Bob Volman Price Action Scalping

[Panjm]

Can somebody please tell me why the BB entry (actually an ARB) at 11:16 was better than the RB at 10:44 in Bob's chart? He said "this development is now more likely to scare the bulls away from the 50 level". Why? The development was a series bearish bars, worse buildup than that before the skipped short, and more likely to be countered.



Thanks,



Cha-ching

IMHO the second attempt by Bulls to trade away from the 50 level fails and price went down to the 50 level again. This forms a double top with the first bull attempt to trade away from 50 level on the left. Anytime when 2 attempts fail, more likely the opposite scenario may occur. Since the Bulls are demoralise , bears more likely to push through the 50 level.
Also I think the second build up is better than the first: out of the 6 bars below the big box, 5 are with equal lows which form the signal line for BB . Furthermore the 4th bar is a false high which trap or demoralize some Bulls.

Regards

 

[fiction4]

Are you trading 200-tick or 5 min? Your chart shows 5 min.

The setup was too tall (8 pips, which implies a 11+ pip stop), so was the signal bar itself (7 pips). The overall pressure was not bullish enough given the bear swing. These are just my personal opinion on trading 200-tick charts (I trade 70-tick for EUR/USD and 200-tick for USD/JPY). I found no entries today during my trading hours.

One thing I found useful is you can set EMA color to be green for uptrend and red for downtrend. If you had done that in your chart, you'd see there's not enough greens to counter the red for you to go long yet.

Tried the reply to this, did it come through?

I tried trading the 200-tick in the morning and it really messed me up. Switched over to the 5-min chart which I posted here.

I saw on your charts the changes you made to the EMA. I like it and I've implemented myself. Thanks for the feedback, did have a few questions though:

1) You mentioned I didn't have enough 'green' to counter the 'red'. That seems arbitrary. Do you just make a judgement call for that, or do you have a method?
2) You mentioned the setup and bars were too tall. How tall do you like to see your setup/signal bar for a 10-pip breakout?

Thanks again!

 

[JRS]

Can somebody please tell me why the BB entry (actually an ARB) at 11:16 was better than the RB at 10:44 in Bob's chart? He said "this development is now more likely to scare the bulls away from the 50 level". Why? The development was a series bearish bars, worse buildup than that before the skipped short, and more likely to be countered.

Thanks,

Cha-ching

The way I thought about it was the break at 10:44 was part of a progression from the top of the range to the bottom. At that point, there really had been no bullish response yet - they had not yet 'thrown in the towel'. After the bulls held the break, then setup a block back inside the range, they *should* have been able to pop it up; it was basically on a silver platter for them. Once they made a move, however, the bears *sharply* sold it down. The sharpness of the order flow after all the work the bulls put in would have been scary for a trapped bull.

 

[JRS]

No trades for me Fri. Just took one today.

 

[cha-ching]

1) You mentioned I didn't have enough 'green' to counter the 'red'. That seems arbitrary. Do you just make a judgement call for that, or do you have a method?
2) You mentioned the setup and bars were too tall. How tall do you like to see your setup/signal bar for a 10-pip breakout?

Thanks again!

1) I think it's just an easier and visual way to look at the slope of the EMA (as mentioned in Bob's books). No I don't have a scientific way to define this. In his weekly charts Bob often marks HL, HH (or LH, LL) etc., when he wants to show how he looks at the pressure.

For angular pattern lines, my personal preference is to look at them as flags, so in your chart I will need to see a bigger pole earlier before I go long (remember the harmony principle in UPA).

2) I usually require my setup to be at most 4 pips. In a faster, or volatile market I may add one more pip but never go 6 or above. My broker's spreads for EU and UJ are about 1.5, so a 5 pip setup implies a stop of 8.5 pips. I hate to lose more than 9 pips.

I have a floating horizontal channel with two lines 4 pips apart in my PRT charts. Whenever there's a barrier line formed, I'd align one channel line along the barrier, and the other on the stop side. This makes it easier for me to see the height of the upcoming setup.

 

[cha-ching]

No trades for me Fri. Just took one today.

Great IRB trade. May I ask where your exact entry was. From the chart I suppose it's at the 96-level when price broke the angular pullback line (not shown)? Or is it at the 95-level one bar later (9:37:22)?

 

[JRS]

Great IRB trade. May I ask where your exact entry was. From the chart I suppose it's at the 96-level when price broke the angular pullback line (not shown)? Or is it at the 95-level one bar later (9:37:22)?

Thanks! I actually intended to give it one extra pip and get in at 95 but jumped the gun a hair and got in a 96. That's what I get for trying to 'time' the market/break.

I usually use stop orders to get into position. In this case I used a market order because I wasn't exactly sure where the pullback would finally setup and didn't want to miss the move because I was fumbling with orders.

 

[fiction4]

Having a rough go of things lately.

This trade was overly aggressive I think. Prices came straight up from a higher low to break a debatable pattern line without stalling. If I had seen a doji, or possibly an extra bar of buildup at the pattern line I had drawn, this magic have gone my way.

 

[JRS]

Chop mode today. Gotta work on avoiding getting trapped. Maybe the best route on these days is to stay out until you see a breakout. It would mean missing the break but at least you don't get chewed up in the process.

Anyone have thoughts how you approach these type of days?

Edit: Anyone use a contrarian style on chop days? What are your rules?

 

[keen246]

Chop mode today. Gotta work on avoiding getting trapped. Maybe the best route on these days is to stay out until you see a breakout. It would mean missing the break but at least you don't get chewed up in the process.

Anyone have thoughts how you approach these type of days?

Edit: Anyone use a contrarian style on chop days? What are your rules?

That's the fact that made me stop trading B.V style. As himself would put it, trading breakouts is a losing proposition, IMHO (on any TF). We have to bear in mind that we're on a manipulated market and the breakouts, fadings, retraces, etc, are meticulously crafted by the market makers. It's us against their well thought out algorithms.

 

[cha-ching]

Chop mode today. Gotta work on avoiding getting trapped. Maybe the best route on these days is to stay out until you see a breakout. It would mean missing the break but at least you don't get chewed up in the process.

Anyone have thoughts how you approach these type of days?

Edit: Anyone use a contrarian style on chop days? What are your rules?

I wasn't at my desk around 8. I would've drawn barrier at 37 or 38. Bob said when market is not active, use the absolute high/low as barriers. So I don't do breakout type IRB either, especially if the inside range barrier is too close to the bigger range barrier.

On the other hand Bob also said if you trade aggressively then you do it consistently to avoid adding another layer of randomness.

 

[keen246]

"On the other hand Bob also said if you trade aggressively then you do it consistently to avoid adding another layer of randomness."
That is very wise. Consistency is the name of the game.

 

[fiction4]

Cha-Ching - Great suggestion on using the 4-pip floating channel. Really helped visualize things for me today. Got a late start and nothing big was setting up, but was able to scalp a handful of pip.

Comments always welcome!

 

[JRS]

Victory! Today I managed to avoid the chop-mode trap (see the last skip). To me, there was nothing aggressive about that setup. In any other market, I would have taken it easily.

I realize this is only one example and you need many, many to form a long-term strategy and even then you need to constantly verify it's working. That said, for now I'm adding a rule to watch closely:

When the market enters 'chop mode', skip all breaks until it actually, conclusively breaks out. 'Chop mode' is defined as a tight range of <10-12 pips for at least an hour. As with any aspect of trading, this is subjective so use best judgement.

 

[JRS]

I stepped away after posting earlier but saw this follow-up price action. I mentioned defining 'chop' is subjective, might need to refine the definition more to allow this.

After a false break by both the bears and the bulls, the market livened up and printed a nice ARB setup. Even though the range wasn't 'conclusively' broken, I think taking this would be fine since the price action started moving again.

To augment the definition of 'chop' more, in addition to a long, tight range, it also implies stagnation in the order flow. The market prints tiny candles slowly and the price just meanders back and forth with no conviction.

Other's thoughts welcome!

 

[fiction4]

Chopped out of position today. Frustrating when you get the right read like this but timing is all out of sorts.

 

[fiction4]

I stepped away after posting earlier but saw this follow-up price action. I mentioned defining 'chop' is subjective, might need to refine the definition more to allow this.

After a false break by both the bears and the bulls, the market livened up and printed a nice ARB setup. Even though the range wasn't 'conclusively' broken, I think taking this would be fine since the price action started moving again.

To augment the definition of 'chop' more, in addition to a long, tight range, it also implies stagnation in the order flow. The market prints tiny candles slowly and the price just meanders back and forth with no conviction.

Other's thoughts welcome!

Chopped out of the same trade. Wasn't smart enough to stay out. Love seeing it posted here so I can relive the agony all over again!

 

[JRS]

Today's trades.

Edit: Kudos if you stepped up and took that last IRB I skipped. The market finally decided to test 1.09 after that.

 

[JRS]

And I thought today would be a pretty boring trading day...

 

[JRS]

Exit Strategies

I mentioned in a previous post that I was tracking a couple other exit strategies. I'd like to describe the strategies and performance of each for July's trades.

1. Tipping Point Technique - straight FPAS
2. +10/-10 Bracket - every trade is either +10 or -10 pips; no early exiting except for news.
3. Trailing Tipping Point - trail the price action with tipping point until it is eventually broken. The idea here is to be able to catch the larger moves. (See attachment for example.)

A note about how I counted these - I traded the standard tipping point but tracked the others as if I had traded them to see how they would have done. That means that if I closed a trade then reopened a new one before the Bracket strategy (for example) would have closed, the Bracket strategy only has 1 trade where TP has 2. That accounts for the difference in number of trades. Also, I tracked this for ALL my trades, even the errors.

So, this is how it went across all good, bad, and ugly trades:

1. Tipping Point: 53 trades, 49% wins, +52 net pips

2. 10/10 Bracket: 49 trades, 63% wins, +141 net pips (had a couple news exits in there)

3. Trailing Tipping Point: 48 trades, 38% wins, +92 pips (89 of which came from today's crazy move)