Bob Volman Price Action Scalping

[samich1262]

Hmm, that's a good tip. I'll check out the Forex Factory calendar.

Also, I have been sitting on my hands too a lot lately. I have noticed that the past 10 days or so have been slower than usual. The European session has been much faster and more smooth. My 70 tick chart seems to print 10 bars twice as fast during the European only session than during the US/European overlap. I don't know why this would be, other than that there has been a lot more news during the Europe session. It has finally picked back up today but is a little too crazy. As a new trader, it's made the past couple weeks difficult. The first half of the month was faster during the overlap session, and I would see 5-8 opportunities during it. Now it's more like 1 or 2 a day. Due to my lack of experience I usually miss the first one or two before I summon up the courage to take a trade, so I really hope next week is back to normal. If anyone else knows what has caused such a difference let me know! I thought about trying to trade the Europe session but I don't want to wake up early for it and have it not move hardly at all on me like it did early in the month. I have read that some traders prefer the way the market moves during the european session vs. the US sessions, but I am not sure what method they are following.

 

[BLS]

Hey samich,

I've emailed Bob about this sort of thing and his reply was that the market conditions just isn't as favorable to his method as when he wrote it, meaning that there is a lack of volume and follow through to make his setups work more often. His advice was to just trade more carefully, like expecting the 20 levels to hold more rather than to break and to shun shadier looking with trend setups and what not.

I have noticed that second half of July has been more favorable, either that or I was just improving on my trade selection.

You don't have to trade the entire European session. Maybe start trading around 9-10 AM GMT. I wake up around 9AM GMT to catch part of the European session but I will sleep-in a couple hours if there is a major news event in the US session like yesterday with the FOMC statement. I'm going to sleep in a bit on Friday too since the NFP numbers are coming out at 12:30 GMT.

As for taking valid trades, I think you will realize eventually that you just have to bite the bullet and trade. I've begun to make that realization (or accept it) these past few weeks and I've performed a lot better.

 

[samich1262]

So did Volman think that these conditions were temporary, or that the book method might be a little dated? I know it still works, and very well at times, I just sometimes wonder what sort of a lifespan this method has before something changes and it doesn't work as well anymore. Given that it is based on market psychology I'd expect it to still work to some extent, but who knows what happens when there's a change in technology or other underlying factors. All the more reason to get better at it now, I guess!

Yeah, I agree. I need to just bite the bullet. I have also been watching some of the other major currency pairs like GBP/USD and AUD/USD. Sometimes they show similar setups but one will be better. For instance, this morning I was watching a possible RB form on the EUR/USD chart but I thought it looked very weak and risky. It did work out, but I didn't take it. However, shortly after that I flipped over to the AUD/USD chart where the same RB had formed except on that chart, it was unmistakeable and of a much higher quality. Too bad I missed it by a few minutes. I saw a similar SB situation on the GBP/USD yesterday. Luckily my broker's spreads are only about .1-.2 pips higher for the other pairs, sometimes even equal.

 

[BLS]

Yeah, Volman said these conditions were temporary and that volume and follow through may return when the summer ends (it seems to me it's returning now though).

If you are comfortable with trading multiple pairs and have the extra monitors for them then go for it. I'm relatively new to trading so I'm sticking to one pair for now but I do like to occasionally glance at the GBP/USD to see what is going on. The important part is to make sure that you can constantly keep yourself up to date with that the pairs are doing. You have to constantly look for clues to see which way prices may move in the future. I think it might be hard for me to do that for more than one currency pair so I'll stick to the EUR/USD for now.

 

[samich1262]

That sounds like a good plan. EUR/USD seems to be slightly more smooth, but every once in awhile I'll take a chart pattern on another pair that just looks too good to be true. A couple weeks ago I saw an absolutely perfect DD on USD/CAD and just couldn't pass it up.

I'm glad to hear Volman's reply. I couldn't figure out why the overlap session would be slower, as it theoretically should have more participants. I'm going to dig back through the charts this week/weekend and practice a ton, maybe that will help me get some confidence and take some more trades next week. As a beginner I really ought to go get a part time afternoon job or something. I have read that trying to live off of trading at the beginning of your career is a big no no. It'd probably take a load of stress off, lol. I've done this method long enough that I know what it is capable of. I'm committed to it, so if I have to do something else on the side for awhile, I'll do what I must!

 

[samich1262]

Here's a good question from this morning's session. Would anyone have taken either of these? I spotted the first box here and almost took it. Didn't feel like the 2nd one (I believe this would be an IRB) had enough pressure in it for me to take, but it came after several bearish signs. I seem to struggle more with these ranging markets so I wondered what you might think of these trades. I like the first one a lot, but box #2 looks too risky to me.

 

[sonatine]

Thanks for the reply. You are right, I do need to lower my volume. I started out with 1 full lot. When I hit that rough patch I switched to a .50 lot. I am going to turn it down to .25 because I really won't care then. I think part of the problem is, my account is in the positive and I'm afraid to screw up and let it dip backwards. I calculate the odds of my picks in an excel spreadsheet and they work out fine overall, but going backwards after a couple trades would make me anxious. It's just a mental thing, I assume from lack of experience.

I am actually using Fastbrokers as my broker. I fit the buy/sell controls at the very bottom of my screen underneath my Ninja Trader chart. I didn't have to change any features other than setting it to ticks to get it to display like the Volman charts. I may need to stretch the chart vertically to catch some of those BBs better. Fastbrokers seems to have really good spreads, usually around .5 plus like $3 per full lot in commissions. I used to use FXCM but they charged like 2.3 pips on EUR/USD unless you had an account balance of over $50,000. It seemed like the only other brokers offering cheap spreads were overseas and I wasn't really comfortable with a non-US broker, although there are plenty of reputable international brokers out there. I used to swing trade and had about a 20% profit this year with FXCM. However, I don't think scalping would have been possible with FXCM's spreads. It just reduced my odds too much.

One other thing that I do for practice is, I try to scroll through Tick charts one bar at a time and practice paper trading that way. By scrolling through one bar at a time, you don't know what is coming next and it's at least somewhat close to trading a live market. I either go through old charts, or the European session since I haven't been trading that one. I do the US/European overlap most of the time. I have been trying to go through about 5 days worth of charts every day and have seen a big improvement in my trade selection. I also take screenshots of all of my bad picks and look through them. That helped a lot too, because about half of my bad BB trades were the exact situation. I didn't realize it until I looked back through the screenshots. Anyways, I am still learning, but I thought this had been helpful for me and thought it might be a good tip. I'm curious to see what other practice methods people have.

Hi samich1262,

It's good to know you do visual simulation/backtests via scrolling bar-by-bar with tick charts. I did that too when I used MT4 to trade (time charts). May I ask a few simple questions since I've never used NinjaTrader: do you use the free version or paid version of NT? Do you pay money to get MBTrading data in NT?

Thanks!

 

[sonatine]

Here's a good question from this morning's session. Would anyone have taken either of these? I spotted the first box here and almost took it. Didn't feel like the 2nd one (I believe this would be an IRB) had enough pressure in it for me to take, but it came after several bearish signs. I seem to struggle more with these ranging markets so I wondered what you might think of these trades. I like the first one a lot, but box #2 looks too risky to me.

View attachment 141976

As a very new newbie to Bob's method, I'd take the first one. The second one looks very similar to Figure 12.2 in the book: even the round number below the set up. However I don't quite understand his logic on page 184. If I do, I'll take this trade.

1) He said that almost every bar in the box turned out to be a bearish looking doji at the top of page 184, which is not quite the case.

2) He mentioned in second paragraph on page 184 that "the odds favor the bottom of the setup to rather hold up as resistance than to give a way to rising prices". I don't understand this sentence either.

Could somebody kindly explain this trade to me? Thank you,

 

[samich1262]

Hi samich1262,

It's good to know you do visual simulation/backtests via scrolling bar-by-bar with tick charts. I did that too when I used MT4 to trade (time charts). May I ask a few simple questions since I've never used NinjaTrader: do you use the free version or paid version of NT? Do you pay money to get MBTrading data in NT?

Thanks!

I use the free version of NinjaTrader with an MBTrading free demo account feed. My actual broker is Fastbrokers.

 

[samich1262]

As a very new newbie to Bob's method, I'd take the first one. The second one looks very similar to Figure 12.2 in the book: even the round number below the set up. However I don't quite understand his logic on page 184. If I do, I'll take this trade.

1) He said that almost every bar in the box turned out to be a bearish looking doji at the top of page 184, which is not quite the case.

2) He mentioned in second paragraph on page 184 that "the odds favor the bottom of the setup to rather hold up as resistance than to give a way to rising prices". I don't understand this sentence either.

Could somebody kindly explain this trade to me? Thank you,

I can't seem to find the exact quote in the book (my page numbers are slightly off) but if I remember correctly, I think he meant that if prices break out of the bottom of the box, the odds are that if they try to retest the box, the bottom of the box would hold up as resistance and should prevent prices from going back up. I'm glad you cited Figure 12.2 for reference. Looking at the 2nd box in my chart now, it doesn't look so good. IRBs and ARBs seem to be my problem area, although I am starting to recognize more and more of them. Used to be I could go through an entire weeks worth of charts and never spot one. I'd see tons of BBs and RBs, but no IRBs and ARBs. Must just take some time and eye training.

 

[BLS]

As a very new newbie to Bob's method, I'd take the first one. The second one looks very similar to Figure 12.2 in the book: even the round number below the set up. However I don't quite understand his logic on page 184. If I do, I'll take this trade.

1) He said that almost every bar in the box turned out to be a bearish looking doji at the top of page 184, which is not quite the case.

2) He mentioned in second paragraph on page 184 that "the odds favor the bottom of the setup to rather hold up as resistance than to give a way to rising prices". I don't understand this sentence either.

Could somebody kindly explain this trade to me? Thank you,

Right, but 12.2 had a downtrend at the beginning of the chart so I'm not too sure. On samich's chart, we don't see obviously bearish pressure until around 9:20 but even then I feel it's a bit early to trade. But I'm not too sure about these IRBs.

What Bob meant was that those bearish looking dojis had their "open" and "close" towards the bottom of the candle. For the second part, Bob means that the bottom of the IRB setup is more likely to stop prices from going up, meaning that the setup itself gives you a nice place to put your stop (probably one pip above the highs of the setup)

 

[samich1262]

Right, but 12.2 had a downtrend at the beginning of the chart so I'm not too sure. On samich's chart, we don't see obviously bearish pressure until around 9:20 but even then I feel it's a bit early to trade. But I'm not too sure about these IRBs.

What Bob meant was that those bearish looking dojis had their "open" and "close" towards the bottom of the candle. For the second part, Bob means that the bottom of the IRB setup is more likely to stop prices from going up, meaning that the setup itself gives you a nice place to put your stop (probably one pip above the highs of the setup)

I should have shown more of the chart for that first box. It comes after a large bearish downtrend which made me feel like that was a valid trade. I cut too much of it off in the screenshot so you couldn't really tell.

Yeah, that 2nd box is too iffy. It's just too close to that dip at 9:05 too. Seems like the box isn't bearish enough and I have had a few bad IRB picks because they're too close to the bottom of the range. Probably good I didn't take it, even though it worked out, it would set a bad precedent for future trades.

 

[BLS]

Oh, I should have shown more of the chart for that first box. It comes after a large bearish downtrend which made me feel like that was a valid trade. I cut too much of it off in the screenshot so you couldn't really tell.

No, you showed enough. I'm looking at the same setup with 200 bars (what Bob recommends) on my chart.You cannot see that giant downtrend.

 

[samich1262]

No, you showed enough. I'm looking at the same setup with 200 bars (what Bob recommends) on my chart.You cannot see that giant downtrend.

Ohh you're right, I was talking about the downtrend in reference to the 1st box. But in terms of the 2nd box, yeah there's only one or two signs of a downtrend and no real confirmation. In fact I probably shouldn't even have picked that 2nd box out as a possible event. I need to reread the IRB chapter this weekend. For like the 4th time, lol!

 

[johnwolf]

Here's a good question from this morning's session. Would anyone have taken either of these? I spotted the first box here and almost took it. Didn't feel like the 2nd one (I believe this would be an IRB) had enough pressure in it for me to take, but it came after several bearish signs. I seem to struggle more with these ranging markets so I wondered what you might think of these trades. I like the first one a lot, but box #2 looks too risky to me.

View attachment 141976

I would have skipped the first trade. And actually, it's a good example of the question I asked yesterday about my issue with seeing reversals everywhere.

The chart does not show how steep or long the first move down is, but I probably would have interpreted this as a reversal situation (starting at 8:06+), with the double-bottom, and the subsequent bars all above the EMA.

Price also cleanly broke the swing high set around 8:02. So I probably would have viewed the leg with the first box as a pullback in a bull move, and would have waited.

This is the kind of analysis that talks me out of so many good trades.

The second one is more to my liking, with the three lower highs starting around 9:15.

John

 

[samich1262]

Price also cleanly broke the swing high set around 8:02. So I probably would have viewed the leg with the first box as a pullback in a bull move, and would have waited.

Hmm, interesting. Even with the false break to the upside in the first box?

I'm interested because I also seem to have trouble figuring out when to switch from bearish to bullish and vice versa. I'm not sure how many signals I need to see to justify it so I often wait until it's super obvious.

 

[BLS]

Looks like I still have problems with taking valid setups.

 

[vanica]

Hello BLS.

Why do you consider this trade a missed opportunity? According to your own comments on the chart the overall picture was quite mixed. The range market was trading in didn't have clear barriers or levels where either side would give up in case they were broken. In my opinion, taking this BB meant betting on the successful breakout to new highs which isn't the most high probability trade considering the big resistance level above. Can you please share your thoughts on this.

Thank you.

 

[BLS]

Hello BLS.

Why do you consider this trade a missed opportunity? According to your own comments on the chart the overall picture was quite mixed. The range market was trading in didn't have clear barriers or levels where either side would give up in case they were broken. In my opinion, taking this BB meant betting on the successful breakout to new highs which isn't the most high probability trade even in a strong trend. Can you please share your thoughts on this.

Thank you.

You are right to point that out. I may be judging the validity of this setup because of what happened after the break so I will try to justify the trade.

While the pressure looks somewhat mixed before the setup starts to form, we have to remember that prices tend to move in 20 pip steps and that prices are more likely to move on to the upside if they test former resistance first.

After that double bottom prices moved to the 40, a ~20 pip move. Then they drift lower to test the 20 area, after which we see a huge bullish move. Then we have prices test the 41 level. Even after such a big move, the bears failed to make any significant pullback. That is a very bullish sign. We start to get a better sense of direction. We could say that the bulls are pretty much in control at this point. Prices remained above the 20EMA all the way to the break of the setup. The break itself was pretty textbook with the 20EMA pushing it out.

I originally saw this as a RB/ARB with that high on the left. It looked pretty bad seeing as it looked like prices came from the range bottom all the way to the top. But when I redrew it as a BB setup it looked a lot better. Sometimes you have to fiddle with the boxes and lines to get a clearer picture.

I don't think we have to worry too much about daily highs and lows; Bob doesn't seem to mention them in the book.

 

[samich1262]

Hello BLS.

Why do you consider this trade a missed opportunity? According to your own comments on the chart the overall picture was quite mixed. The range market was trading in didn't have clear barriers or levels where either side would give up in case they were broken. In my opinion, taking this BB meant betting on the successful breakout to new highs which isn't the most high probability trade considering the big resistance level above. Can you please share your thoughts on this.

Thank you.

Hey BLS,

This is a 1m chart of today, right? Because I missed the same thing on the 70t. I saw it a bit too late. For Vanica, I think it looked even more clear on the 70 tick chart. It came on the end of a 2nd double bottom pattern, the first one being lower. Next week I'm going to cut my volume in half. I think that will help me stop being gun-shy.