Video Transcript:
Hello everyone, it’s Dale here. Welcome to this video where I’ll show you my three favorite anchored VWAP setups. I’ll be focusing mostly on the trade entries. I won’t be focusing on stop-loss, take-profit placement, position management, or any of that stuff. I just want this video to be quick, to the point, and all about the trade entries.
All right, before we get to it, I have a little gift for you — my VWAP book. It’s a paperback book that I’ll send you for free. I’ll even cover the shipping. Just follow the link below this video, fill in your address where you want me to send the book, and I’ll send it over. No strings attached — it’s a little gift from me to you.
All right, let’s get to it. Let’s cover the first setup: anchoring the VWAP to an important swing point. All the examples I’m going to show you today are mostly on the EUR/USD and the ES. You can obviously use this on other trading instruments, but the examples are on the EUR/USD and the ES using 30-minute charts. That means these are going to be intraday trades.
So, setup number one: anchoring VWAP to an important swing point. What this setup is all about is looking at the chart and identifying the most important or prominent swing point on that chart — a swing point that every trader who’s trading the same chart as you sees as well. In this example, that would be this swing point — the most prominent place on the chart.
You anchor the VWAP there — to the candle that formed the high. That’s this candle. This candle formed the high of that swing point, so you anchor the VWAP there. Then you wait for pullbacks. Here’s the first pullback — that means you go short from there because the price was below the VWAP, and when it hit the VWAP, you go short.
The reason the price reacts there is because the VWAP represents the fair or average price since this swing point. That’s what VWAP represents — a fair price. Sellers want to sell here for a fair price. They don’t want to sell from down here because that would be too cheap. They want to sell at the fair price. And it’s not just retail traders — these are algorithms and big trading institutions. By the way, VWAP and anchored VWAP are among the most-used indicators that algos and big trading institutions use.
All those institutions, traders, and algorithms want to sell for a fair price, which is represented by VWAP. That’s why the price reacts here. So you go short from the place where the price hits the VWAP. Then another opportunity to go short is here, and another pullback is here. Another short is in this spot. All those reactions are triggered by the VWAP — sellers wanting to sell at a fair price since this important swing point. That’s the logic behind it — that’s why this works.
Now here’s another example. Take a look at this chart. This is the most prominent swing point here — where the downtrend ended and the uptrend started. This is the most important place, the most important swing point on this chart. Everybody trading this instrument and timeframe sees it and bases their trading decisions around it.
So you anchor the VWAP there — to the candle that formed the low. That’s this candle. Then you trade the pullbacks. Since the price went up from this point, you wait for the pullback and go long from there. Another long trade opportunity is here, another one here, and another one here.
What the institutions or algos want to do here is buy for a fair price. The price is moving up, but they don’t want to buy up here — that would be too expensive. It’s not a fair price. The fair price is represented by VWAP, so they want to buy from that level. The next place where the price hits the VWAP — the fair or average price — is here. That’s where more buy orders get triggered, and those big players go long — and so should you. Trade with them, not against them.
Now here’s the last example of the swing-point anchor. Again, you can see there’s a very prominent low where a downtrend turned into an uptrend. So you anchor the VWAP to the candle that formed that low — this candle. Then you wait for the pullbacks. The price went up, so you go long from here, and again from here, and again from here. Every time the price hits the VWAP, there’s a chance it will react.
By the way, this platform you see here is TradingView. I have my custom-made indicator coded for this platform. I also use the NinjaTrader 8 platform, which is actually my preferred one. I have my anchored VWAP coded there as well, but for this presentation, I’m using TradingView.
Setup number two is anchoring VWAP to the start of the week. As I said before, you always want to anchor VWAP to an important place — one that’s important to as many traders, algos, hedge funds, and institutions as possible. The start of the week is very important for almost all intraday traders. They all base their decisions on what the price has been doing since the start of the week. That’s why you anchor VWAP there.
Then the VWAP line (the blue line) represents the fair price since the start of the week — in other words, the average price of an average trader. The logic is the same: you wait for pullbacks, and when the price pulls back to the VWAP, you enter short. Short from here, from here, from here — several short opportunities. This one would be a losing trade.
By the way, these setups work best in trending markets — markets that are moving like this, not sideways. In sideways markets, these setups don’t work as well.
Back to this setup — the reason it works is that sellers want to sell for a fair price. They don’t want to sell down here, way below the fair price. The clever guys know where the fair price is — they have it on their charts. They wait for the price to return to VWAP and then sell.
Here’s a long trade scenario. You anchor the VWAP to the first candle of the week. We’re still on a 30-minute chart. That’s this candle. The price reacts there, giving you long signals. You can combine this with other strategies — use it as confirmation or trade it as a standalone setup.
Now look here — the price goes below the VWAP. That means VWAP now acts as resistance. Sellers want to sell for a fair price. Everyone wants to trade at a fair price — buyers want to buy fairly, sellers want to sell fairly. When the price is below VWAP, it’s resistance. When it’s above, VWAP acts as support.
Here’s another example. You anchor VWAP to the start of the week. The price rotates around VWAP, then moves away — so you focus on longs, as VWAP now acts as support. Later, some news drives the price below VWAP, turning it into resistance. The traders who want to sell for a fair price sell at the anchored VWAP. Every hit of VWAP becomes a short opportunity.
If you want full VWAP training and my custom VWAP indicators, go to Trader-Dale.com. Click “Trading Course and Tools” scroll down to the VWAP Pack — it includes a 12-hour VWAP video course and custom VWAP indicators for NinjaTrader, TradingView, and MetaTrader, plus custom Volume Profile indicators. You can also get all my packs together — Volume Profile Pack, Order Flow Pack, VWAP Pack, and Smart Money Pack — for a discounted price.
Now, setup number three — anchoring VWAP to heavy volume zones. Here you combine VWAP with Volume Profile. Volume Profile shows where the big volumes were traded — where large institutions were active.
So, you first identify a rotation with heavy volumes. Then, it must be followed by a strong trend move. That’s the place you want to anchor VWAP — because that’s where big players accumulated their positions before starting the trend. Anchor VWAP to the last candle of the rotation — usually the first candle of the sell-off. That’s this big red candle.
You trade pullbacks to VWAP, because VWAP represents the fair price since that important zone. Short from here, short from here. When the market rotates again, you stay out — VWAP setups don’t work well in ranges. Later, when price moves above VWAP, the resistance becomes support — you then wait for pullbacks and go long.
Here’s another example — a short scenario. You have a strong downtrend starting in a heavy-volume zone. Anchor VWAP to the start of the sell-off. Even if you choose a nearby candle, it won’t make much difference. Then trade pullbacks — short from here, here, and here. Sellers want to sell for a fair price.
Last example — a small rotation with massive volume followed by a sell-off. Sellers built shorts there and pushed the price down. It’s an important zone. Sellers want to sell for a fair price, represented by VWAP. When price hits VWAP, short again. In this example, the move is slower because it’s during the Asian session, when liquidity and volatility are low. But patience pays — the second test gives another short entry.
That’s it. I hope you guys liked this. If this video gets 500 or more likes, I’ll do a follow-up showing combo setups using Volume Profile, VWAP, and other strategies to boost your win rate.
And don’t forget about the book — I’ll send it for free and even cover the shipping. Just fill out the form below this video, and the book is yours.
Thanks for watching. See you next time — and until then, happy trading.
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