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The AVWAP Trading Indicator | Secrets and Setups | Brian Shannon_ CMT
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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
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