Bob Volman Price Action Scalping

[johnwolf]

Hey John, do you ever use Brooks's 5m methods too, or just the Volman method? I was curious to see how the methods compared.

I traded in Al's webinar for several months. If you want to learn about price action it's an investment well spent. Al literally talks all day, analyzing the price action on almost every 5m bar.

He and Bob both trade price action, but there are some differences. As a rule, for example, Al does not trade breakouts. He might buy at the close of a strong breakout bar, but not at the breakout point. So no RBs. And no ARBs, except the breakout pullback variety. One of his mantras is that 80% of range breakouts fail, so he's always looking to fade them until the BO is confirmed.

Al enters on stops in trending markets. It's similar to Bob's approach, letting price move into your entry. On a 70t chart there's obviously no time for that.

In trading ranges, Al mostly fades extremes on limit orders. But he does not recommend that for beginners. IRBs across ranges are one of his standard setups, but not at the tops of bars.

Al scalps a lot himself, but does not recommend scalping for beginners. He recommends taking profits on a couple ES points and letting a small portion run. The larger gains improve the trader's equation and lower the win/loss ratio required to be profitable, he teaches.

There are lots of other differences, but these come to mind. I think one of Al's most valuable pieces of advice to beginners is start with just a couple setups and look for the 2 or 3 best trades each day.

I'm so glad to have discovered both Al and Bob. I will say that Bob's writing is far, far superior to Al's. I'm speaking as a career technical writer. Al has written a rambling encyclopedia of PA and Bob has written a PA trader's handbook. Al's books are a real challenge to plough through, while Bob's is a model of simplicity and clarity. I actually find it almost as entertaining as it is instructive. I wish Al's next book would employ Bob's model.

But both are remarkable to me in their knowledge and generosity to share that knowledge.

John

 

[samich1262]

Thanks.


This is where I got a little confused: I understand Bob's point is to focus on the trade itself rather than P/L. So do you mark the tipping point lines during the trade or after? When price progresses, are you (and should you be) aware of how far away price is from profit target as well as current mental stop? Do you (should you) check the actual entry price level? If you don't mark the profit target do you know exactly where it is on the chart? Or you rely on some sound alert from the broker to notify you that trade's been closed so that you can relax?

I think Volman's recommendation was to keep track of the tipping point mentally and not actually draw lines. I think Volman would say that we shouldn't be concerned about the entry price and should always look to exit technically if our order doesn't close. For me personally though, I'll check it if I think I got hit with major slippage. But I don't really have much trouble with my broker and slippage so far. I look on the chart to see about where I think it got filled, and if price stalls near 9 or 10 pip and I don't hear the order close sound, I have closed it manually a few times just to make sure I get out with a good profit. Usually, I only do that if there's a top or resistance nearby that might keep price from giving me that last pip. That's not really how Volman would do it, but if price is having trouble hitting that last pip, 9 or 9.5 pips is enough to make me happy. I don't think that really reduces the odds of the trade. If it's not 9 pips ahead and it stalls, I wait to exit technically.

 

[BLS]

I set up my order button in one-click mode with default TP = 10 pip and SL = 9 pip (b/c of 1 pip spread from OANDA). So most of the time I'll need to move SL to the tipping point right away.

Do you mean you change the default SL every time before you enter a trade? I'm not experienced to do it fast enough at this moment. Many times when I spot a trade I don't have enough time to type in tipping point as SL before I place the order.

The tipping point is a mental stop meaning that you click "exit/close" when you see your tipping point taken out. You don't change the SL on your platform at all. It's remains at 9 for the entire duration of the trade (you could set it to 10 because Bob does take into account the spread when he talks about how to determine how big your tipping point is).

This is where I got a little confused: I understand Bob's point is to focus on the trade itself rather than P/L. So do you mark the tipping point lines during the trade or after? When price progresses, are you (and should you be) aware of how far away price is from profit target as well as current mental stop? Do you (should you) check the actual entry price level? If you don't mark the profit target do you know exactly where it is on the chart? Or you rely on some sound alert from the broker to notify you that trade's been closed so that you can relax?

[/QUOTE]

I mark the tipping point lines during the trade. Sometimes I'll draw a line on some spot on the chart to get ready for a trade and then I'll move it to my tipping point when I enter. It just makes things a little easier while in a trade.

I am aware of how far away prices are from the PT and tipping point. Bob says you shouldn't be, that you should just let the tipping point and bracket orders do their thing. I check the entry price to see if I got slipped but Bob says not to worry about it. I usually know where the profit target is on my chart because I check my entry price. The reason you shouldn't do any of these things is because we want to remove any distractions from managing the trade. We want to remain calm so we don't do things like close out early for no technical reason. Seeing your P/L fluctuate during your trade can make you very anxious. I do all these things because I don't have enough confidence in my trade selections. I worry about each individual outcome because I'm a bit of a perfectionist. I still have a lot to learn and accept as a trader.

I use a program called One Clicker to do orders in MT4. It's very convenient because you can have it always on top and you can enter/exit with only one click. Since you're using OANDA you might want to check it out (test it in a demo account first to get familiar with it).

Download One Clicker 2.1 Free - A tool developed for MetaTrader users. It works as an addon for MetaTrader and allows One Click Trading. - Softpedia

 

[samich1262]

I traded in Al's webinar for several months. If you want to learn about price action it's an investment well spent. Al literally talks all day, analyzing the price action on almost every 5m bar.


John

Thanks John. I read the first couple chapters in Al's book today. I'm not sure if I'm going to finish that just yet because I only want to focus on one trading method at a time, but there were a couple Price Action behavioral tips that might help me avoid some of the losing setups in Volman's method. What's frustrating me is that I can read charts well but trading Volman's setups in the live market is a problem for me. Unless it's a DD, SB or RB. But I have seen so many BB setups lately that I don't want to not trade them. The problem is the context. So I think I'm going to go through a bunch of charts and calculate the odds of the BBs working out in each scenario. For instance, a sideways BB at the top of a trend, vs. a BB in a pullback, or a BB that forms on the outside of an RB, a BB after a double-top and a pullback, a BB at the top of a double-top, etc... Oddly, I've seen BBs in the top of a double top work out better than one in a trend that hasn't pulled back first. I can't figure out why this is. I tried to short a BB on the GBP/USD today that was at the bottom of a trend without a pullback, and it failed again. I would have stopped doing that by now except for Volman's figure 10.8 in the BB chapter. That's pretty much what I tried to trade except that my setup was not entirely made up of dojis. I'm going to assume that is a key difference between a non-pullback BB that works and one that doesn't.

I've picked up on a few scenarios to avoid, but I could learn it a lot faster if I just had some data. So that's why I'm going to take a large sample of BB setups and figure their odds. Then I can print a table out, put it on my wall, and know which setups to trust in each context and which ones to skip. I think that will help me figure out how to trade them consistently faster than just watching charts or analyzing. It won't be perfectly accurate but it'll probably be close enough to see what works and what doesn't.

 

[Fjaneiro]

hello everyone!

This is actually my first post here.

I've just start reading Bob Volman book, and i'm still at the beginning. However I have a question that is annoying me.

I have an account on IGmarkets in which i can use the Prorealtime trading plataform. However, i don't know and to change de pipettes candles to pips candles on the 70 tick chart.

Can please anyone help me?

Thank you.

 

[samich1262]

I almost forgot... I have some theories on what makes certain BB scenarios more likely to fail, and why other BB scenarios are likely to work out. Tell me if you think this stuff seems right or wrong:

Say a range breaks out in a strong trend, maybe 15 pips with 1 or 2 small pullbacks in the middle. I look at that and say price is trending. A solid BB forms without a pullback, but it has a double bottom and a higher low with dojis before the break. The bars that make up the BB are 3-4 pips tall. It has a nice EMA squeeze and price is pushed out of the box. 3 or 4 of my failed trades from the past week have been this exact scenario. What is wrong here? Technically it should show bears losing an attempt to counter or short the top of the market, right? Even when the BB almost looks like a mini range trade, it often fails.

Some of these actually work out, but here's what I think the difference MIGHT be:

1. If the entire BB is made up of dojis, it may be more likely to work out. Ex: Figure 10.8 in Volman's book. He took that BB setup right out of a range breakout. A lot of us would have been waiting to make sure we see higher lows and lower lows before stepping in, but I don't think that's necessarily the right approach because Volman doesn't do that. I think what makes this tradeable is the fact that everything in the BB is a doji and that shows a lack of bullish strength. A key here is that these BBs are below the average but don't make it back to the average, so it may not be necessary to wait for price to come back to the EMA like in the case of a doji and SB. If the price bars in the BB aren't dojis, then it resembles a bottom or top forming. Those situations look to me like they require a pullback because most are failing, even really nice looking BBs.

2. Another situation where a BB without a pullback might be okay is a very lengthy BB. It contains a number of bars and just can't pull back or produce a notable countertrend. After awhile, it has drifted sideways for so long that the countertrend traders clearly can't produce anything. Eventually price creates pressure on the barrier and it takes off. These seem to work out because if price drifts sideways long enough, it shows a lack of countertrend interest.

3. The third scenario that I am seeing work out is a BB in a trend that only contains a few bars, say around 5. They don't have to be dojis, but the BB does not become very wide and the countertrend traders get taken out fairly quickly. I am less confident in this BB only because I haven't paid attention to it until the last couple of days, but the premise is that countertrend traders come in briefly and suddenly realize that the market is not done trending. They panic and price takes off again. If a BB gets too lengthy in terms of the # of bars and doesn't come after a pullback, it shows possible countertrend trader strength. They will be less likely to bail out when price breaks in the direction of the trend.

Here are the BB scenarios that I am seeing that work out more often than not:

1. We all can agree that BBs after a pullback have excellent odds. What made me skip them for the longest time is that sometimes they look like they need to break through a countertrend BB. This doesn't really seem to pose much of a threat to a BB in a trend, but it would to any other trending setup.

2. Any trending BB that forms using another BB as support seems to produce pretty good odds, even if it is at the top or bottom of a trend without a pullback. Example: Figure 10.5, 2nd box. However, if it's not trending, it doesn't work as well. For instance, yesterday I saw a BB right inside a range barrier (basically an ARB) and then a nice BB formed right on top of the outside of the barrier, testing it to the pip. This BB failed. It made it like 5 pips, double-topped and then crawled back inside the barrier. I have seen this fail 2 or 3 times in a row. I tried to trade it because I saw one of these work out on last week's chart. This sort of situation is why I'm going to try to take a large sample of BB scenarios and try to figure their odds in each situation. I want to eliminate the ones that just don't work as quickly as possible.

Let me know what you guys think. I think BBs, IRBs and ARBs can be complicated and it would help us become profitable a lot faster if we could distinguish which scenarios were low-odds or generally unfavorable as quickly as possible, so I'll be looking into it. I'll post my spreadsheet here when I'm done if you're interested.

 

[Fjaneiro]

No one can help me about the prorealtime pipettes to pip settings?

please

 

[samich1262]

No one can help me about the prorealtime pipettes to pip settings?

please

I can't remember if I had to adjust my chart or if it was already like that. I'm looking through my settings right now and can't find where to adjust the pip increment. Anybody else know?

 

[BLS]

hello everyone!

This is actually my first post here.

I've just start reading Bob Volman book, and i'm still at the beginning. However I have a question that is annoying me.

I have an account on IGmarkets in which i can use the Prorealtime trading plataform. However, i don't know and to change de pipettes candles to pips candles on the 70 tick chart.

Can please anyone help me?

Thank you.

ProRealTime is NOT a trading platform. You can only use it for charting.
Make sure you are loading the complete workstation from their website:
https://www.prorealtime.com/en/members

The charts in ProRealTime should not show pippettes by default.

 

[Fjaneiro]

Like i said. I can actually trade trought a prorealtime plataform (something called IT-finance) from my IGmarkets plataform.

There it goes a printscreen from it. Like you can see, the price is on pipettes..

 

[samich1262]

Hmm, yeah mine doesn't look like that. Might try contacting their customer support. Some platforms have the pip increment adjustment feature, some don't.

 

[shotgun77]

Say a range breaks out in a strong trend, maybe 15 pips with 1 or 2 small pullbacks in the middle. I look at that and say price is trending. A solid BB forms without a pullback, but it has a double bottom and a higher low with dojis before the break. The bars that make up the BB are 3-4 pips tall. It has a nice EMA squeeze and price is pushed out of the box. 3 or 4 of my failed trades from the past week have been this exact scenario. What is wrong here? Technically it should show bears losing an attempt to counter or short the top of the market, right? Even when the BB almost looks like a mini range trade, it often fails.

I've learned not to take the BB if there's been several other pullbacks in the trend. So you might look at what has come prior. If there has been a range period, some days will just go back into a range so that might be what happens upon occasion.

1. If the entire BB is made up of dojis, it may be more likely to work out. Ex: Figure 10.8 in Volman's book. He took that BB setup right out of a range breakout.

Are you talking about the first box in the chart? The ema slope is down at the hard left edge so it may have been a downtrend that had a leg up then resumed. So not necessarily a range?

I think what makes this tradeable is the fact that everything in the BB is a doji and that shows a lack of bullish strength. A key here is that these BBs are below the average but don't make it back to the average, so it may not be necessary to wait for price to come back to the EMA like in the case of a doji and SB.

I agree with the horizontal BB's. For the pullback variety, I like it to come back to the EMA.

If the price bars in the BB aren't dojis, then it resembles a bottom or top forming. Those situations look to me like they require a pullback because most are failing, even really nice looking BBs.

Yes, I see the same. These can fail if the trend has been extended. I look for some kind of reversal action shortly thereafter.

2. Another situation where a BB without a pullback might be okay is a very lengthy BB. It contains a number of bars and just can't pull back or produce a notable countertrend. After awhile, it has drifted sideways for so long that the countertrend traders clearly can't produce anything. Eventually price creates pressure on the barrier and it takes off. These seem to work out because if price drifts sideways long enough, it shows a lack of countertrend interest.

I've been tracking the number of bars in the BB in my spreadsheet.
I've seen a BB fail with as many as 23 bars!
And I've seen it succeed with as few as 4 bars. But in general, I agree that more is better -- especially if a trend reversal is the goal.

3. The third scenario that I am seeing work out is a BB in a trend that only contains a few bars, say around 5. They don't have to be dojis, but the BB does not become very wide and the countertrend traders get taken out fairly quickly.

Something else I track in my spreadsheet is the range (height) of the BB. VERY compressed seems to work out well. But if I limited my BBs to only those very compressed, I'd miss out on a lot. Do you think you also have to take into account the overall volatility on the day? Would a volatile day mean that a wider range in the BBs could be tolerated?

1. We all can agree that BBs after a pullback have excellent odds. What made me skip them for the longest time is that sometimes they look like they need to break through a countertrend BB. This doesn't really seem to pose much of a threat to a BB in a trend, but it would to any other trending setup.

2. Any trending BB that forms using another BB as support seems to produce pretty good odds, even if it is at the top or bottom of a trend without a pullback. Example: Figure 10.5, 2nd box. However, if it's not trending, it doesn't work as well. For instance, yesterday I saw a BB right inside a range barrier (basically an ARB) and then a nice BB formed right on top of the outside of the barrier, testing it to the pip. This BB failed. It made it like 5 pips, double-topped and then crawled back inside the barrier. I have seen this fail 2 or 3 times in a row. I tried to trade it because I saw one of these work out on last week's chart. This sort of situation is why I'm going to try to take a large sample of BB scenarios and try to figure their odds in each situation. I want to eliminate the ones that just don't work as quickly as possible.

Good analysis. Let me know the criteria for your spreadsheet and I'll see if I can contribute to your data.

I think BBs, IRBs and ARBs can be complicated

I widened my sample rate. So now my SB's have a winning % of 56%, IRBs are 60%, and BBs are 47%. The BB has a low rate because I've been overtrading them. I haven't been doing too well with ARBs lately so I think I'll avoid them for a while. I feel confident I know what I need to see with ARBs but I get blinded sometimes real-time and see what I want to see.

I'll post my spreadsheet here when I'm done if you're interested.

Definitely interested. Please share.

 

[samich1262]

Are you talking about the first box in the chart? The ema slope is down at the hard left edge so it may have been a downtrend that had a leg up then resumed. So not necessarily a range?


I've been tracking the number of bars in the BB in my spreadsheet.
I've seen a BB fail with as many as 23 bars!
And I've seen it succeed with as few as 4 bars. But in general, I agree that more is better -- especially if a trend reversal is the goal.


Something else I track in my spreadsheet is the range (height) of the BB. VERY compressed seems to work out well. But if I limited my BBs to only those very compressed, I'd miss out on a lot. Do you think you also have to take into account the overall volatility on the day? Would a volatile day mean that a wider range in the BBs could be tolerated?



Definitely interested. Please share.

Thanks for the feedback, it will really help. I did mean the first box in that chart, you may be right. I didn't think of that.

For BBs with a lot of bars, do you think that they should be taller setups? That way compression before the break is more significant? I'm not sure if it makes a difference yet or not, it's something I'm going to look out for. I don't usually take in daily volatility, I just like to see a significant pullback if the setup is going to contain a lot of bars.

One thing that I read in Al Brooks book today is that a lot of times we put too much significance on the setup itself and not the context. He said a less picture-perfect setup in good context is very tradeable, more so than we might think. I took this advice into account this afternoon. I've only been through a couple days of charts so far, but some of the taller/wider BB setups that I wouldn't normally like work out very well after a nice pullback. They're valid I think, at least comparable to some in Volman's book. I had not been considering those because I didn't think they would be as economical as the tighter setups. But some of them look very reliable. They look like mini ranges that are like 5-7 pip tall, but after a nice pullback they can be valid. They definitely fit in the textbook BB category and match some of the examples, so I don't know why I keep overlooking them.

 

[shotgun77]

One thing that I read in Al Brooks book today is that a lot of times we put too much significance on the setup itself and not the context. He said a less picture-perfect setup in good context is very tradeable, more so than we might think.

Yes, Volman says the same thing. P. 137. The key to sophisticated scalping is not the ability to recognize the setups. The key is the ability to truly understand their role in relation to the overall picture.

I was trying to figure out why my IRB-BB failed the other day when another one had worked. Turned out the one that had worked came after a DB and then the BB built horizontally - I went long with both the BB and the DB acting as bullish pressure. The one that failed came after a DT in the pullback and BB built horizontally - but I was trying to go long despite the DT.

Read up on what Al Brooks says about final flags (in his original book they were called failed final flags). I think sometimes the BB is a FF and that is why it fails after an extended trend. It is early counter-trend traders coming in anticipating/causing a reversal.

For BBs with a lot of bars, do you think that they should be taller setups?

I have not yet found this to be a correlation in stocks but Forex might be different. Sorry I don't trade Forex. But I can't find a forum using Volman with stocks so, like JohnWolf, I hang out here.

I do trade less than picture-perfect BBs but I have to have some kind of "instinct" about them. I don't think you can necessarily quantify everything about the context - though I'm tracking just to see how much can be quantified.

 

[stehlikpetrmsncom]

I was thinking about reading Al Brooks but I am concerned about mixing two methods together. Although it eventually sounds like a logical thing to do - Volman's method takes advantage of succesful breaks, but leaves out a lot of opportunity in fading breaks.

 

[shotgun77]

I was thinking about reading Al Brooks but I am concerned about mixing two methods together.

It takes a long time to get through all of Brooks material. He has his own way of describing the market which can be hard to decipher. If you study Brooks, I'd suggest a plan of attack to digest it in small chunks. Else it might be overwhelming.

 

[johnwolf]

I have not yet found this to be a correlation in stocks but Forex might be different. Sorry I don't trade Forex. But I can't find a forum using Volman with stocks so, like JohnWolf, I hang out here.

Gee, that never occurred to me. I sure hope we futures and stock traders are welcome here. PA is PA after all. And I, for one, am trading Bob's setups.

One big difference I see is that we have to deal with the New York open. My approach with that is to wait for a clear opening range breakout and trend, or to wait until a trading range is clearly established.

John

 

[samich1262]

I actually started out in stocks in January. Used to trade earnings reports. I switched to Forex in May. Ironically, I was trading First Breaks on stocks but unintentionally. It was just a pattern that I noticed that sometimes occurred on exceptional earnings reports. I couldn't keep up the account minimum for daytrading with my current expenses though, so I found that Forex was the best thing for me to scalp on. I feel a lot better about it after discovering Volman's methods, because I was pretty much just winging it before. I did pretty well but I think it was probably a lot of luck. Sooner or later I knew my lack of actual technical knowledge would catch up with me.

 

[stehlikpetrmsncom]

I though I turned my results around. I was losing June, July, August and in Semptember I started to be profitable, although very marginally. I lost 25 pips these last two days and deleted my profits for September...

Yesterday and today I had two trades that were stopped out only by one pip (mini fake break) and then went to the (potential) target. That's a difference of 30 pips (2x -5 for loss and 2x -10 for unrealized profit) which is also the difference between profitable/losing month for me :-(

I attached two trades that I think stood a good chance of working out (although neither of them did). Aside from this, I also managed to take a bunch of stupid trades today.

I am starting to think about a different exit management. If you trade well, then majority of your trades go your way for at least a couple of pips, rarely do they go sour immediately. I am sure of you did too, what was your conclusion?

 

[samich1262]

That ARB looked like a tough decision to me because of the ceiling arch retest principle. I did take that ARB but I closed it for a 3 pip profit after I decided it might not be valid. The reason was, the barrier didn't put up much of a fight and the DD appeared way above the 20 EMA. The pullback looked nice and I took the trade because of that, but later decided that prices stood a good chance of crawling back up to the last arch.

The BB might be a defensible but you probably want to exit it at 1.2927 which would either break even or give you 1 pip profit assuming you have a 1 pip spread or less. That may be aggressive trailing for some traders, but since price failed to break 1.2920 and put in 3 lows in that area, that's pretty good evidence that prices are going to crawl back in the range. I'm not afraid of double bottoms when it comes to breakout boxes from a pullback, but a triple bottom or a double bottom and higher low will scare me off, or at least make me trail more aggressively. I'm not going to be as aggressive when trailing my trending setups, but for IRBs and BBs in a ranging market, I follow price a little tighter for now.

I am in the same boat, September has not been very good for me. But today, I was happy to avoid the bad BB setup that I had taken a couple times. If you don't already do it, you should save your charts with your trades marked on them. I didn't think it was necessary at first but I really couldn't remember some of the trades that I made. It could help you avoid some of the trap trades. If I look at August compared to September I am making better decisions overall, it's just a couple situations with BBs that have been tricking me.