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The Volume Weighted Average Price (VWAP) is one of the most widely used indicators by traders. It analyses price in relation to volume, providing a clear view of the balance between supply and demand.
A useful evolution is the Anchored VWAP (AVWAP). This indicator calculates the weighted average of prices starting from a specific point in time. This can be a significant high or low, a breakout or a fundamental event.
The AVWAP helps to interpret institutional movements and identify strategic areas. It is useful for both mean reversion and momentum strategies. Unlike standard VWAP, which resets every day, AVWAP retains its relevance as long as the anchor point remains significant.
Its effective use depends on the trader's ability to contextualise, test and integrate it into their approach. There are no magic formulas: it is necessary to distinguish statistically advantageous configurations from those to be avoided.
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