Bob Volman Price Action Scalping

[BLS]

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.
John

You are more than welcome. I am interested to see how Volman's setups are used/adapted for different markets. I'm trading the forex market because of it's low start up costs but I might consider moving on to futures or stocks when I get better. Do you trades CFDs? Just curious.

 

[BLS]

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 haven't broken even since I started trading . Still, I just see these losses as a tuition cost and I think I'm growing as a trader (albeit slowly), even if my account is not. I have learned a lot about myself.

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 would encourage you to go back to your charts are try to find out why those trades were "stupid" and what thinking process led you to take those trades. Then post your results for the world to see, maybe you'll be less inclined in the future to take those kinds of trades. At the very least others may learn from your mistakes.

Maybe get into the habit of marking your charts up in more detail and force yourself to really think about each skipped/missed/entered trades. I think it helps.

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?

It does seem like that way. I think that's why I've been toying with the idea of a time based stop in addition to the tipping point. If you picked badly and prices just stall for awhile, my reasoning is that it's more and more likely that the trade will fail, barring any favorable economic news releases.

I took three trades today. That FB I took looked good at the time but I usually skip these; I took it because I wanted in on the breakout move. I think that DD/ARB was a much better setup even though it didn't work out.

 

[shotgun77]

That ARB looked like a tough decision to me because of the ceiling arch retest principle.

True. But don't forget pages 222-223 where he talks about whether the arch ceiling test is necessary or if the range barrier is good enough if the % pullback is 40-60%.

 

[shotgun77]

One difference between stocks and forex that I've noticed is that stocks need a little looser stop. So sometimes instead of the last arch being used as my stop, I'll use the next to last.

 

[shotgun77]

@BLS: to my eyes, you made a good decision to skip that first BB at around 05:40 on your first chart. As Volman says on page 228 - your decision to pass on a trade stands. The outcome is only painful to those who think in terms of being right or wrong. pg 236-237.

 

[stehlikpetrmsncom]

I would encourage you to go back to your charts are try to find out why those trades were "stupid" and what thinking process led you to take those trades. Then post your results for the world to see, maybe you'll be less inclined in the future to take those kinds of trades. At the very least others may learn from your mistakes.

I took three trades today. That FB I took looked good at the time but I usually skip these; I took it because I wanted in on the breakout move. I think that DD/ARB was a much better setup even though it didn't work out.

When I enter a low-odds trade, it is because I feel like I am wasting my time and I want some action. I start to quesiton how I spend my time, which is sitting and doing nothing for the most part.

I am ok with this if I am let's say few pips positive. But losing pips AND just sitting for hours and hours still drives me mad sometimes.
I wish I could for example do some kind of routine part-time job from my home as well, because then I wouldn't have that feeling of "wasting my time".
In other words, I am always motivated to do some work, but trading isn't really much of a work, it is just a neverending practice of patience.

There's just not enough trades for me to justify the time spent in front of the computer - and the pips can't justify it either, since I am losing them.

By the way, I took that FB too and it would have looked good if the RB didn't initiate from the high. In this instance, it would have been much wiser from us to either wait for SB or barrier test.

 

[stehlikpetrmsncom]

@BLS: to my eyes, you made a good decision to skip that first BB at around 05:40 on your first chart. As Volman says on page 228 - your decision to pass on a trade stands. The outcome is only painful to those who think in terms of being right or wrong. pg 236-237.

Haha, love those quotes, it's like citing from a bible :cheesy:

 

[samich1262]

Well I'm nowhere near finished with my BB study, there are just too many different setup situations. It will be a longterm project that I'll probably add to every day after close, but I have noticed a few important things so far.

1. As we figured earlier, a BB in the top or bottom of a trend is more likely to fail without a pullback. Unless it forms directly on top of another BB. My guess is, this happens because countertrend traders try to enter the market on the first box. They fail to hold it at that initial level. When a 2nd box forms and breaks, they're really screwed and they bail. Those tight BBs made up entirely of dojis on the top or bottom of a trend stand a better chance to work out, but they need to be managed carefully if price starts to slow down or forms a higher or double bottom.

2. I think a BB that forms after an RB or ARB on the outside of a barrier might always be a bad idea, even if it was an excellent break. I think this is because it resembles a failed breakout and price has a tendency to crawl back inside the range. So one question here is, if price forms a BB on the outside of a barrier and it was NOT a proper RB or ARB, do you take it as an IRB? Seems like it has a pretty good chance to create a boomerang trade especially if the trade is tall enough. The situation resembles breakout traders that get trapped, and there's not enough support at the point of the breakout to keep prices from climbing back in.

3. A situation that I haven't made up my mind on yet is a BB in the top of a forming double or triple top.
So far I have seen BBs in the top of a double top break to the upside for more than 10 pips on 3 out of 4 occasions and a triple top trade worked out 1/1. I need more data on this setup for sure, but if it IS a workable setup, it would probably be for the same reasons of a BB on top of a BB in a trend. If a forming double top gets taken out, then it's actually a double bottom/continuation pattern and the trend may resume. Short sellers probably have their stops above the first top. If the BB breaks to the upside, they may bail. It makes sense when I think about it. After 6 days of data, I think that setup works out better than A BB in the bottom of a range after a double top. If price breaks to the upside it never puts in that double top. If it comes back down and forms a BB at the base, you've got a triple bottom which is good, but you've still got 2 tops to go through and you know there are short sellers waiting up there.

Still need more data, but I think it's been helpful so far. This morning I avoided a couple bad BB scenarios that I had been getting trapped in lately. I took that one ARB setup and exited for a 3 pip gain, but I was mostly just happy not to get caught up in a trap BB trade again. For some reason things moved really well during the Asian session last night, so I'm not surprised that we didn't see as many setups today.

 

[johnwolf]

You are more than welcome. I am interested to see how Volman's setups are used/adapted for different markets. I'm trading the forex market because of it's low start up costs but I might consider moving on to futures or stocks when I get better. Do you trades CFDs? Just curious.

No CFDs. I trade index futures, right now mainly TF - the Russel 2000. I also keep a chart up of 6E - EUR/USD futures.

TF is $10.00 per tick, with 10 ticks to a point. My scalp target is one point. Scratch loss is usually 5 to 7 ticks, so it equates to Bob's configuration pretty well.

John

 

[samich1262]

This chart is from 2 days ago. I thought it was one of the more difficult sections to trade on-the-fly so I decided to post it and see what you guys thought of it. First, I marked IRBs but they are by far my weakest setup, so if they look bad to you, let me know! But overall, the 2 IRBs and the BB are basically the exact same move over and over again. It's very repetitive.

IRB #1 is part of the shoulder of a sort of Head & Shoulders pattern that you can't really see on screen. The ARB was a 2nd entrance. Then there's the BB that says "skip this." A tight BB full of dojis like this might be okay in a stronger trend. If I take a BB at the top or bottom of a trend, it's got to be short and all doji's.

IRB #2: Volman says in the book that a lot of times we assign more value to some obstacles than we should. I was scared of that double bottom at 1.301 (maybe even considered to be a triple bottom by some) but overall pressure was down and that IRB had 10 pips to work with. I looked more at the DB than the context. But I thought that trade stood a good chance to work out because it was basically a failed breakout after a triple top. I almost traded it but decided to watch since IRB's are my nemesis right now! Haha...

You could probably draw a box around that price action from 5:37-6:12. In fact I think I actually traded that as a BB for a loss that day. Then there's the 2nd BB labeled Skip This. If you read my last post, you probably saw that I am skipping all BBs on the outside of a range break because I think it resembles a failed breakout and has a good chance of climbing back into the range. At least lately, I have not seen hardly any of them make it 10 pips. Maybe with a longer pullback, but not like this. The break out of the range just didn't look solid enough to me. You could use that BB setup as an aggressive trailing opportunity if you took the range break though.

After that, there's a beautiful pullback which is almost sure to be countered. It uses that previous price action that I labeled as an IRB for support. I probably should have viewed this as some sort of range break since it crawled back in the range. Pressure is more clearly bearish at this stage.

I don't know if I'm just paranoid about IRB's, but I would rank the most conservative trades on this chart as the 1st ARB and the BB on the far right.

Let me know if you guys saw anything else on this chart or saw anything differently. I am really trying to work on my analysis so that it becomes automatic. I take too long to gauge IRBs in the live market and find that I don't take hardly any setups that aren't either trending or proper RB's. I think that will change with repetition.

 

[johnwolf]

View attachment 145352
IRB #2: Volman says in the book that a lot of times we assign more value to some obstacles than we should. I was scared of that double bottom at 1.301 (maybe even considered to be a triple bottom by some) but overall pressure was down and that IRB had 10 pips to work with. I looked more at the DB than the context. But I thought that trade stood a good chance to work out because it was basically a failed breakout after a triple top. I almost traded it but decided to watch since IRB's are my nemesis right now! Haha...

That IRB in the middle is a hard one for me to call. In realtime,I probably would have drawn the top of the box above the three tops just before it. So I guess that would make your IRB a failed ARB. Just not sure. Let's see what others think.

John

 

[samich1262]

That IRB in the middle is a hard one for me to call. In realtime,I probably would have drawn the top of the box above the three tops just before it. So I guess that would make your IRB a failed ARB. Just not sure. Let's see what others think.

John

Yeah, it's tough... I don't know exactly how to handle those yet. I thought this one was a good candidate for a boomerang effect, but I am not sure I'd trade it yet until I see several more cases.

 

[samich1262]

Here's a perfect example of why I've been watching two charts. This big move came about an hour before the US open today.

I knew to be watching for a DD, SB or BB once that pullback started at 6:18. However, the EUR/USD pullback didn't make it to the average, and only pulled back about 10%. While this was not a valid DD setup, the exact same move on the GBP/USD chart was a valid setup. Price pulled back about 30-40% right into the average, gave us 2 compressed dojis and then broke south for 11-12 pips again.

While both of these moves did result in 10+ pip moves, sometimes the better setup will work out and the chart with the weaker setup won't travel all the way to the profit target. I finally got a 2nd monitor set up so I can watch both of these at the same time and pick the more valid setup between the two. Sometimes the two pairs are doing completely different things, but other times they're both trending at the same time.

 

[BLS]

Yeah, it's tough... I don't know exactly how to handle those yet. I thought this one was a good candidate for a boomerang effect, but I am not sure I'd trade it yet until I see several more cases.

I'm not too sure about that IRB ni the middle. I've looked over the IRB chapter and it seems that the barrier bounce variety usually has some evidence of the barrier holding up a bit further back in the range, like a previous block (12.1) or a double top (12.4).

 

[BLS]

I overslept today by an hour and that just threw off my morning routine. I missed that first counter trend BB and only saw it after it broke out when I sat down on to watch the market. By the time I finished assessing the pressure for that M/S: BB it had already broken 5 pip to the downside (the breakout was fast). I couldn't really get in my trading mindset so I just ended up watching the market and coming up with reasons not to trade.

 

[cha-ching]

I overslept today by an hour and that just threw off my morning routine. I missed that first counter trend BB and only saw it after it broke out when I sat down on to watch the market. By the time I finished assessing the pressure for that M/S: BB it had already broken 5 pip to the downside (the breakout was fast). I couldn't really get in my trading mindset so I just ended up watching the market and coming up with reasons not to trade.

Hi BLS,

Regarding the SB setup, should one worry about the previous lows at 1.2994 (around 7:06 in your chart)?

Thanks,

 

[samich1262]

I'm not too sure about that IRB ni the middle. I've looked over the IRB chapter and it seems that the barrier bounce variety usually has some evidence of the barrier holding up a bit further back in the range, like a previous block (12.1) or a double top (12.4).

Hmm, I am glad you guys are pointing this out, but it means that I still must not be understanding when "double pressure" kicks in on an IRB setup. Do you have any tips on how to pinpoint when the tables turn/when the entry should be?

I read over the IRB chapter again last week, but this particular setup still confuses me.

 

[johnwolf]

Hmm, I am glad you guys are pointing this out, but it means that I still must not be understanding when "double pressure" kicks in on an IRB setup. Do you have any tips on how to pinpoint when the tables turn/when the entry should be?

I read over the IRB chapter again last week, but this particular setup still confuses me.

He's not referring to double pressure, but to the fact that no range top has been established to the left of your middle IRB. Looking at this chart again, I agree.

John

 

[BLS]

Hi BLS,

Regarding the SB setup, should one worry about the previous lows at 1.2994 (around 7:06 in your chart)?


Thanks,

Not in this particular instance. If prices had formed a bigger block/more clustering there then yes, that would indicate some support around that level.

He's not referring to double pressure, but to the fact that no range top has been established to the left of your middle IRB. Looking at this chart again, I agree.

John

Yeah that's what I meant.

 

[samich1262]

He's not referring to double pressure, but to the fact that no range top has been established to the left of your middle IRB. Looking at this chart again, I agree.

John

Ah, thanks guys. I appreciate the help. I'll brush up in IRBs again this weekend.