What is the difference between VWAP & Anchored VWAP?

What is the difference between VWAP & Anchored VWAP?

Understanding how price and volume interact can significantly improve trading decisions. VWAP and Anchored VWAP (AVWAP) are two such tools that help traders gauge market sentiment. While they share a common formula, their use cases differ in terms of timeframe flexibility and anchoring logic.

What is VWAP?

VWAP stands for Volume Weighted Average Price. It calculates the average traded price of a security throughout a single trading day, weighted by volume. It resets daily and is primarily used for intraday analysis.

Formula:
VWAP = (∑ Price × Volume) ÷ ∑ Volume

(∑ = cumulative total over time)

  • Helps intraday traders identify whether a stock is trading above or below average price
  • Bullish signal: Price trading above VWAP
  • Bearish signal: Price trading below VWAP

Limitation: VWAP only works for intraday timeframes and cannot be used beyond a single session.

What is Anchored VWAP (AVWAP)?

AVWAP extends the concept of VWAP by allowing traders to select a specific starting point or “anchor”—such as a major news event, breakout, or earnings report. This makes AVWAP flexible across any timeframe.

  • Uses the same VWAP formula
  • User defines the anchor date/time manually
  • The indicator plots from that point forward
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Example use case:

You can anchor the AVWAP to February 1st, 2022 (Union Budget Day), to track how prices behaved post-event.

Steps to apply AVWAP in FYERS:

  1. Go to Indicators, search for 'Anchored VWAP'.
  2. Click to apply it to your chart.
  1. Open the indicator Settings, enter the exact Year, Month, Day, Hour, Minute, and Price.
  1. Once applied, the AVWAP line will start from the chosen date.

As you can see, the current market price of HDFC bank is trading above the AVWAP line, which means the market is displaying Bullish trends post the event.

The AVWAP line has been acting as both Support & Resistance during this period, as highlighted below:

VWAP vs. AVWAP

FeatureVWAPAnchored VWAP (AVWAP)
Reset frequencyDailyUser-defined
Use caseIntraday TradingSwing/Positional Trading
FlexibilityFixed to market openCustom inflection points
TimeframeIntraday onlyMulti-timeframe
Support/Resistance roleLimitedStrong and extended


Points to note

  • You can plot multiple AVWAPs with different anchors.
  • VWAP and AVWAP won't work on indices as they lack volume data.
  • AVWAP won't display if the anchor date is a holiday.

What if...

ScenarioResolution
AVWAP doesn't show on chartEnsure the anchor date is not a market holiday.
VWAP/AVWAP not working on indicesThese indicators won’t plot since volume data isn’t available.
You want to track multiple eventsUse multiple AVWAPs with different anchor points.
Combine VWAP and AVWAP on the same chart to align short-term intraday direction with broader event-based trends.

Last updated: 30 Jun 2025