Bob Volman Price Action Scalping

[Giorrgi]

Hello,

took two paper trades with very low volume today. Both failed. In hindsight they don't look too good but I would like to analyze the reasons why. Also I apologize in advance: I can only use oanda in my library, therefore these will be 30 second bars and not 70 ticks.

The first trade is a failed DD play. I think the main reason for not taking this trade should be the fact that the pullback from the preceding trend was barely a 20% retracement, nowhere near 40-60%. The psychological reason for taking this trade was me anticipating two dojis near the EMA without looking further.

The second one is what seemed like a decent BB at the time. The trade failed, but I still don't see any obvious reasons for not taking it... except for the fact that the high of the block was broken very recently, which means that the upper limit of the block wasn't a significant level at all.

 

[MaxDoom]

Hello,

took two paper trades with very low volume today. Both failed. In hindsight they don't look too good but I would like to analyze the reasons why. Also I apologize in advance: I can only use oanda in my library, therefore these will be 30 second bars and not 70 ticks.

The first trade is a failed DD play. I think the main reason for not taking this trade should be the fact that the pullback from the preceding trend was barely a 20% retracement, nowhere near 40-60%. The psychological reason for taking this trade was me anticipating two dojis near the EMA without looking further.

The second one is what seemed like a decent BB at the time. The trade failed, but I still don't see any obvious reasons for not taking it... except for the fact that the high of the block was broken very recently, which means that the upper limit of the block wasn't a significant level at all.

Hi,
my take would be....

First trade was at the top and it had already pulled back to that level once - so a second pullback to that entry level is no longer making higher lows and a top formation was in the making.....

Second trade was in a congestion zone so a DD does not really count I think the box play with breakout would have been better or a skip

 

[Yorkshire Terrier]

Hi everyone
Just a observation but it looks like price is at a point of interest on the chart price is testing
the low of the day @ 1.3047. There doesn't seem to be any Resistance blow this point in the recent past unlike above
to wards the Asian hight @ 1.3077.

So perhaps waiting for a squeeze from the 20 against the low could possibly give a Resistance free journey to target,
just a one possible scenario. I would personally rather trade above or blow then highs and low mentioned today as bob says
tread the path of least Resistance.
I would appreciate any thoughts.

 

[samich1262]

Here's a BB/IRB that just happened. I am wondering what you guys think of this setup, as I am still having a little bit of trouble determining the right amount of squeeze. I was looking for a little more, and this BB broke south when the average wasn't quite pushing the dojis. I think I was just being too picky, but I thought that this break was going to be a tease. This is my assumption:

A BB/IRB does not require as much squeeze as an RB. This makes sense because it takes more power to break a range, as ranges tend to try to preserve themselves. You definitely want some squeeze, but in an RB it's worth waiting for a strong squeeze. Does this seem right? Do you think this BB shows enough squeeze? One more doji before the break and I would've fired off a short for sure.

This setup was only 4 pip tall so it was a little bit silly for me to expect another lower low before entry. The good news is, I was expecting that a break to the 40 level would be likely for probably 30 minutes before the entry. Here is what I saw that put me on high alert for a possible BB entry:

1. First I saw a pullback. The trend is too slow and does not have enough momentum right now for an SB or DD. Price is also above the 50, and without strong momentum, an SB or DD would be a risk. Therefore I would look for price to turn sideways and form a BB.
2. Next I was looking to see if price, would be able to make it back for a retest of the 60 level. It didn't appear that it would be able to, and price lined up as if it were going to try to break the 50. This was the only valid scenario that I could think of at that price. Ex., if the 50 level had held right there, I would not have taken a BB to the upside. The chart was too bearish and the 60 level would likely halt prices.

There is a little bit of blocky action at the 40 before the pullback, but it didn't seem significant compared to the size of the BB setup.

I thought conditions strongly supported a visit to the 40 level. I am not sure if that entry was good enough, I may have just been looking for the "perfect setup" here.

I realize I am elaborating a lot lately, but the idea is to help us get in the habit of thinking ahead so the setups don't catch us by surprise. That's where I was 3 or 4 weeks ago. Happy with my progress there, I just haven't pinned down my entry points just yet.

 

[samich1262]

Hello,


The second one is what seemed like a decent BB at the time. The trade failed, but I still don't see any obvious reasons for not taking it... except for the fact that the high of the block was broken very recently, which means that the upper limit of the block wasn't a significant level at all.

I don't think this block was a strong enough setup. It probably needs a bigger pullback and a bit more tension inside the box. Think of an M or W pattern with an extra leg, if that makes any sense, although BBs can vary quite a bit. The price action before the BB that you marked looks like it is finding support at the 10 level. If price does not make it to the 00 level here, a pullback into the 20 level would probably have been a better place to look for an entry. I would have waited for a pullback into the 20 level and looked for a BB entry there.

 

[vanica]

This is a trade I took. Too many "paper cuts" so far and not enough winners to cover them.

 

[vanica]

View attachment 147692

Here's a BB/IRB that just happened. I am wondering what you guys think of this setup, as I am still having a little bit of trouble determining the right amount of squeeze.

Hi Samich,

I was looking at this setup as well. The idea/location seems to be correct to me. The reason I skipped it was the length of this block/range. Considering the size of the bars and the way they were printed I just stopped feeling any tension between bulls and bears. It seemed to me that there could easily be a 1 pip move below the signal line and then continuation of that "backing and filling". If there was a better squeeze I may still have taken it though.

 

[stehlikpetrmsncom]

@samich1262: I'd take the setup gladly if there was a better squeeze, because the market was really slow.

I don't feel bad about skipping it at all though, this break practically occured from the middle of the range. The ema was flat. The pressure withing the range is bearish, but it's not that self-evident as in many other ranges.

Also, if I was to trade it as it stands, I'd put my stop one pip higher to match the tiny false break, because then I'd have a much better chance (for just 1 pip) to survive even if my entry would show up to be a tease and price returned to the range before the actual break.

 

[samich1262]

This is a trade I took. Too many "paper cuts" so far and not enough winners to cover them.

I think the pressure overall was too bearish to look for an entry to the upside. Here price starts out at about the 70, puts in almost a double top and then comes down to the 50. The 60 level would be a 50% retracement, so I would not want to trade into that. A trade to the upside would be looking for a complete retracement of that bearish move. I'd wait to see if the 60 holds and then maybe look for continuation, a strong BB setup to crack the 50. Later, the 60 level did end up holding and price went down to the 40, but I did not see a good entry unfortunately.

 

[samich1262]

Hi Samich,

I was looking at this setup as well. The idea/location seems to be correct to me. The reason I skipped it was the length of this block/range. Considering the size of the bars and the way they were printed I just stopped feeling any tension between bulls and bears. It seemed to me that there could easily be a 1 pip move below the signal line and then continuation of that "backing and filling". If there was a better squeeze I may still have taken it though.

Yeah, it was a little weird to watch before the break. It seemed like the bulls were keeping price off the barrier so I almost stopped watching it, but then the bears brought prices back down. I almost thought it was a little too eager. 1 more doji on the barrier would have made me more comfortable with it. It doesn't look quite as bad now as it did when it was live, but I've been staring at old charts for so long that I'm finding it hard to pinpoint a comfortable entry when the EMA hasn't finished settling yet.

 

[samich1262]

@samich1262:

Also, if I was to trade it as it stands, I'd put my stop one pip higher to match the tiny false break, because then I'd have a much better chance (for just 1 pip) to survive even if my entry would show up to be a tease and price returned to the range before the actual break.

Yeah, that's true. That 1 pip extra protection is something that I have just recently been trying to pay attention to after re-reading the tipping point technique. There's actually a lot of good stuff in that chapter besides just when to move your stop that I forgot about.

 

[vanica]

I'm finishing a bit earlier today. This is my afternoon trade. I think the pressure was there, but seems like only RBs have been ok recently considering low volatility. Well, many things to think about over the weekend.

 

[samich1262]

Ahh, I made a poor decision here on multiple levels...

I went with the pressure and there was a nice squeeze, but I knew going in that there were two potential problems:

1. When I first saw this BB developing, I thought, Hmm I don't like where this is developing. I would like to see the BB a little higher, maybe in the 40 level. I expected price to attempt to retest the 40.

2. That elipse has blocky resistance in it. It would take a more favorable location or lengthier BB to crack that.

I should probably know better by now than to trade that, I ignored conditions this time and focused on the setup. I thought maybe the 20 level would act as a vacuum, and yes it possibly could if price had retested the 40 level first.

Question: Would the break after the false highs be a valid entry? It may a little over eager, but it does have a nice squeeze, provides a 3-pip stop, and a failed test of the 40 whipsawed the bulls. You can actually draw a diagonal line there, and the break of the BB breaks the plane of the trend line. It only makes it 9 pips, and it's still a little lower in the chart than what I would want, but it provides a tipping point to at least break even. So not taking results into account, do you think it's valid?

 

[stehlikpetrmsncom]

View attachment 147720

I couldn't help but notice there were many situations this week, where a break was preceeded by fake high/low/break in the other direction instead of prebreakout tension.

I think under normal circumstances that re-entry you are speaking of would be a terrible trade, but I am somewhat confused after this week.

 

[samich1262]

I think under normal circumstances that re-entry you are speaking of would be a terrible trade, but I am somewhat confused after this week.

Yeah, this week confused me a little bit too because I saw this happen 2 or 3 times. I don't know if this should be treated as a false break or not. For now, I don't think I will take those setups but I'll keep my eye on them to see what they do. That middle chart does give an economical entry too though, and pressure is supportive. That one looks like a better bet than the one I posted.

 

[shotgun77]

Here's a BB/IRB that just happened. I am wondering what you guys think of this setup, as I am still having a little bit of trouble determining the right amount of squeeze. I was looking for a little more, and this BB broke south when the average wasn't quite pushing the dojis.

I like it as an IRB. You have the bull bounce off the 20 level and that is likely to be tested IMHO in a downtrend like you had prior to that bounce. I also see a nice arches pattern or a cup/handles pattern in the IRB. Whatever pattern that is, it gives you a double top and a failed breakout of the 2nd high (in between the DT). And the barrier level has 9 touches and one overrun (false break) so good signal level. All these signs are a lot more than you get in most IRBs.

 

[shotgun77]

Question: Would the break after the false highs be a valid entry?

I don't like the re-entry. Normally a false break countertrend is a good thing.
But here the clustering action to the left would have kept me out.

 

[samich1262]

I like it as an IRB. You have the bull bounce off the 20 level and that is likely to be tested IMHO in a downtrend like you had prior to that bounce. I also see a nice arches pattern or a cup/handles pattern in the IRB. Whatever pattern that is, it gives you a double top and a failed breakout of the 2nd high (in between the DT). And the barrier level has 9 touches and one overrun (false break) so good signal level. All these signs are a lot more than you get in most IRBs.

Yeah, I think you're right. I think that IRB trade shows something that has been confusing a lot of us. I've been looking back through the book today and there are a few IRB examples that are somewhat similar. I was putting too much emphasis on the perfect squeeze for an IRB. The book IRBs don't have the kind of EMA squeeze that an RB has, I don't know why I started looking for that. It's more the whipsaw action or boomerang effect that is important. A doji somewhere in the box before the break is nice but it doesn't have to be right on the barrier necessarily, and just because there's only 1 doji and not 2 doesn't mean there's not enough tension. For example, check out Figures 12.1 and 12.2 in the book. The only bar that is on the favorable side of the average here is the signal bar itself.

Figure 12.4: The bar before the break isn't a doji

I skipped like 4 good IRB's this week because I was waiting for a bigger squeeze, when the price action actually fit the definition of an IRB perfectly. Judging by some of our IRB discussions this week, I think a lot of us have been doing that. The BB chapter examples show the same thing, they don't have as big of an EMA squeeze as I thought. Maybe in an RB, the EMA can help us avoid a tease, but in a BB or IRB, we have to rely on price and conditions, and just use the EMA as a reference. I'm going to look back through the recent Volman charts and see if those are the same way.

The 2 IRBs that failed on me this week had excellent squeeze, I don't think that's the problem. They were lacking that unexpected whipsaw factor. Something funny that I noticed... The IRB trades that I lost had excellent squeeze... like 4 or 5 dojis that were 1 or 2 pips tall. So that doesn't mean there is a lot of tension, especially if it is taking close to 1 minute for each 70 Tick bar to close. Nobody is getting whipsawed unexpectedly there, because they see it coming. The average was conquered like 5 or more bars before the break of the box on those trades. Those were the IRBs that only went 2 or 3 pips in the positive, and then failed this week. Seems like the most reliable IRBs bounce around like a pinball inside the box, put in one or two compressed dojis, and then shoot out of the box like a rocket. But in the other cases, I was like, hey, this looks like excellent squeeze, it must be an IRB! But it's a trick!

Almost the exact same thing happens with RBs. When price is making lower arches and then cuts through a barrier level, it takes off. It's like the arches display momentum. But when price starts to go sideways for awhile right on the barrier level, like a sideways mass of dojis, it has no momentum and the break usually fails. The EMA looks like it gives us an excellent squeeze but there doesn't seem to be any tension in these breaks. These cases have been my absolute biggest trap situation, so next week hopefully I will keep an eye out for that.

 

[stehlikpetrmsncom]

Do you think you could send me the charts with the trades from this week that you consider valid (via email, [email protected])? I am going through the charts but even from hindsight I can't spot too many opportunities I would have liked to be in. I feel like I'm missing something, so I'd appreciate a different perspective.

Thank you

 

[shotgun77]

Yeah, I'm studying IRBs today too. I reread the IRB chapter in its entirety today. Then I looked at all the charts Volman had sent with IRBs. Some of them on those charts I still don't understand and would never see as an IRB real-time. Something he said on page 189 struck me though.

"In this particular chart, it wasn't really that essential to think in terms of ranges. . . The bottom barrier here, that was where the true fight was fought. . . a range barrier or a very prominent level of support or resistance, being fought over for at least the biggest part of an hour."

Previously, I did think you needed a well-defined range which is why some of the IRBs in the charts bothered me. Now I guess that is not true.

Some of the better IRBs seemed to have very well defined bottom support for a long trade or well defined resistance top for a short trade. So maybe if an IRB forms afterwards, it is a good trade. Volman did say you have to be aggressive on the boomerang IRBs because they can "shoot out" very fast and you must be ready.

The arches do show 2 sided trading so definitely one side is being trapped. Always a good thing for momentum after a break. Too many times this week price seemed to go nowhere after a break. Ouch!