Video summary

The AVWAP Setup Every Swing Trader Should Master | Brian Shannon, 35+ years Trading

Main summary

Key takeaways

Finance

Finance-Focused Summary (Markets, Investing/Trading Strategy, Risk, Performance)

Brian Shannon (35+ years trading; founder of AlphaTrends / alphatrens.net; credited with the origin of anchored VWAP) outlines a swing-trading approach built around:

  • Trend alignment across multiple timeframes
  • Using anchored VWAP (AVWAP) as a “level of interest” to guide entries, exits, and expectations about participant behavior

Core Principles He Emphasizes

  • Never fight the trend
    • Attempting to countertrend is a reliable way to get “burned.”
  • Risk management and position sizing are the edge
    • Rules/indicators matter, but without sizing and risk control they don’t protect performance.
  • “Price > volume”
    • Volume is used as a supporting diagnostic—especially for fear/turning-point context—not as the main driver of decisions.
  • Anchors matter because participants defend different cost bases
    • Different groups anchor to different “fair prices,” such as:
      • post-earnings holders
      • YTD investors
      • week/month participants
      • intraday chasers

Instruments / Tick ers / Assets Mentioned

Stocks / Names

  • Lowjack (early anecdote)
  • Advanced Polymers (APOS)
  • EMC (data storage; options discussed)
  • Unisys / Unicus (spelling unclear; referenced roughly $7–$12)
  • Chantel Pharmaceuticals (CHTL) (earnings/news-driven breakdown)
  • EMC option symbols including references like “EMCX” and month-style notation (some symbol details were garbled)
  • Caesars (CZR implied; price discussion around 27.58 and 28)
  • US Foods not fully confirmed; referenced as USFD
  • Target Therapeutics (biotech; described as the best trade of 2024; ticker unclear)
  • Fastly (FAST) (earnings catalyst and AVWAP behavior)
  • SanDisk (SNDK; described as having “Tesla-like” IPO/breakout behavior)
  • Alber (rare earths/lithium; ticker unclear; discussed around $18.80–$21.50)
  • Russell 2000 ETF: IWM
  • SPY (S&P 500 ETF; used for macro framing and AVWAP/pivot examples)

Macro / Indices / Event Concepts

  • S&P via SPY
  • Federal Reserve announcements framed as “event anchors”
  • VIX / “fear & greed index” referenced conceptually (e.g., “VIX starts soaring”)
  • Qualitative macro drivers:
    • Oil prices (narrative support for bearishness; no specific ticker provided)
    • Interest rates and “war” referenced qualitatively

Key Numbers, Metrics, Rules / Thresholds

Risk / Leverage & Anecdotes

  • Options early on were leveraged via credit cards; started with about $25,000
  • Brokerage advertised roughly 20:1–25:1 leverage (prop-firm context)
  • A strategy anecdote included about “$1,000%” wins (approximate wording; exact phrasing was garbled)

Earnings / Fundamental Catalyst Example

  • An example of a positive earnings surprise concept:
    • analyst expected revenue; company delivered 10x
    • revenues up 236%

AVWAP / VWAP Application

  • Intraday example anchored to the early session (e.g., first 6 minutes concept)
  • A probabilistic idea for chase-the-gap follow-through:
    • referenced as roughly “60% … won’t violate … 40% … will”
    • note: Shannon explicitly said the “numbers” were effectively made up; conceptually it’s about expectation and invalidation risk
  • Uses daily R2/R3 levels as cues for where sellers show up (partial risk reduction logic)

Pivot Framework

  • On average, a stock trades between daily S2 and R2 about 87% of the time
  • Only about ~13% of the time it moves beyond that range
  • Therefore R2/S2 are treated as “levels of interest”

Moving Average Framework

  • Uses an “effective 5-day” concept mapped from intraday timing:
    • day length roughly 390 minutes (9:30–4)
    • e.g., on a 15-minute chart, ~130 periods ≈ 5 trading days

Concrete Trade Management Example: CHTL & Caesars

  • Chantel Pharmaceuticals (CHTL):
    • sold after negative report framing
    • described as not working (“complete… [dis]” text garbled, but meaning indicates it failed his expectations)
  • Caesars (CZR) (explicit “losing” case):
    • Bought around $27.58
    • Sold 1/3 around $28
    • Initial stop around $26.22
    • Remainder stopped around $27.39
    • Net on thirds described as near break-even:
      • + $0.42 on 1/3
      • - $0.19 on 2/3

Exit Trigger: “Two-Minute Low” Rule

  • In the “VWAP reclaim / chase the gap” style:
    • sells partial when a lower two-minute low breaks, even if price later continues higher

Step-by-Step Methodology (Anchored VWAP Swing-Trading)

Overall Objective / Style

  • Swing trading with the trend, using multiple timeframes
  • Core tools:
    • simple moving averages
    • anchored VWAP (AVWAP)
  • Supporting tools:
    • pivot points
    • light Fibonacci (not central)
  • Volume is used primarily for diagnosing execution/participant emotions, not for direct entry targets.

AVWAP Setup Logic (How He Uses Anchors)

Instead of only relying on “magic support/resistance,” he defines levels of interest with anchors:

  1. Event anchors
    • examples: earnings, Fed announcements
    • typically relevant for a few days to ~3–10 days
  2. Time anchors
    • daily VWAP, week-to-date, month-to-date, year-to-date
  3. Price anchors
    • prior highs/lows
    • relevance depends on proximity—distant anchors are less useful “right now”

Intraday “Volume VWAP” Meaning (Psychological Interpretation)

  • VWAP as dollar-cost-average of trades since the start of the measurement period
  • Psychological read:
    • when price is below VWAP, late buyers are trading below their average cost
    • when price reclaims VWAP, buyers regain control

Entry Concept: “Chase the Gap / Wait for VWAP”

  • For gap stocks:
    • wait for a pullback
    • then buy the reclaim of VWAP
    • example timing: reclaim about 22 minutes into the day after a gap run
  • Stop placement tied to the structure:
    • stop under the low of the day
    • manage risk dynamically intraday

Trade Management: Risk Reduction + Re-Add

Partial profit / risk reduction near pivot zones

  • If price runs into a daily pivot zone (e.g., R2/R3):
    • don’t automatically liquidate
    • use 2-minute structure to decide

Two-minute low break trigger

  • If each 2-minute bar prints higher lows, he stays with the position
  • If a lower 2-minute low occurs:
    • sell the first third, even if price later rises

Re-add on stabilization

  • If price pulls back to VWAP and bounces:
    • may rebuy that third with a tighter stop under the bounce low

Larger Timeframe / Event Persistence

  • For earnings gaps:
    • AVWAP levels can act as defended “cost bases” for roughly weeks to ~2 months
  • He distinguishes between:
    • buying a touch/reclaim
    • vs expecting only a later bounce after profit-taking resets the structure

Risk Management / Sizing Framework

Uses R-Multiples

  • Risk unit is fixed dollars
    • example: $100k account, risk $1k per trade
  • Position sizing is based on distance to stop
    • tighter stop → fewer cents risk per share → more shares allowed

Stop Rules

  • Stops should be based on structure (e.g., prior higher low) rather than arbitrary indicator levels
  • He states he does not set stops before the market opens
    • instead, he delays stop placement by about the first 5 minutes
    • rationale: avoid opening “games”; after minute 5, he adjusts

Key Recommendations / Cautions

  • Do not fight the trend
  • Don’t buy “touches” blindly
    • AVWAP/pivot zones are levels of interest, not automatic entries
    • avoid entries when extended; prefer evidence of buyers and lower-risk structure (higher highs/lows)
  • Avoid “code-cracking” mentality
    • repeated success can lead to overconfidence; one failure can erase gains
  • Manage risk regardless of narratives
    • macro stories (oil, rates) can be wrong
  • Use volume carefully
    • volume spikes may reflect turning points/fear extremes, but don’t override price action

Disclosures / Disclaimers

“This is not financial advice.”

Presenters / Sources Mentioned

  • Brian Shannon
    • professional trader (35+ years)
    • founder of AlphaTrends / alphatrens.net
    • associated with anchored VWAP
  • Richard Mglin
    • host/interviewer (Trailland podcast)
  • Platform/sponsor mention: DVT (described with other sponsor-like strings such as “DFW/Dy Charts” and “DPU AAI”); not attributed as strategy source

Other Influencing Authors Mentioned

  • Stan Weinstein — Secrets for Profiting Bull and Bear Markets
  • John Murphy — technical analysis/patterns
  • William O’Neal — How to Make Money in Stocks
  • Edwin Lefèvre — Reminiscences of a Stock Operator
  • William Giler — How Charts Can Help You in the Stock Market
  • Brad Kadeshwar — The Perfect Stock (includes references to Taser/Axon)

Original video