Anchored VWAP is like a refined version of traditional VWAP. It uses a specific price point, or anchor, as a reference point to calculate the VWAP. This anchor can be a previous day's close, a moving average, or even a specific support or resistance level. By using an anchor, you can get a more accurate picture of the market's sentiment.
Imagine you're on a road trip, and you're using a map to navigate. Traditional VWAP is like using a map that only shows you the main roads, while Anchored VWAP is like having a GPS that shows you the scenic routes, traffic updates, and even the best places to stop for food. It's like having a personal navigator that helps you make better trading decisions.
