YouTube Transcript:
The AVWAP Trading Indicator | Secrets and Setups | Brian Shannon_ CMT

foreign
[Music]
welcome back to the treyland podcast I'm
your host Richard moglen joining me
today is one of my favorite traders to
talk to Brian Shannon who is very
experienced he's also the founder of
alphatrends.net and he just released a
new excellent trading book all about
anchor V web which is really our Focus
today so Brian thank you so much for
coming on and uh yeah great to have you
back on the podcast I've been looking
forward to this one Richard uh you've
always got great questions and really do
a great job researching the subject
before so yeah let's do it yeah perfect
and uh to Dive Right In I think it'd be
good to you know hear about your history
with v-wap and anchored V web
um how you first you know uh became
aware of that indicator and how you've
kind of adopted it and kind of centered
your strategy a little bit uh
surrounding that so I'd love to just
kind of hear about you know that
backstory and and how you've you know
developed Mastery of it okay so I I
first became aware of the V web in 2003
I was using a software called so 20
years ago
um real Tech and Realtek had this uh V
web for one day which is what it was
traditionally designed to do but I
realized after using it for a little
while that I could do it you know if I
change the time frame it would allow me
to look at you know five days or 30 days
or 18 days and I started kind of
experimenting I actually started
experimenting with a I had a uh a trend
tool just like any software you see or
uh normal Trend tool where you draw you
know lows or highs and or whatever it is
you're trying to draw a straight line
with well they had a v-wap trend line
it's like what the heck is this so I
drew it kind of like horizontally and I
noticed it would move up and down and
what it was doing was actually showing
that last point was the actual view app
for the beginning so I I started to
notice that and see that you know there
was support and resistance there and I
couldn't figure out why so then I
started using the the other tool on the
chart and realizing that hey there's
some value here when I look at it from
earnings reports or from two days ago or
from this big move so you know fast
forward I think about 2008 I wrote an
article for
uh tradingmarkets.com called uh chase
the gap or wait for v-wap and that's one
that I've you know still a strategy I
use today that you know a stock gaps up
and you look at it you know do we chase
the stock what do we do it's so hard to
know when to get involved in that stock
so I just let it settle down a little
bit if it gets back above the daily V
web and it's not too far extended by
there with a stop below the low of the
day that got a lot of attention 2015
tc2000 uh got a hold me and said hey
would you like to use our software we
like what you're doing and this sort of
thing I said if you can build a
point-and-click anchor tool I'm yours
done about two weeks later said Brian we
got it we're going to call it the
anchored V web by Alpha Trends and you
know there it is today I've been you
know posting charts about it for the
last 17 years and now we've got uh you
know so many other platforms tradingview
has it
um
uh Trend Strider has it
um each each trade charts I think has it
Fidelity charts so it's really becoming
more of a mainstream uh technical tool I
didn't invent it I've just kind of you
know help Shine the light on it
yeah perfect and you know take it a step
back for people who aren't familiar with
it at all uh what is V web and anchor V
web or AV web stand for I kind of give
it away there
um but what does that stand for and also
how how would you go about calculating
it
okay so the v-wap itself the volume
weighted average price
it was invented in two I'm sorry 1988 as
a tool uh for institutions to to
Benchmark their executions that a broker
would do for them so what it is is
basically the dollar cost average of
every single trade during that day so
every share one share one vote it's not
you know weighted by time it's the
actual you know truth in price so it
says you know if the stock traded
between 24 and 26 uh and closes at 20 it
closed at 25 well maybe most the volume
occurred you know near the high of the
day so the V web for the day is 25 and a
half and if you got a execution better
than 25 and a half it means that you did
better than the average participant and
it's kind of been known as uh the price
on naive Trader could expect to get
that's what the original authors
basically said
um a few years after that I believe it
was 1993 Paul Levine who has deceased
since then he's a math who started you
know tinkering with this and he kind of
invented the anchored v-wap as far as I
can tell that's he's you know I dug far
and wide to find what the history was
um so he in you know kind of invented it
and then his work kind of died off a
little bit and I like I said picked up
after that so the anchoring part is
simply as you suggest as uh mentioned
it's you know the traditional view app
is for one day and one day only the
anchored view app says from this
earnings report eight days ago from the
beginning of the year or whatever
Catalyst or event you want to measure
the the true price the true average
price that allows you to set it to that
point and then it tells you from there
who's in control buyers or sellers are
they gaining control are they losing
control are we oscillating above and
below that view of that anchored V web
so now it's you know become uh instead
of just an execution tool which is still
used very heavily as in fact it's the
most common uh input into the algorithms
according to
um Ken Griffin which Ken Griffin Citadel
is the um I know you know this is the
largest uh market-making firm in the
world and Ken Griffin you know told this
to Congress a couple years ago with a
GameStop thing and said you know we do
35 of all business in the market every
35 percent of all orders touch our hands
the majority of those are done with uh
the anchored view with it with a volume
weighted average price order and he went
on to say it's not just for one day it
could be a week it could be a month and
you know that was a real important thing
I mean that's when it really made so
much sense to me in that trial I mean or
that hearing whatever it was
um and here's the guy you know he made
more money than anyone in the hedge fund
business last year he took in 4.1
billion dollars in one year highest
earner ever you gotta listen when a guy
like that talks and says this is what
we're doing so now it's you know a huge
piece of algorithmic orders and what it
allows us to do is look at it and say
you know where are those buyers or
sellers stepping up defending price
levels and it's a level of interest to
you know look at the stock a little bit
closer and see if there's evidence there
for to suggest maybe it's a trade or not
yeah perfect and
um I I've I've talked with you of course
about this before previously uh you one
aspect that really stuck out to me
previously is you talk about how it
combines price volume and time all
together takes all those into account
um and there's a few different ways to
calculate the price component of uh the
anchor V web there's like open high low
close divide by three what what's kind
of the actual method that you use for
for the for the different time frames to
to calculate uh that's a great question
I get it all the time and I actually
wish that these trading softwares
wouldn't allow anything other than open
high low close divided by four that's
you know so so the V web is every single
transaction is what were the true V web
is and in order to get the true V web
you have to use a tick chart which
averages every single trade that's just
not practical looking at tick charts
especially if you're looking for more
than a day or sometimes in the really
big ones you know for an hour or so
because there's just so much data
scrunched up in there so what we want is
we want the most inclusive data we're
not trying to look at the average from
the highest point ever we're trying to
look at this it's basically represents
the psychology the participants it is in
my mind it's the best sentiment
indicator because it's actual truth it's
not this the sentiment in you know polls
it says what do you think well I'm
bullish but you know I'm 20 short uh you
know they there's there's what people
say and then what they do with their
money and this allows us to look again
with 100 accuracy what they are actually
doing on balance it's not just the
person who you know someone argued with
me the other day saying well I anchor it
to the high because I want to know the
program that turned on at that high it's
not like someone just turned on a
program at the high it gets you know it
just shows that there's a lack of
understanding so the point is if you
have high low and close well you're
taking out the average of the open if
the open is one of the most liquid
periods of the day same with the clothes
and everything in between every share
gets an equal count it's not a Time base
it's time volume and price and that
makes it Superior to any simple or
exponential moving average but you know
there's still room for those as well as
as we'll probably delve into
yeah and that was a question I asked
people if they had any questions for you
on Twitter and there were a few that
were saying uh you know you also include
uh the five five day moving average into
your uh process also the 50 day you talk
about that in your book you know it's a
key level of interest because a lot of
Market participants have it on their
charts that's why it's significant it's
a little bit of a self-fulfilling
prophecy uh so actually let's go ahead
and touch on that uh how do you
incorporate
um those different indicators along with
anchor view app to you know bring it all
together and make the final package
which is kind of how you look at and
interpret different charts yeah you know
Richard I think that all analysis in my
mind I I never look at and say hey it's
at the view app so I have to buy I never
look at and say the earnings are strong
so I have to buy I I look at it and say
in and same thing with a 50-day moving
average or a two-thirds retracement
those are all just little breadcrumbs
that lead us into the direction to say
how does this all add up does it come
together and reveal what the crowd is
actually doing so I don't place you know
100 emphasis on anything I have you know
clearly you know the five-day moving
average for me is what I've said you
know consistently is my most important
intermediate term Trend indicator if the
five-day moving average is declining I'm
not going to buy that market or that
stock if it's advancing I'm not going to
short that stock or that market so what
we're trying to do is to understand the
psychology of what drives the
participants you know I've done this
before I ask people hey do you have how
many people in this room of a room of
100 people have a 50-day moving average
on their chart you know 99 of the people
will raise their hand and and then I'll
say well why do you have it there well
because it works well because you know I
read about it in IBD or whatever and
it's but no one could tell there's no
real reason why it works right it works
because as you alluded to just before
it's a self-fulfilling or self uh you
know self-fulfilling prophecy to a
degree that if enough people believe a
pullback to the 50-day moving average is
going to be a place where it finds
support what happens will sellers start
to slow down their sales as it gets
towards that level buyers come in off
the sidelines and say hey it's at the
50-day moving average I'm going to buy
some I'm going to look at that 50-day
moving average or that anchored view app
or that 61.8 percent retracement and say
Hey you know it pulled back to this
level and this is also the anchored V
web from 22 days ago when the company
reported earnings and I looked at those
earnings and they were great they had
big Revenue increase they had a big
earnings increase so it tells me that
who's going to buy here well most likely
fund managers growth fund managers
they're interested in this they so I I
I'm not interested so much that hey I
think it's a great company because the
revenue and earnings are good I don't
want to get my opinion in the way I'm
trying to understand the psychology of
the fundamental people the 50-day move
moving average people to Fibonacci
people the Sunspot people if that's a
thing and the volume weighted average
price so how does it all come together
it's all about psychology of that area
and then when we get to that level and
we say this is an important level you
can choose to buy there if you like I
personally don't because it might just
continue to go lower it might be a
motivated seller we just don't know
about so instead to me it's time to
drill down to Shorter term time frame
and look for the evidence so it might
have pulled back you know four days in a
row that five-day moving average is
still declining but it's touching on the
50-day moving average or the 21 or the
21 EMA it doesn't matter they're all
kind of going to be in that same general
area and tell us it's a level of
Interest so study closer and that's
where I start to stock the trade it's
not just about boom take action it's
about okay now let's drill down so I can
get the stock as it begins to Rally
again I want to latch on to that
emerging momentum I don't want to buy by
the breakout from where it was eight
days ago because it has to go ten
percent to move there and I'm chasing so
I want to catch it as it comes off that
stage one on the short term time frame
right and then I can manage my risk uh
you know very effectively and that
allows me to have much bigger share size
at the onset of the momentum
yeah perfect uh you touched on a lot of
Concepts there that I think we'll dive
deeper into and I think the best way to
talk through this is actually to bring
up some charts and you know uh look at
it live because it's such a visual thing
so if you wouldn't mind go ahead and
share your screen and maybe once you
brought that up uh the first thing is
just to kind of talk through your your
overall layout so people get get a sense
of you know what you're looking at on a
day-to-day basis uh just so if they've
got that that frame of reference yeah so
what you see here I share this on uh
Twitter a lot these these charts and I
do my videos with this so I've just got
on the left I've got a daily chart and I
have a that red right here is a 20-day
moving average that blue is a 50 and the
black is a 200-day moving average over
on the right you can see I've been
drawing here
um I've got a 30 minute time frame and
that's the five day moving average right
here that orange one so what I'm looking
at Richard is you know I've got a couple
anchor View apps too so this is Sienna
and Sienna made a high in 2022 that
might have been late 21 I don't know and
it found resistance at sorry anchor of V
web from that it found Supply right
there it found Supply found Supply found
Supply again again and again well that
orange line is also the covet anchored
view app so they're kind of coming
together in that same area now I look at
this and I say let's just kind of clear
all this stuff off let me uh the
camera's in the way
um so that dark blue line is the
year-to-date anchored V web what I can
also do is say you know are the buyers
in control from this low in October or
from this low and we're above those so I
look at this and I see you know we've
got a 20-day moving average above a
50-day moving average above a 200-day
moving average
what's important about that to me is I
know that that's in a requirement for
some institutions that they're only
allowed to buy if the 250 is above the
200. it's written into their bylaws so
now you know we've had the stage four
decline the lower highs and lower lows
that were that were very clear over here
lower highs lower lows then we had a
higher low and we had a higher high but
at that point the 200-day moving average
was still declining so I wasn't trusting
it so the 200-day moving average is
flattened out this tells me we're in
stage one three basically doing this
sets it into a stage 2-1 now I wouldn't
have purchased here when it got above
that because look at that big gap and
you know it was just a couple days ago
it was 46 and a half and you know the
people who bought there you know it was
good for a day but then it just got
crushed they reported earnings the other
day they had what's looking like a
ShakeOut to me so if you look at the
anchor from that place so what I'm
trying what we're doing here of course
is building a picture on multiple time
frames we know there was a catalyst that
Catalyst immediately got bought up
because we can see let me just get rid
of this one so we can see that's the
average the the anchored viewf from that
low and it's telling us that since that
occurred the buyers came in very quickly
and it may you know ran up here it
pulled back and made this low at 50.75.
well it got back up to that level again
and it pulled back to 51. so the higher
low tells me the buyers weren't waiting
for it to pull back to 49 again or to 50
or to 50 75 the buyer said you know we
got to get involved in this thing on the
open tomorrow morning if an app opens
lower so they defended at 51. so now
we're building we know this is the level
of Interest so I'm starting to build a
trade plan and say we've seen some
resistance in here recently so for
whatever reason there's a seller there
let's look at the anchor from this Gap
and we're above that and from this high
so that confirms that from the average
of this Gap this Gap the average
participant long is in a winning
position the average short seller is
losing money so we want to be on that
that team so now if it breaks it got a
nice A little pullback here this
afternoon tomorrow we get rid of this
data so that means this will be we'll be
averaging this out and that means as
soon as the Market opens even if the
Market opens down here that five-day
moving average is going to start to to
advance because we're getting rid of
this data so what I want to look for is
I want to buy the higher high above a
flat to Rising five-day moving average
because it's in alignment with what we
see on this longer term picture and
Sienna who knows maybe it's going to
break out and then just completely fall
apart we we don't know this is the
tricky part of stage analysis in six
months if it's up here and it's done
this we can say what a beautiful stage
you know two breakout that was but right
now we're at that part where nobody
knows what's next it's that lonely
feeling of buying right here and saying
wait a minute where's the volume I'm
going to wait for the volume I'm going
to wait for it to break Above This level
well guess what as it gets above that
level it's extended and I'm going to
sell some to you and look for the next
pullback and get long on this move so if
I want to buy here I'm going to use this
shorter term time frame to say well if
this is a new emerging uptrend on the
shorter term time frame that's
going into a larger uptrend on The Daily
time frame I could be at the very
beginning of maybe a multi-year run I
don't know but I do know this that if I
buy right here at the point where it
makes that higher high what is my point
of exit if I'm wrong you know this is
great analysis and you can say you know
and maybe it just maybe it's going to
fall apart you can say well the V web
doesn't work well whatever nothing works
all the time that's not the point
what we have to do of course is risk
management and say based on my debt the
definition of not my definition the
definition of trend higher highs and
higher lows if I buy here there's only
one place in my mind that makes sense
for a stop and that's right under here
because that is the most recent and
relevant higher low
that emerge so if we're truly going to
you know see this stock let's just you
know make it look like this and move
this over a little bit if it does
something like this and I'd buy it here
and it goes like this and maybe I sell a
third and then it does this I might get
out of another third there and probably
just the rest of it here truthfully but
if it breaks down below here well what
happened to my definition of trend it
doesn't exist so if I'm a trend Trader
why on Earth would I still hold this
stock it doesn't make any sense what my
hope instead would be is that I buy that
break right above here and I sell a
third and maybe it goes a little it
pulls back and does this maybe I'll even
buy back that third there and you know
then raise my stop under here once it
eclipses this high I'll say that's the
new high or low so then if it does this
and rallies well then again I'll raise
my stop under here and though that's the
definition of trend I'm not looking for
a price target of 62 or whatever I'm
looking for this and if the market does
that that's where I get stopped out so
if I'm in here and I'm out of the final
third here I'm out of a third at this
point that's what the market told me for
my time frame
yeah perfect you touched on a lot of
great stuff there and coming back to one
thing you said about not buying on that
that large move up previously uh you
mentioned this your book as well it's
expended a lot of energy to get to that
point already you're looking yeah for it
to set up in a large term time frame
have that consolidation that then it can
have that that rapid advance from which
if you can get a precise entry you can
immediately hopefully be at a profit and
then you've got options you can sell to
strength you can manage risk tighter at
that next relevant higher low
um all those things that as you
mentioned and uh you know exactly it's a
key theme in your book too that you talk
about the risk management aspects you
know pretty much at the end of every
chapter you know why why is that so
important it's because we want to limit
losses
um as you mentioned you mentioned
already so many times
yeah so you know here's where I wouldn't
buy this stock if it gapped lower that
day and then broke out on here there's
no way I would buy it there and and
maybe it goes and I miss a trade and you
know what I've missed a lot of them but
what I would think would happen is it
breaks higher like this then it pulls
back a little ShakeOut does this and
then I always want to see a tightening
of the range because the tighter that
range gets I know I can maybe put half
of my stop below here put the rest of my
stop there once I sell a little bit I'll
raise my stop up under here completely
and just let the market tell me whether
it's working or not I've got a third
left of isee I bought that one at 27 the
other day and this is this is where my
stops are I mean this is you know I this
is I've got one third left and because
it's extended my stop currently is at 28
uh 50 uh 28.40 per share so you know
maybe it continues to go higher but it's
had a huge run I get defensive when
they're up this much like this I want to
lock in gains I don't want to be there
um you know there was one uh so let me
just make a quick example of that cute
I was in Cube
and bought it over here it doesn't look
like much let me just change the scaling
so we can see it a little bit more
clearly
um so I you know I bought it over here
at uh 47.70 I took a third off the first
day at with a 55 cent gain then I got
stopped out of uh part yesterday at
48.59 and the reason I raised it on that
third so tight is that it broke out
and look at where it had come from look
at the last time it broke out you know
and it was extended well those breakouts
from extended levels so I sold a third
55 cents a third 89 cents and then guess
what you know and look what happened
today a gap down so I got rid of the
last third with a loss of where's my
notes
um
I know it was very small oh 54 cents so
what I do when I when I when I get
stopped out like that I go uh I'm sorry
when my stop gets hit prior to the uh
you know if it gaps through my stop my
stop was
4806 so it opened below the Gap so I
wait for the first five minutes because
oftentimes we see so this is a five
minute candle oftentimes we see it we'll
do this right but instead I say if it
breaks below the five minute load that's
where I get out so I got out at
47.17 I believe and lost 54 cents on
that but because of the prior two thirds
that I took off profitably I made 30
cents a share on average which you know
buying it at 47.70 I'd be down 90 cents
instead right now so it's not my problem
anymore it's uh you know you got to take
especially in this market you got to
take them quick it's just they just
don't hold
for sure and and coming back to v-wop um
first kind of you know just talking on a
daily basis what does it indicate to you
when a stock trends all day above that
daily view up and also on the flip side
if it's trending below that all day
um yeah I'm curious to hear your
thoughts on that yeah motivated buyer um
I mean that's the only real way that I
can you know look at it and let's just
uh get rid of some of these so let's put
this on the Spy you know today and put
never mind those two purple and blue
ones but you know we kind of did that
today we gapped up and this is what we
often see is it chops around you know
after that but then it breaks that
opening range and then it's Off to the
Races and you can see that you know
throughout the day it was higher highs
and higher lows above that volume
weighted average price so as a very
short-term Trader if I was looking to
you know get involved in this I would
either want to buy it right here or I
would want to buy after these pullbacks
acts and I you know so I even on this
chart which is one minute I would put a
v web here for instance and say okay
well we pulled back from that little
break of that range it pulled back the
buyers regained control right here so I
can enter as a day trade right there at
40. 410 90 or whatever it is and my stop
would go under here and then look at how
that v-wap held as support there so
we'll pull back down that would tell me
well I want to put my stop under there
and maybe I'll set a new anchor there
and look at how that happened how that
handoff occurred and then that touched
it over here later in the day so what
those handouts allow us to do is to say
you know I my stop is under there now
this is my new high or low once it does
this my stop goes underneath that level
and now we've got another shift in
momentum higher so as long as you know
for my short-term day trade as long as
it's above this V web I'm going to
continue to hold out till here till the
end of the day and exit very close to
the high whereas I might have purchased
it right here or maybe even purchased it
right here but that's still good you
know for a day trade for a Dollar Plus
yeah and we're talking day trading here
but the same Concepts apply on higher
time frames right uh yeah exactly yeah
and and you know sometimes people when I
show a one minute chart they're like
whoa whoa hey I'm not a day trader
that's not the point the point is with
technical analysis all of the
information works exactly the same so
when you look at for instance a gap up
like this and it goes sideways for 40
minutes today it's very similar to
um newer these guys reported earnings
um not too long ago about a month and a
half ago and what do we see we see some
choppy action around that so again do we
want to buy just because it's above the
V web well look at where it had come
from the last couple days so do we want
to buy Above the Wii app here no it's
extended but now what I like about this
stock is we have this low we have a
higher low we have a higher low we have
this level of resistance and now it's
starting to tighten up if it breaks
Above This high I can get involved with
a stop under here rather than if I buy
here where does my stop go way under
here no thanks and then I have to write
it down like this so you know maybe you
know someone with a even a longer term
time frame than me might say yeah I like
that I'm going to buy the break of this
high and then I'm going to sell some on
the breakout Above This level right so
if I buy some at 74.10 and sell some at
76.20 that allows me to say okay now
I've recognized some of my gain here and
if it rallied up in this manner where it
goes like this
uh then I would put my stop under here
and even if it came back and stopped me
out at break even I would still have a
third off up there and I would still be
profitable overall so that's that's the
way I like to do it sell a little bit on
this breakout maybe I have a third maybe
I have two thirds left my stop on the
balance will go under here and then I'll
try to be a little bit looser with that
final stop and who knows maybe it goes
on to 90 bucks a share and I've still
got a third of my you know uh last piece
there so here's the two time frames
together and there's the year-to-date
anchor so it's kind of pinching we can
talk about a pinch people love the pinch
um but you know the problem with the
Pinch A lot of times is people will
Point them out to me on Twitter and say
hey Brian look at newer it's pinching
between the V web from that Peak and
there and it's just kind of useless
there truthfully instead you know we
want you know notice how the support
became resistance flip back to support
we've now got a Rising 20-day moving
average curling under it a rising 50-day
moving average so it took some time for
buyers to regain control they're not
there a hundred percent yet but they're
in as good a position as they've as
they've been in to say if it breaks
above here with a stop you know ideally
maybe it pulls back like this and this
is where I want to buy it tomorrow but
if we look at the longer term chart
what's the potential here
's our anchor from the high the year and
a half ago is that you know that that
adds a piece of confidence that this is
an important level because it's the
average price since that high now just
regular technical analysis maybe it's
going to run up in here there's almost
no price memory in this Zone this is
where we would expect to find Supply so
maybe that's where this stock is going
it's a level of interest on the upside
where if it got up there quickly maybe
you sell some or maybe you just say hey
it's battling with that so I'm going to
set my stop real tight to lock in my
gains or if it doesn't it keeps going
like this well then great I'll continue
to raise my stop there
yeah perfect and you mentioned the
anchor view up pinch uh for people who
aren't familiar with that could you
maybe run through one more example and
talk about how you would Set uh the
anchor view office on the on the top
side as well as at the bottom yeah so
what what a pinch really is doing and
you know here I didn't draw it properly
where's so there's January and what is
what it's telling us is you know from
this point the beginning of the year the
buyers are in control they've been
defending the average price since the
beginning of the year so there's a
motivated buyer who said you know this
year we like the prospects for newer
rate we have a mutual fund that you know
wants to buy you know there's a hundred
thousand shares outstanding we want to
buy a hundred million shares outstanding
we want to buy five percent of those
we're gonna buy five million shares well
we're gonna buy on pullbacks to that V
web from the beginning of the year we're
gonna defend it there we're not going to
chase it up here in fact you know we
purchased 5 million of our shares and it
gaps up here let's sell a million shares
so that when it pulls back down we can
replace those it's just you know trading
on a bigger scale and now accumulating
in here and saying we're going to buy as
much as we can because this is the naive
price the trader for this year could get
so they're providing support at that
level there's a buyer buyer you know
group of buyers there and it also is
further giving confidence because that's
the rising 50-day moving average so like
we were saying earlier you know there
might be a group of buyers or there
might be a group of shorts that shorted
up here on that Gap up and they said
we're going to cover the 50-day moving
average we're going to short it down to
the 50-day moving average or that long
fund might say we're going to sell a
million shares down towards that 50 day
and when it gets to the 50-day we're
going to flip and put a bid in so we
don't crush the stock the short seller
is going to say we're going to start
covering the 50-day and it's a supply
and demand equation that starts
balancing out the sideline cash will say
hey it's the year-to-date V web maybe
they recognize that they're at the
50-day moving average we're going to
start to nibble and then it gets above
the 20-day moving average but it's
extended so pulls back the 20 crosses
above the 50 right in here it's holding
the 20 and the 50 and it's holding the
anchored V web from this low right in
here if I made a big mess there but
let's just clear that up so it's you
know it's at this anchor it's at the 20
and the 50-day moving average this is
you know worst case a stop would go
under here I think for somebody who's
looking to say maybe hold this for the
next month or two you can also look at
it like this is this a shoulder this is
a head and this is a shoulder and
there's going to be you know buyers as
it breaks past the neckline well maybe
I'll sell a little bit on that break to
them it pulls back and then maybe I'm
going to add to it and you know this
should hopefully bring about the bigger
move on the weekly time frame and we're
getting there by looking at the shorter
time frame uh or that 30 minute time
frame go
um
on that 30 minute time frame is where
we're making the decision so it goes
back to Trend alignment we'll identify
you know the big picture on the weekly
time frame and say that looks good you
know this was an earnings report someone
got motivated what are the motivations
of the different groups I'm not talking
about the magic of the V web as much as
some people want it to be that because
oftentimes it seems magical but it's
about why there's buyers and sellers
that congregate in that area how can we
use that information to our advantage
narrow down on this puzzle and make what
appears to be a low risk purchase and
get involved in emerging potential large
uptrend
yeah perfect and I like how you pointed
out when uh you're looking at the area
where the Confluence of the 50-day
moving averages you're talking about the
psychology of all the different
participants and why you know that might
be a level of interest for you know
multiple groups of people who trade
differently but it all kind of comes
together at that one spot and that just
increases the probabilities of you know
that level being respected obviously as
you've kind of drilled into my head a
little bit you know nothing's absolute
you don't you don't want to buy before
the strength but it did respect that
level ultimately and pull back and now
present another another potential
opportunity another higher low setup
yeah it's it's not the market right I
mean when we were two two years ago when
we're coming off the covered lows you
could buy any pullback you could buy
ahead of a breakout and you had very
good odds it was going to continue but
we're in a very selective Market where
things like you know uh
um what was the one I just uh mentioned
um you know Cube they break out and then
they just come in hard I mean if you
didn't sell you know the next morning
you're you're at a loss so you've got to
take some off the table and it's just
about knowing the environment that
you're in and hopefully being able to
identify those those situations where uh
they come together and you can
you know get the low risk opportunity
and ride them for the time frame that
you're engaged in yeah and and how have
you been handling you know the more
choppy Market
um obviously 2020 was you know
abnormally good but um are you a little
bit quicker to take profits are you
looking for short-term time frames how
are you kind of adapting to to still be
able to trade and and manage risk as you
as you go in this type of environment
well so the you know the again the a lot
of these moves have have failed to to
follow through not not all of them of
course I mean you can always look at you
know something like Nvidia that's just
been riding this beautifully higher
um and there's been some you know great
moves in there for even shorter term
Traders now maybe it's getting a little
bit heavy right but so what I what I do
Richard is I just don't have a lot of
confidence in this market yet it's
getting there maybe but I still think
we're you know could see if you had a uh
uh head fakes so I'm taking each stock
based on own merits I'm not as concerned
about the market because we've at least
you know we're at least in late stage
one maybe getting ready for a a a trend
that could hold we're just entering
earnings season so maybe that's going to
be the uh yeah or maybe that's what's
going to crush it as well so we have to
be aware of that so everything I do has
been
unfortunately almost everything I do has
been smaller share size I hate it but I
I'm just trading like a because
more things are going against me and
I've gotta you know be able to number
one get out of a little piece right away
to lower my risk that's been really
crucial for me
um so just like we saw on Cube if I
hadn't sold any I would be taking I'd be
taking a loss and I'd be really annoyed
with myself because my process is to
sell some into strength especially in
this market if we're in a you know
beautiful stage two up trending market
and everything seems to be working on
all cylinders I'm not going to be as
quick to sell that first third if I
really feel like I'm at the right entry
point I'm going to be involved with you
know larger share size I'm going to you
know Trail my stops a little bit wider
behind because I know that you know I
can account for uh you know probably
less volatility as as the uh soros's
quote that I like is volatility exit
turning points and diminishes with the
trend so if we're in a trend we don't
expect large volatility but when we're
battling it out buyers and sellers for
control you know that's what we're
seeing that's what this volatility is
about is that we're you know trying to
look at this you know uh s p on a weekly
chart and it's still a battlefield right
and it's just not certain yet we've
we're looking as good as we have that
maybe we're going to you know sustain
something but what would you know to me
what would say we're in a stage one is
getting about stage two is getting above
here but it doesn't mean I would buy
there because we just you know went one
two three four five six weeks to get
there instead I think it would break
there
and it would do this
and then I would want to get involved
right here thinking that okay this is
the higher low I'm going to see it do
this and if the market can do this and
continue to you know do what it's
supposed to or maybe a little shake out
here and there and then continue higher
that's the ideal scenario but we're
we're not quite there yet
yeah perfect
um
and getting back to if you could
actually bring up the Nvidia chart uh I
thought that might be another good
example to talk about the the handoff uh
as it's in the trend maybe go to a daily
uh can you talk about you know how you
would Place The View UPS here where you
would anchor them and also how you would
do the handoff process maybe it's not
long enough of a trend but you can do
make sure no no it is and so you know I
would anchor one to that low when would
I anchor it to that low is is the
question like well how did you know that
was the load anchor well I wouldn't have
known it I wouldn't have set that anchor
till probably you know three to four
days later because I would say hey we
had that big decline we
rallied from that and that seems to be
holding so far so I'm going to set an
anchor there how does that you know
where do the buyers take control from
that last sell-off so we see that this
is where the buyers really took control
with that we knew for a fact that from
that break above the declining 200-day
moving average which was sold into we
knew for a fact that the average
participant long from there is now in a
winning position the average short
seller is now losing money so we might
want to even just anchor one right there
from that break point and then we saw
the pullback to that and it touched
there so we could anchor one here and
look at how it touched right there and
there so I would have on this day I
would have anchored one here and I might
have said hey time to get out but we'll
I keep that one on because then it you
know but there was no trade there
because it gapped away I wouldn't have
bought at that level it would have been
a mistrade so it rallied up and then
guess what well look it pulled back to
this one again so that and then it had a
strong rally so on this day I would say
that was an important low let's anchor
to that level and now here we are we're
holding you know we're just battling the
20-day moving average and we're uh you
know still holding above the anchor from
this point so if it does this I wouldn't
sell it short mainly because it's still
above a 50-day moving average I would
think maybe though if it does this it's
going to do something like this and then
come down towards that 50 day if it gets
trapped below that 20 if it gets trapped
below that anchor over here then you
could say is this a shoulder this is a
head and this is a shoulder so in order
to really see that better though we
could look at like 130 minute time frame
and here I've got a 5 10 and 20 day
moving average so actually let's just go
to a 65 minute time frame and there you
can see it really you know again so is
this
you know a head and shoulders pattern
that's breaking down and if so this was
an important recent High you know maybe
my stop goes just above this level right
here so if it rallies up a little bit
breaks down short here with a stop there
if you're interested in shorting it I'm
personally not interested in shortening
because it has a rising 20 and a rising
50-day moving average right but I could
see it pull back maybe if it was going
to you know experience a deeper pullback
I could see it come down to that 50 day
I would be more interested in seeing how
it behaves there and then buy it as it's
breaking away from there with a stop
under here
yeah perfect and one one thing new that
I picked up for your book was uh you pay
a lot of attention to the slope of that
anchored V web so looking at that
original uh thick blue one uh you know
that's Rising quite quickly what does
that indicate to you about you know the
the strength of the buyers and and the
aggressiveness that they're that they're
exhibiting yeah they're motivated I mean
they're really motivated that's the
average price for this year now one
thing is that you know as we start
getting up in these nosebleed levels I
mean a pullback seems highly likely at
some point in here soon something that's
probably going to come very quickly too
and and you know maybe then you have
this prior resistance that might act as
support this year-to-date anchored V web
starts sneaking up like this
um I think though that you know it would
probably be you know maybe the anchor
from here right so you can see that's
where the buyers really took control
after that little pullback right there
it touched it was defended it touched it
was defended so that view app would
probably tie in a little bit better with
this and you know I'd be aware of this
though because if it continues lower I'd
say okay well there's the year to date
so again I don't want to buy the
pullback to the 50-day moving average I
don't want to buy the pullback to this
level I don't want to buy that pullback
I want to see instead that if this is
the pullback that it occurs like this
and that five-day moving average comes
bearing down on it like this and then
you know if I just extend this over a
little bit that you know price action
does uh does uh where's my tool here we
go price action does this and maybe sees
a little bit of a of a ShakeOut maybe
the five day comes down like this I
would want to be a buyer here with my
stop underneath this high or low maybe
half of it there and half of it under
this higher low and that might occur
here it might occur at the 50-day moving
average it might occur here then you
know maybe there's going to be people
saying hey well you know throw some
Fibonacci Fibonacci on there that's a
38.2 percent retracement right there of
that low to that high so there's another
you know group of people group of
traders that say I short it down to the
38.2 percent retracement then I cover
another group says hey we're long 20
million shares of this stock let's sell
it down to the 38.2 percent retracement
and then we'll flip from seller down to
buyer in that level and recover some of
our position at you know same it's the
same psychology it's always about
thinking about what motivates other
people is it the 50-day moving average
sometimes it is so I keep those on my
charts in addition to the anchored V web
the the you know so just if I can go on
a little tangent here that might answer
some questions for people is you know a
simple moving average or an exponential
moving average either one they're good
they you know there's a lot of people
that base trades around them a lot of
people will say they do it though
because it works because there's often
support there there's no magic to the
number 21 there's no magic to the number
50. so what we're looking at is just a
crowd consensus that that says it's a
reason to look at that level just like
the 38.2 percent this is a crowd
consensus the 38.2 percent is a normal
pullback without ruining the uptrend so
let's look in there under the curtains
to see is it is the is the five day
moving average still declining and is
the stock getting rejected on rallies up
there and just continues down well fine
I I don't have to own this stock there's
no reason to own it if it's just doing
this right
so
the v-wap though what it tells us is
from a certain point where the buyers
were motivated it's price memory it says
that from this point where the buyers
regain control it was defended it was
defended there was maybe maybe there's a
program that got turned on there that
said we're going to buy 8 million shares
for the next six months but if it gets
more than x away from the uh view app
from that action point we're gonna sell
some and when it gets down there we're
turning the program on we're going to
buy as much as we can we're going to try
to fill this order as best we can so
that when if as if they're expecting the
weekly time frame to you know continue
to do
something like this
and go on to new all-time highs I mean
the stock is capable of it right so they
want to buy as much as they can on that
pullback
shorter term Traders smaller Traders we
have the luxury of sitting out the
pullback we don't have to buy the dip
it's stupid don't buy the dip buy
strength after the dip that's what we
want to do
yeah perfect and one question I had for
you was it maybe you could go back to a
daily time frame for this uh when you've
got an acre V web
um maybe from the year to date if you
could do that do you take a look at how
extended above that view app we are as a
measure of you know maybe the Stock's a
little bit stretched out it might need
more of a basing period like do you use
um I don't know uh standard deviations
from that or maybe just look at it
visually but is that something you take
into account at all but you know that's
a good question a lot of people like the
standard deviation bands I prefer not to
use them simply because I do like the
simple moving averages is what I you
know cut my teeth on simple moving
averages and I still have a lot of
belief in their value and and I don't
think it's a coincidence either that you
know there's buyers at this 20-day
moving average and a little ShakeOut
below it so I'm more interested in
what's the direction of the 20-day
moving average than whether it's above
or below it then maybe it's a ShakeOut
and same with the 50-day moving average
that maybe it comes down to it and
slightly through it but then I would
expect this and recover so uh back to
your question though is I want to look
at
I look at it visually and say hey it's
pretty far extended from there I've got
to be a little careful but when I look
at the daily chart I see that there are
aggressive buyers defending not only the
20-day moving average but the anchored V
web from the buyer where the buyers
really gain control from this point I'm
sorry this point right here
and this point right here and then again
anchoring to this point saying we really
expanded away from there that's the next
level of Interest the 50-day moving
average sneaking up with it uh so it's
always just you know being aware of the
important levels on different time
frames and what type of participants
might be motivated when it's this far
extended I you know and you see this
what looks like a clear uh Head and
Shoulders pattern I'm not going to mess
with it because the primary trend is
higher but I know that there's people
out there shorting this thing and you
know the beauty might be that it breaks
down below there comes back up and
squeezes all those shorts right and I've
got to be aware of that as well
yeah perfect that definitely answers my
question and
um I know you've covered this before and
it's definitely in your book as well uh
but could you kind of give an overview
of maybe a quick guide of you know
important spots uh significant days
basically where you like to Anchor an
anchor B web uh too because that's kind
of the subjective part of it but it's
it's the art right uh it is the art yeah
so so again it's it's about psychology
what's important to the market earnings
reports are important to the market
anything that causes a big supply and
demand disruption whether it's an
earnings report on really big volume or
is just an analyst upgrade because this
analyst kicks ass or whatever it might
be but what is you know what gets people
excited what changes the supply demand
perception a lot of times it's earnings
at the end of the day stocks trade based
on earnings they're trading on fused to
treat your expectations for the company
and once in a while we get a true Supply
a surprise rather it breaks above the
anchored viewf from the IPO so here I'm
answering that with some examples of one
I like it from the IPO that you know we
had that as we spoke about on the one
minute chart for the Spy it gets up
there it has that Battleground you know
just like we saw on that one minute spy
and here we are on a daily chart and
then the buyers take control so I would
probably set one where did the buyers
take control right there and then I
would go back and say you know as a
swing Trader well it's breaking down I
don't want to be involved in that
anymore let's see as it breaks down
there now I know this was an important
high so I want to set an anchor to that
high and see how prices uh behave around
that and maybe that becomes a level of
resistance in the future which in fact
it did so as it breaks above there well
you can see on this 30 minute time frame
on on
um you know it got a little bit extended
in here and they shook people out pretty
hard this was the earnings report it was
defended defended looked like it was
defended saw ShakeOut so that's an
important low and I knew that right here
and now I'm looking at this and saying
well that
event what's the you know who's in
control buyers or Sellers from that gap
down who has control well the buyers are
back in control because that anchor V
web lines up right in here along with
the anchored V web from the earnings
report and that Mo that that low so now
I want to look at it a little bit closer
and say well we had a ShakeOut two days
ago what is the average price from there
okay so when we look at that it tells me
that today you know we gapped up we
pulled back now if we can pull back down
into here tomorrow and then the stock
starts getting going right here I want
to be a buyer right here maybe even
maybe even add some there uh
but I think this would be just a little
bit early which is fine
um and my stop initially I mean your
worst case stop I think would go under
here otherwise you know under this
cluster of of volume weighted average
price levels which is also where we see
that Rising five-day moving average so
it's got a little bit extended I mean
you look at us go right it only rallied
a point it's three percent though right
I don't want to chase it three percent I
want to buy after the pullback and it
starts to Rally again and then set half
of my stop under this V web cluster half
of my stuff under the morning low as it
climbs higher to daily R2 later in the
day I sell a third I raise my stop to
break even on the balance now I've taken
UH 60 cents on a third of it and I've
got two thirds left that now if I get
stopped out at break even I'm still
going to have an average of 20 cent gain
in case it falls I you know I don't like
crystal balls in the shop it doesn't
tell me but but I've got to be aware of
this as well so the anchor from the
recent high is that going to Halt it so
maybe that's a good place to sell that
first third right up in there pulls back
and then maybe so tomorrow's Friday
maybe it shakes out and then Monday
morning it's Up Up and Away past this
level I've got a head start on the
breakout buyers for a reason
because I know as a fact the sellers
lose control above that point from the
highest point paid if this if there were
very aggressive short sellers where do
they get into trouble they get into
trouble Above This level not above that
level because they're you know dollar
cost averaging averaging into it it's
it's you know it's assuming what the
average price for the crowd is not
assuming the average price it's
factually that's the average price from
that Peak
yeah perfect and uh this is also an
example of a breakaway Gap so maybe we
could go back a few days to uh the
actual earnings date and talk about uh
the Breakaway gaps because you break
down in the book The the four different
types of gaps and the Breakaway Gap I
think uh you know especially on earnings
reports that's something a lot of people
are interested in and are looking to
accumulate kind of Entry tactics to to
address that type of situation
well so there's three types of uh gaps
in in terms of traditional technical
analysis I'm just trying to move that
over there because the camera's in the
way again
um but in traditional technical analysis
you have three gaps one is called the
Breakaway Gap that's kind of like the
ignition that really got people excited
but it got ahead of itself so it had to
slow down and check in and do the buyers
are the buyers still interested in you
know maintaining control and it appears
as though they are because they let it
slide a little bit then they came in and
created a higher low and you know that's
the way you have to think of it is the
buyers created a higher low how did they
create that higher low well they showed
enough demand in there to stop to to
absorb the supply so it can stop going
lower and then once they get rid of that
seller it was free to go higher so if it
breaks that pattern now of this low and
this higher low well then I I don't want
to be involved because maybe it goes
down and this is a failed Gap I I don't
want to take anything for granted and
make assumptions that it's just going to
go higher because it would suck to say
hey I love their sneakers they sold a
lot of them they're making a lot of
money the positive earnings surprise the
shorts are getting squeezed but
something happens I'm not going to be
around for it so the Breakaway Gap and
then typically somewhere around halfway
between a stocks you know final move and
oftentimes it actually occurs you know
three months apart between earnings so
maybe next earnings let's just call that
three months to this point maybe in
three months they report earnings again
and it does this and then it it has this
Gap doesn't quite fill it you know all
gaps get filled people say but often you
know maybe a year and a half later as it
comes back down but this is what's known
as the measuring Gap
so the measuring Gap
occurs typically halfway through the
move so if this was the Breakaway and we
went from 21 to 20 to 36 that means that
that was 15 points so if we add 15
points to this break point that tells us
our next Gap should come up around here
that so the measuring Gap simply says
you know we typically see two moves of
about the same price uh price magnitude
and that's our you know price objective
doesn't mean it will be the the high but
if then in six months from now we saw
another earnings report and then that
one gaps up you know let's let's just
call this that earnings report three
months six months from now it might Gap
up and now it's you know with the stock
has gone from 21 to 51 it breaks to new
all-time high on that earnings let's say
well that would be a great place to sell
some because you're likely to see you
know at least a longer term time
correction it's kind of done what it's
supposed to do unless the earnings are
just you know through the roof you know
double what analysts were expecting and
that sort of thing
um and those are you know the guidelines
just like all technical analysis there's
I mean what's the magic of these three
gaps they tend to occur in this fashion
and people-based decisions around them
so they're things we need to be uh you
know to look at and consider important
in our analysis whereas you know some
people trade they'll tell you
successfully by looking at sunspots I'm
not going to laugh at that maybe they do
but I know that they're in the very
small majority minority maybe they're
one in a thousand people and maybe
they've just cracked the code and that's
great but there's not going to be
demand all the time when Mars goes
retrograde and that guy the astrologer
is buying and he Nails it because
there's only one or two out of a
thousand people looking at that but the
50a moving average 90 percent of the
people who look at charts are looking at
a 50-day moving average so we have to
look at it
yeah for sure
um and another good question that
somebody asked on Twitter which I think
is very important to talk about uh and
you you address it in the book as well
um what happens when the v-wop doesn't
work uh how do you deal with those type
of situations where it doesn't seem to
respect that level it undercuts it or or
different situations where you know it
it doesn't act as it should based on how
you're interpreting price action yeah
excellent question and actually uh
Richard you know prior to you getting
that question if you recall on the DM I
said hey feel free to trip me up and you
show somewhere it didn't work because it
was a lot of value to be learned in that
and the answer is kind of the same as
sometimes the 50-day moving average
doesn't work well what do you mean by
work it's not a magic buy Spot it's a
level of Interest so if the stock you
know doesn't get up through that level
and fails did it work is resistance if
it doesn't hold Above This V web that's
why we use stops and there's no perfect
system nothing's going to work all the
time you know like as I point out and I
showed you know numerous failed examples
in the book I wanted to be a book that
says hey guess what real life trading it
doesn't work all the time and this looks
like a beautiful buy at the touch of
this V web but the next day it got the
snot kicked out of it so how do you
handle those situations my preferred way
to handle those situations is to not buy
the touch of the v-wap right here but to
buy strength as it moves away from it
not to buy the touch right here but to
buy strength as it moves away from it
because it might be this touch then
you're down a dollar and a half you're
like well where's my risk management
so I like to buy strength after the
touch I like you know if I'm looking to
short this thing because it does this
well I would be looking to sell short
not as it touches that five-day moving
average or that V web I'd want to sell
short as it's failing right here and
then I know I have that lower high to
protect myself with so it's about
combining all the pieces of the puzzle
together and not just saying I'm gonna
buy blindly at the view app because to
me that's just foolish
yeah perfect
um and is there a certain number of
pullbacks to a v-wop that you would
consider buyable because often you know
when we're looking at just a simple
moving average the 50-day moving average
often the first one there's some basing
of respects that continues the trend is
it a similar process for for the anchor
view web I kind of look at them all just
uh independently because they're they're
they are subjective uh more subjective
than a 20-day or a 50-day and that's
what makes those popular is they're easy
they're on every charting platform
people have been trained on them they
use them
um whereas you know looking at this you
know again do I want to buy that first
test no I want to buy strength away from
it and what I often do is actually
put a view app and say well you know
what that was the high of the move right
there that was the high of this move so
I don't want to buy this tells me the
per the average from the highest point
from there and right here the average
point from there is now making money so
I want to buy here I want to buy here
and then even if I wanted to buy you
know this one I would buy at this point
right here
and so you know on and on it goes that I
want to buy I want to be aware of the
touches of those V webs but I also want
to have confirmation that the average
lung from the highest point paid is now
filling in a good spot and the average
short from the highest point paid is is
feeling pain and that gives them
motivation to go in and cover
perfect and there's another good
question and we you've definitely given
a few examples
um already but uh please ask Brian to
show a few setups where he's taken uh
that he's taken recently where he's
combined the five-day moving average and
the anchor view web to enter a trade uh
he's discussed two purchases in separate
videos with TL but I don't think he's
combined the two to show his overall
entry tactic especially in the current
environment sure um I mean I talk about
these in my weekend video too I don't
know if he's a subscriber but
um you know here here's uh this one is
brze I put this one on the other day
there's the anchor from the IPO the I I
just put those on there that the stock
came public at 65 a share that's just a
reminder to me
um but you know so the most recent
really relevant High big high was right
here so the buyers are back in control
from there they're also fighting this
200-day moving average right and that
provided resistance three times in a row
then it gapped above it on earnings so
let me switch the scaling over here so
we can see this and now we've got I'm
looking at the stock and you know it
pulled back and I was thinking maybe
this is a ShakeOut because it tested the
year-to-date V web and tested the 20-day
moving average in the 50-day moving
average and now it's still now that the
200 days in the way but over to the
shorter term time frame this is that Gap
and I set an anchor there it hasn't been
really great you know truthfully and you
could say here's an example of one where
it doesn't work because it's you know
maybe you buy here but you'd have to get
stopped out over here maybe you buy Here
you'd have to get stopped out over here
it worked there
um and we saw a gap lower so I was
thinking maybe this is a uh a ShakeOut
but I'm not you know what you didn't see
on the Twitter which I you know provide
this stuff for subscribers and that is
that what I'm actually looking for in
here is for the buyers to say they're in
control now it looked like from that Gap
lower
that was encouraging but we had a
declining five-day moving average so I'm
not a buyer yet what I want to see is in
the next couple days if this stock can
you know show that this was in fact a
just trying to move that around so if if
this you know if it
so that was three days ago so what this
tells me is
that was four days ago that was five
days ago if the stock is down here that
five-day moving average is still going
to decline for the next one two days
right because we're getting rid of this
data but next Tuesday when we get rid of
this data on the open and if the stock
is here maybe it's done this
and then it breaks a higher high above
that right here well that tells me now
we're above that level how does that tie
in with the anchored v-wap from here
well maybe you know that
gets a bunch of volume down here I think
I would probably buy some be aware of
this maybe sell a little bit expect it
to do this and pull back to the ryzen
five-day moving average add to it here
so it's it's all about you know as you
can see like when I draw on these charts
it's always not just about what happened
it's about how do I in Project forward
based on how these stocks typically
trade so on a different chart I have uh
you know you've seen this Richard I have
a uh let me just pull it up this is 20
days ago and this is 50 days ago and I
have those there to remind me how the
slope of the 50-day moving average might
change in three or four days if we're
getting rid of a big gap that might have
occurred you know 47 days or 53 days ago
just as we're doing here we're getting
rid of the data you know tomorrow from
this day and on Tuesday from this day
I'm sorry Monday because today's
Thursday it's so maybe it just needs a
little bit more time and it's going to
do this and time is fine there's there's
no hurry to get involved people who buy
the pullback or buy because it you know
because it's closing the gap or whatever
their reason is you know you're just
buying weakness
hoping I want evidence that this trend
has has flattened out and it didn't do
it you know it didn't get extended and
it breaks above it but instead it coils
up underneath it I can buy in here set
my stop at a real reasonable place maybe
half of it here and half of it there and
then sell a third as it breaks above
this high
and then you know rise raise those stops
up under here then under here and if it
breaks above that high so another third
and just continue the process and and
just try to have guidelines for every
scenario and always trying to anticipate
what could go right what could go wrong
how do I get out of this mess if it
becomes one right
yeah excellent and one question I want
to ask you is uh say there is an
anchored by pitch and it pushes through
it's it gets nice and tight nice and
contracted pushes above that pinch and
then retest the anchor V web and then
reconfirms show some strength after that
is that a potential entry spot or are
you always looking to get involved right
as it pushes through uh the the top of
that pinch yeah so we kind of did that
in maxn right so maxn was a recent one
it gapped up on earnings it did that you
know first couple days in there then it
shook out and on this day we knew we
could anchor a v web to that point
because it seemed like that was the end
of that pullback and then we came in and
saw that the buyers stepped up
each of these days it had the 20-day
moving average had a chance to catch up
to it and then you could take a look
then let's say at a 65-minute chart and
we can say from that you know was it
pinching between these and it was kind
of sloppy but again I don't want to be a
buyer here
because it just rallied from 21 and a
half to 26. it makes the higher low it
touches it and gets rejected on the open
that day the next day though it breaks
it and you can see it tested it here and
it tested it here so again I missed the
second trade I actually got stopped out
of this one and I don't own any of it I
bought it over here on this day and I
got out of my last third right here and
I never got back in what I should have
done was been looking at let's say a 15
minute time frame and say well from that
Peak and from this low you know and that
that was the problem is that it didn't
give a clean entry I guess you know if
you look closely at this day these are
30 minute 15 minute candles so if we
look at that let's see if we can look at
that on a five minute time frame
um and that was right here this Gap so
I'm if I was paying attention to it I
might have purchased here with a stop
below the low of the day as it got back
above the daily V web
um and you know then it makes these
lower highs so I'm just out of this one
but that was that that's off the top of
my head that's the best one I can think
of that uh recently did that and I did
not purchase so again the test came here
and then we saw the strength away from
it
yeah perfect
um and
you you may not have been screen sharing
yet I think this might be an interesting
concept to show with a chart in mind
um the anchor V web based on the
calculation it kind of changes the level
based on the time frame you're looking
at
um because it teaches a thousand if
you're on a daily chart uh it calculates
based on daily if you're on a five
minute based on the five minute uh could
you kind of um
re-emphasize why you always like to look
at the lowest granularity possible and
do you ever consider the level the daily
version of that view app is on that
lower time frame kind of similar to how
you look at the the five-day moving
average on a lower time frame using
different you know different
um period moving averages the
corresponding uh yeah yeah so if you I
mean if you look at a daily view app for
one day like you're not going to see any
value in it at all in order to get any
value from the daily view app you have
to look at it from a very shortest term
time frames now what I'll do is I'll set
it first thing in the morning like on a
one minute chart
and as the day goes on about 20 minutes
in I'll change to the uh two minute
chart and then I'll go over to the five
minute time frame and I'll just continue
to
um you know look at the different time
frames
so that the most accurate is going to be
found on the shortest time frame because
you have a larger denominator you have a
larger sample size if you have a sample
size of one
it doesn't change right so it's similar
to I forgot how I explained in the book
uh if you were looking at
uh I'll I'll come up with that example
later I can't think of it right now you
can tweet it out or something yeah what
was that you could tweet it out or
something if you okay yeah um or find
the page in the book and yeah that'll
make people want to go hunt it down and
buy the book buy the book by the way
um if you don't own it uh I'm just
talking to the audience there it's my
pitch Richard yeah there you go um so
you're always gonna you know the larger
the denominator the more accurate it's
going to be But as time progresses in
this you know longer time frame has a
bigger diameter
divisor rather
um they're going to compress together
just like you'll see you know a 20-day
moving average and a 22-day moving
average or in approximately the same
place because they're close to the same
denominator
um whereas on a 130 minute time frame
you know which is three candles per day
there's your daily view app on the Spy
you could say Well it pulled back to it
but there's you can't you can't make a
trade plan for a day trade based on that
you've got to get down into this area
and see that did it actually even touch
it there it looks like it on those three
candles but it didn't actually touch it
in real life right it's just because
you're only dividing by three then you
don't and actually at that point it was
only dividing by two because you were
only into the second 130 minute bar of
the day and that 150 minute bar that
might have occurred in the first five
minutes of that 130 bar so you're
averaging 130 minute divider divisor and
a five minute divisor it doesn't make
any sense you want to keep the divisor
as clean as possible similar to the math
of the five-day moving average that I
don't use it on a daily time frame
because it's only divided by five but if
I look at it on a 15 minute time frame
and I look in there well I've got 130
periods there's 130 15 minute periods
over the course of five days so it's the
true five day where it's uh for a daily
chart it's only going to be the true
five-day moving average at the close
everything else is four days plus an
hour four days plus three hours whatever
it might be four days plus six hours
until it's four days and six and a half
hours now we're at five days again
yeah yeah that that's that's helpful I
think I phrased my question a little bit
wrong can we go to a chart of onon on a
daily chart uh because what I think what
I was asking I I think it's a daily view
app instead of anchored view app so if
we go to a daily chart here
um so that's one day is that oh daily
okay yeah daily so say say you anchor it
from that earnings Gap up day then when
it's pulling back into that level uh in
the recent week do you ever look at what
that uh anchored view app level is on
the daily chart but look at the lower
time frame that same level so I don't
know what you know just under 29
uh 29.50 so basically yeah I want to get
down in there and see what's really
going on gotcha um because again at that
point your divisor is one two three four
five six seven eight nine ten over 12
13. that's day 13 where it hit it
whereas if you're looking at a 30 minute
time frame yeah
uh you know six uh 65 of these over the
course of five days so you know you're
13 days in your divisor is 250 or
whatever it might be so it's going to
give a much more accurate reading you're
always going to get your most accurate
reading on the shortest time frame
possible as as we started out the
conversation with what's the right
um uh uh formula is it open high low
close divided by four or is it just from
the high the true v-wap is only found
from tick data everything else is an
approximation so we want that divisor to
be as large as possible it can't be as
large is every single trade so instead
we say you know in the first five
minutes of the day I want to look at a
one minute chart with that spy if I'm
looking if I'm focused on the spine I
think there's an opportunity or some
style or Tesla gapped up and I want to
see how it's you know behaving with that
you know this could be the one minute uh
let's let's look at it in Tesla
um you know so here's today's uh
action in Tesla you know where did the
buyers
gain back control after that Gap that's
that article I wrote in 2008 chased the
Gap by the pullback well buy the
pullback here and now you're down a buck
in the first minute of the day and
you're feeling all anxious and you think
oh it's going to close the gap I'm
just going to puke it here or buy here
with a stop below the low of the day now
we have a strategy do you buy the you
know once it gets back above the high of
the day well how well did that work
realistically if you're a day trader and
you buy 183.50 and then it goes down to
one in seven 181.70
you're feeling like a fool in there I do
I do at least I you know I don't have
the faith that it's going to continue
but look at how you know this was
defended perfectly later in the day so
if you're looking to buy it later in the
day and you saw it bounce from there you
would either buy it here uh I'm sorry
um let me just redo that you would
either buy it on that touch
as it's breaking away I like breaking
away or you'd say wait a minute I want
confirmation that from that last time we
saw a high I don't want to buy it there
I want to buy it here
and set my stop under this level and
look at how that which was resistance
flipped to support so it pulls back and
will say okay well as it goes to this
point now my stop is there on the two
thirds I have left because I sold a
third on the breakout of the new high of
the day and ride it into the close and
either hold it overnight switch to a
longer time frame see if it's Justified
to hold it overnight or what might be
going on in here which Tesla is pretty
close to the year-to-date anchored V web
and uh you know buyers of kind of
defended that but we're also below a
50-day moving average so we're kind of
in no man's land on Tesla I think people
are you know wasting a lot of time in
here
yeah yeah thanks that that definitely
cleared up what my question so thank you
for that
um I think uh I don't have too much more
to talk about or were there any other
charts or examples that you personally
wanted to cover today to show the
audience or I mean if you can look at
you know the the principle again is that
you know the fractal nature of technical
analysis we've looked at every single
time frame here today we're from one
minute uh up to weekly and everything in
between pretty much 130 65 30 15 5
minute the thing is you know when it
comes to Trading
it I've been doing this for 32 years
1991 I started full time trading you
know even before then but you know full
time and and it's easy for me to flip
through these and make it look easy but
it comes with Decades of experience and
My Chosen time frame I'm very I have
strong conviction in what my time frame
is especially for this market now if we
enter a new bull market I'm going to try
to stretch my time frame if the market
allows me to and that's the difference
is I'm not going to say now I'm a
long-term investor my thing it will be
let's see what the market allows me to
hold it's not up to me to decide well
now I you know and I think the Market's
in a stage two uptrend so I'm going to
buy stocks and sell them in three months
that's you know that's foolish right
it's just as foolish as saying you know
my stop is 10 away the Stop and that
that's what I maybe would want to uh say
is you know the definition of trend is
always where my stop is so that if I
look at isce and I'm long at 27 well my
definition of trend is higher highs and
higher lows so my stop always goes on a
long underneath the most recent and
relevant higher low for my time frame
because if that higher low is broken so
tomorrow if if this stock
rallies like this tomorrow morning I'm
going to raise my stop under this low
because now I you know especially if it
gets back above this little v-wap right
so I know that the buyers are back in
control for my time frame this is the
most recent relevant higher low it's not
about I'm going to set it to standard
deviations away I'm not going to set it
below a moving average or the week to
date volume weighted average price or
any of that stuff it's about you know
listening to the the definition of Trend
in the market and so that even if I buy
it right here my stop is under here it's
not under the five-day moving average
it's always based on trend is you know
for my time frame and a lot of people
will get confused like because I'm
flipping back and forth between all
these time frames a question I get a lot
is well what's the most important time
frame
and my answer is truly all of them
because they create a picture it's like
asking Van Gogh what's the most
important color to paint with it's it's
not green it's not blue it's not yellow
it's it's how they mix together it's how
they work with each other it's not black
and white we're not doing black and
white art here this is full color living
breathing organism that we're dealing
with the stock market and it's the
compilation of all the hopes desires uh
and you know actions of all the
participants so if we can say what
motivates the biggest participants most
often 50-day moving averages anchored
v-waps multiple time frames great we
don't need and there's no reason that
you know I would never trash any
oscillator or indicator that you find
useful but you can draw some pretty
wacky stuff on these charts and if if it
fine if it's value to you use it you
might look at this and say you know that
anchor view app it's all in that guy's
head that you know he's he's he it's
weird I don't get it don't use it you
use the stuff that makes sense to you
there's no following one person and
saying here's what I should do because I
look up to that person because I have
this many Twitter followers or they want
a trading contest because you're never
going to be able to mimic somebody
else's trades it's about putting it all
together and finding your own style
yeah I think that's extremely well said
and I like that metaphor over there with
with painting I think you came up with a
good one there I just came up with it I
know it again that was great that was
great um for for people who do want to
dive deeper into anchor V web
um what advice do you have them about
where to get started and and you know
how to how to accelerate their learning
curve as much as possible with regards
to that indicator
I I think that you really want a tool
like tc2000 or um you know another good
one is is trading View for the simple
reason that some of the other ones that
offer it uh what what you want to do is
you want to play around with it okay you
don't want to right click type the date
and the time in and maybe get that wrong
and retype it in like you have to do on
thinkorswim
um you know people always say well
when's think or Swim gonna get it well
people have been asking for the last
seven years to get it and you know just
go get another trade you know charting
platform that has the tool but you want
to get one that says let's say you added
it there and say whoops I meant to add
it to this point where I can drag it and
drop it back or if I hit this repeat
button I can just go in click that
anchor and say I want to see how it
acted from there and from there and from
there and there and you know you can go
crazy with these obviously but if you
really study it there's value in some of
these right and and find out what the
value is to you read my book buy it on
Amazon buy it on Apple or Google books
or wherever else it's available and you
know learn the basics learn why
it's valued by institutions and why big
players trade around these levels
learn that's that psychology and then
watch it in action and decide whether it
makes sense and start anchoring from the
key points now some people will say you
know they'll they'll they'll say Brian I
entered the stock at 27 so I set an
anchor there they're like well
you're the only person who cares about
that level
that's important to you that's your in
in the whole anchor is based around
Daniel Kahneman and the anchoring bias
right what's the most important price to
me is it the close of the day no it's
where is the price right now in relation
to where I bought it so that's not
important to anyone except for you what
you want to say is
this was a big event there was a
structural shift in the supply and
demand that caused an imbalance the
buyers regained controls it made this
higher high right here so that's where
you want to buy it somewhere in there
and if that happened to be your entry
great I mean but nobody nobody cares
except you we had this little Gap lower
so that's important and it was defended
here just uh you know this morning
yesterday afternoon this morning it had
a nice bounce away and now if you're a
day trader this is important so maybe
you sold it at the end of the day
because it was fighting with that and
tomorrow if you're a day trader and you
want to get involved or even if you're a
swing Trader and you're like I
missed this one it's a little bit
extended but I want to buy it above this
this level here
um that's where the buyers take control
based on that V web and have my stop
under here
that's okay to get involved in the stock
that's you know may arguably extended on
the on the daily time frame after a five
six day move but as long as you have
your your tight stop and you know where
you're going to get out
there's nothing wrong with that but
yeah
yeah perfect
um Brian this has been fantastic I
personally learned a lot I'm sure
everybody watching did as well
um the link to this your new book will
be in in the description
um so definitely go ahead and check that
out everybody
um are there any other uh places that I
should mention uh where people can reach
out to you I'll have your Twitter down
there as well uh and your website but is
there anywhere else if people want to
learn more from you directly uh that
they should check out yeah I think
Twitter you know anything I do out there
that's not for Alpha Trend subscribers I
put on Twitter I mean I put my YouTube
thing on there so you don't really have
to go to YouTube
um Twitter's the the best place to to go
yeah excellent uh well thanks again
Brian for your time and and awesome
explanations and if you want even more
Brian uh I'll also link below uh your
presentation from the last chairline
conference uh so I thought that was a
fantastic explanation once again of like
using multiple time frames to analyze
the stock so uh go ahead and check that
out uh other than that I hope you guys
all enjoyed if you did go ahead and
leave a like down below we'd really
appreciate it and of course subscribe if
you want to see more videos just like
this one uh later on so thanks so much
and take care thanks Richard
foreign