the place to cut.
Bitcoin
Election
Broke out to all-time highs overnight. The first pullback retested and held the VWAP from the catalyst, consolidated on it for days, then broke out again.
Tesla
Election
Sold into the line on day one, dipped below and reclaimed immediately, then held it in a tight range into the next session.
GEO Group
Election
Held the line in premarket, traded off it on day one, dipped back through it in the next premarket and opened right at it for a day-two drive.
Beyond earnings: any catalyst
The same idea works for any event that starts a move. Anchor where the move began, and you don't have to be anchored to prices you missed.
Missed the start?
Plenty of moves break out overnight or before you're watching. You don't need the price below the breakout. Frame the trade around the VWAP from the catalyst instead.
The first pullback
After a catalyst breakout, the first pullback that retests and holds the line is a high-quality spot. If your play is buying pullbacks, this is your major level of interest.
As it resets
A stock that consolidates on the line for days is resetting. Watch the line as it catches up: it's a place to re-enter the trade.
“Don't buy the dip. Buy the strength after the dip.”The spirit of Brian Shannon's line, as quoted in the video. He's the go-to name for anchored VWAP work.
Set it up in TradingView
Anchored VWAP is on almost every platform. In TradingView it's a drawing tool, not an indicator.
Hover over the toolbar on the left of the chart and open the drawing tools.
Scroll to Volume-based and pick Anchored VWAP.
Click the candle to anchor from: the earnings release, or the bar where the catalyst hit. For an after-hours report, turn on extended hours first.
Right-click the line, open Settings, and change the Source to low for a strong stock in an uptrend.
Check it on the daily chart too. That's where the trailing rule lives: a daily close below means cut at least half.
Watch the video
An SMB Capital trader shows how the desk anchors VWAP to earnings and catalysts to frame swing trades, nail the pullback, and know when to get out.
The anchored VWAP is pure context: whether buyers or sellers are in control since the event, and where buyers are likely to step in.
It works with whatever playbook you trade. Frame the trade around it, buy the strength after the dip, and let a daily close decide when you cut.
A real catalyst: 20% or more of the average day after hours.
Anchor on the release candle; source low for strong stocks.
Buy the day-one or day-two dip that reclaims near the line.
Stop under the line. A daily close below: cut at least half.
From an SMB Capital video on anchored VWAP for earnings and catalyst trades. The after-hours volume thresholds, the low-source tweak, the cut-half rule and the
stock examples are as told in the video. The walkthrough, the two trail charts, the table's bars and the calculators' default numbers are illustrative, made-up bars, not any stock's actual prints.