Bob Volman Price Action Scalping

[stehlikpetrmsncom]

BLS (and anyone else who cares to answer) do you mind me asking how you manage to not put on a single trade over the course of a trading session?

I know the obvious answer but I guess the reason I'm asking is because I personally find it really hard - the waiting patiently for a clear and unambiguous set-up.

I have to be honest and say that I find is SO SO difficult. And then when I do take a sub-par trade out of boredom or impatience etc I hate myself for it and feel like I'm making no progress; maybe even regressing in some ways.

Sorry for going on, I know it's my own personal **** but I find handling myself, my emotions, my discipline etc etc the hardest thing by a mile.

For example - I take a trade that I shouldn't have and immediately lose money. I am then angry at myself for not following the plan and, quite rightly, being punished for it. I then want to get the money back and this affects my judgement (hard to control the revenge trading situation). Things can quickly spiral out of control.

Also, say I diligently follow the plan and take 3 or 4 losses in a row I find it hard to keep my confidence up.

Sorry for the rant, especially since I know this thread is primarily related to discussing set-ups/trades, but I would be very interested in what people have to say about how they deal with the learning process, set backs, their emotional/mental state etc.

Also, how do people afford to sit at their desks day after day and not make any money???

This is my main concern right now.

I think it's all about having the right mindset, and by mindset I mean being fully aware of what is it exactly that you're supposed to do - having the long-term picture in mind, understanding that you do not need to trade, understanding that you trade probability, understanding that you can only work with what the market gives you no matter how hard you try.

My problem is that I lose it over the week, maybe just for a while, but that while is enough to make a mistake that will cost me.

So the thing I'm going to try for next week is this: I'll print various quotes (that describe the mindset) and place it around me to keep me in check. To have the core of that 'right mindset' right on the eyes the whole time.

I will also write a plan for the week of what is it I want to achieve. I realized that sometimes after hours of still sitting I suddenly need pips (subconcioussly), because afterall it's the only thing that can "justify" that I was sitting inactively for the better part of the day so far. So I'll set my goals to something like "taking valid trades; not taking invalid trades; focusing on charts more".

What I found interesting is that I think I actually got worse in this, I don't remember having these 'psychological issues' a month or two back. But maybe it's because I'm setting a different standard on myself with passing time and now I actually understand why certain trades were terrible.

Oh, and I'm also going to invest money to some more comfortable chair, that should make things easier.

 

[shotgun77]

@stehlikpetr
Instead of a chair, you may want to consider a standing desk. That is supposed to be healthier for you. And may keep you more alert. Some standing desks have a motor so they can be easily lowered and raised throughout the day.
@matty_dunn
I think your idea to set specific daily goals per Steenbarger could help you overcome your need for instant gratification. (In the U.S., instant gratification has become a real problem in the culture.)
So doing the confirmation of the trade could be a goal - and maybe set a goal to take a deep breath and release slowly before/during each confirmation step. And keep a count of how many times you actually do that to track performance. The Zen Golf book has something called "pebbles in a bowl" where you throw a pebble (or some other object) into a bowl each time you do a habit that you want to do or do a habit that you want to break. I tried it both ways - one bowl for habits I wanted to break and another bowl for habits I wanted to ingrain. I didn't have wild success at it but your results might differ. At the least, it helps you become more aware before or after you do some impulse action. The book on How to Change a Habit (or something like that) says you have have to become aware of the circumstances of the habit before you can change it. You have to know what it is you are really wanting when you do the habit. So that could give you something to think about during boring times.

 

[samich1262]

@stehlikpetr
Instead of a chair, you may want to consider a standing desk. That is supposed to be healthier for you. And may keep you more alert. Some standing desks have a motor so they can be easily lowered and raised throughout the day.

It's funny that you guys bring this up because I switched to sitting on one of those yoga exercise balls instead of a chair recently. My back gets a little tired after awhile because I slouched in my desk chair all the time. I think it is important to think about though since we pretty much sit here all day.

So I'm in the middle of Al Brooks's 2nd book and I read something interesting this morning that I think applies to trading IRBs and RBs with Volman's method. Seems like most of us are getting the hang of RBs and IRBs, but I'll share this. Brooks says a tight trading range (meaning lots of overlapping bars) is by far the worst thing you can trade because most breakout attempts are countered by high frequency trading programs. Big ranges are fine, he's referring to tight sideways action or tight channels. A few weeks ago we were talking about RBs and IRBs that go sideways before the break. I think it is important to recognize when price is still building up for a barrier break, and when it is instead evolving into a miniature sideways trading range right on the barrier. The overall picture sometimes looks like an RB is going to take place but on closer examination, the pressure before the break is even and it's a sideways trading range. These trades killed me when I first started trading IRBs. The breaks that work out usually have visible arches or obvious signs that one party is slowly pushing the other party against the barrier, and they don't mash up sideways against the barrier right before a big break. I think in that situation, it's less obvious who is winning and price has essentially formed a miniature trading range at the barrier level with even pressure, which means a 50/50 chance of a break in your direction. But I think the odds might be even worse. Brooks says that these tight trading ranges have a lot of failed setups that appear to be good signals before one works out. The high frequency programs and limit order traders will buy on limit orders just below a bearish break, forcing price back in the range. Sometimes those types of RBs and IRBs will have a very clear barrier too so it's really tempting to trade a break, but since I started skipping breaks like that, I stopped losing so many RBs and IRBs. They're also tempting because they appear to have economical entries with a tight stop but they end up being a trap almost every single time.

It's still feels kind of weird for me to take an RB that has, say an 8+ pip stop, like in the middle of the week when we had that triple top RB that only went 9 pips. That trade had a tall stop and I didn't like that so I skipped it, but it actually had much better odds than an RB that has a 3 or 4 pip stop and starts going sideways before the break. For whatever reason, I used to evaluate the odds of a trade mostly by using the risk/reward ratio. I'd be like, I don't want to risk 8 pips on this nice RB, so I'll skip it and instead take a DD that doesn't look as favorable because it only risks 4 pips. The risk/reward ratio shouldn't be a reason to skip a trade if it is still at least 1/1 and the setup is good. My skipping that RB this week shows that part of that bad habit is still sticking.

I am finally starting to see some improvements trading Volman's method. It's good to see some progress too because I was getting a little discouraged with myself. I had a successful flag trade, RB trade, and another RB that only made it 3 pips. My 2 losses were both late flags that should have been skipped. Sometimes I have trouble judging momentum with flag trades. I will get in on a flag when there is too much evidence that the bulls are entering. Just need to be more disciplined. In my head, I think that since its a momentum trade, there's a sense of urgency and it could drop quickly so I get in before evaluating whether or not the bulls are starting to enter.

 

[cha-ching]

A few weeks ago we were talking about RBs and IRBs that go sideways before the break. I think it is important to recognize when price is still building up for a barrier break, and when it is instead evolving into a miniature sideways trading range right on the barrier.

Great post samich1262. Could you please give one chart example of each situation? Since 70 tick bars are usually small, esp. in a range, it's not easy not to have overlaps between bars. Thanks,

 

[samich1262]

Great post samich1262. Could you please give one chart example of each situation? Since 70 tick bars are usually small, esp. in a range, it's not easy not to have overlaps between bars. Thanks,

Yeah, I should've been a little more specific about overlapping bars. I guess I should've said overlapping bars are okay, it's how much they overlap that is important. I mostly am thinking of equally sized bullish and bearish bars that appear sideways and cancel each other out. Some of us see this happen and it doesn't register to us as a setup anymore, so that's good.

The only examples I can find that I saved are not good examples. The spacing is different on this chart, but this slide shows what I mean. It's a terrible trade so ignore the context and just look at the setup. I took this 2 months ago (I guess I have improved because this looks really bad looking back! Haha). Price keeps closing on the barrier, lots of sideways overlapping bars, barrier is very clear but when it breaks, people are selling to force price back into the range. I think I chose this trade probably based on the number of barrier touches, the fact that I could draw a clear barrier line, and the fact that I could use an economical stop. Sometimes this does happen in good context and it fails, so I will try to find a better example this week, I see them fairly often. This particular case is kind of an obvious no-no context-wise, lol.


This trade from Thursday more clearly displays that the bulls have stopped buying. There are overlapping bars, but you can tell which party is winning.

This trade is a weaker RB, but it's still a reversal pattern and you can tell that the bulls have started buying. The bears aren't aggressively shorting at the barrier and after the barrier broke like they were in example 1. Instead they just exited when price broke through the barrier. It didn't go that far, but it still went farther than example one, and my goal here is to avoid those 1 or 2 pip false breaks. I think you want to see a little bit of fight but you want to see one side get squeezed out. In example 1, if the bears look eager to short at the barrier, they're probably going to be even more eager to short when it breaks the barrier by 1 pip because it's a better price for them to enter at. In examples 2 and 3, you can almost see the losing side waning and giving up before the break even happens, so when it does happen they know they have to bail out of their trade because they can see that the other traders on their side aren't trading at that price anymore.




Hope this helps, I will find a better example this week!

 

[matty_dunn]

@stehlikpetr
Instead of a chair, you may want to consider a standing desk. That is supposed to be healthier for you. And may keep you more alert. Some standing desks have a motor so they can be easily lowered and raised throughout the day.
@matty_dunn
I think your idea to set specific daily goals per Steenbarger could help you overcome your need for instant gratification. (In the U.S., instant gratification has become a real problem in the culture.)
So doing the confirmation of the trade could be a goal - and maybe set a goal to take a deep breath and release slowly before/during each confirmation step. And keep a count of how many times you actually do that to track performance. The Zen Golf book has something called "pebbles in a bowl" where you throw a pebble (or some other object) into a bowl each time you do a habit that you want to do or do a habit that you want to break. I tried it both ways - one bowl for habits I wanted to break and another bowl for habits I wanted to ingrain. I didn't have wild success at it but your results might differ. At the least, it helps you become more aware before or after you do some impulse action. The book on How to Change a Habit (or something like that) says you have have to become aware of the circumstances of the habit before you can change it. You have to know what it is you are really wanting when you do the habit. So that could give you something to think about during boring times.

Thanks for the ideas shotgun. The pebble in the bowl thing would be an interesting experiment - will give it a go.

Regarding chairs - I use a laptop and mix it up by sitting cross-legged on the floor or even on my knees with my laptop on the bed.

 

[matty_dunn]

Yeah, I should've been a little more specific about overlapping bars. I guess I should've said overlapping bars are okay, it's how much they overlap that is important. I mostly am thinking of equally sized bullish and bearish bars that appear sideways and cancel each other out. Some of us see this happen and it doesn't register to us as a setup anymore, so that's good.

The only examples I can find that I saved are not good examples. The spacing is different on this chart, but this slide shows what I mean. It's a terrible trade so ignore the context and just look at the setup. I took this 2 months ago (I guess I have improved because this looks really bad looking back! Haha). Price keeps closing on the barrier, lots of sideways overlapping bars, barrier is very clear but when it breaks, people are selling to force price back into the range. I think I chose this trade probably based on the number of barrier touches, the fact that I could draw a clear barrier line, and the fact that I could use an economical stop. Sometimes this does happen in good context and it fails, so I will try to find a better example this week, I see them fairly often. This particular case is kind of an obvious no-no context-wise, lol.
View attachment 150532

This trade from Thursday more clearly displays that the bulls have stopped buying. There are overlapping bars, but you can tell which party is winning. View attachment 150530

This trade is a weaker RB, but it's still a reversal pattern and you can tell that the bulls have started buying. The bears aren't aggressively shorting at the barrier and after the barrier broke like they were in example 1. Instead they just exited when price broke through the barrier. It didn't go that far, but it still went farther than example one, and my goal here is to avoid those 1 or 2 pip false breaks. I think you want to see a little bit of fight but you want to see one side get squeezed out. In example 1, if the bears look eager to short at the barrier, they're probably going to be even more eager to short when it breaks the barrier by 1 pip because it's a better price for them to enter at. In examples 2 and 3, you can almost see the losing side waning and giving up before the break even happens, so when it does happen they know they have to bail out of their trade because they can see that the other traders on their side aren't trading at that price anymore.
View attachment 150530



Hope this helps, I will find a better example this week!

Thanks for sharing your thoughts samich.

Has anyone looked into (or currently trades) other set ups on top of the ones presented in Bob's book? I know he is an advocate for trying different things.

The amount of times I see breaks fail, especially against the major trend, leads me to believe rules for such a set-up could be developed and profited from. I especially notice this when the false break coincides with an earlier break out level in the opposite direction.

 

[BLS]

BLS (and anyone else who cares to answer) do you mind me asking how you manage to not put on a single trade over the course of a trading session?

I know the obvious answer but I guess the reason I'm asking is because I personally find it really hard - the waiting patiently for a clear and unambiguous set-up.

I have to be honest and say that I find is SO SO difficult. And then when I do take a sub-par trade out of boredom or impatience etc I hate myself for it and feel like I'm making no progress; maybe even regressing in some ways.

...

I've been through the same thing. I think some of my older posts in this thread (can't remember which ones specifically) show how I'd manage to get myself into a "death spiral" and just rack up losses after one or two bad trades. I found The Daily Trader Coach to be quite helpful in overcoming these issues. I still relapse from time to time but that's part of the process.

More charts from Bob but no note this week.

 

[matty_dunn]

I've been through the same thing. I think some of my older posts in this thread (can't remember which ones specifically) show how I'd manage to get myself into a "death spiral" and just rack up losses after one or two bad trades. I found The Daily Trader Coach to be quite helpful in overcoming these issues. I still relapse from time to time but that's part of the process.

More charts from Bob but no note this week.

Thanks again Bob and BLS

 

[stehlikpetrmsncom]

More charts from Bob but no note this week.

Thank you so much Bob and BLS

 

[shotgun77]

My thanks added to above.

 

[BLS]

My charts from today. I missed a good trade because I got distracted. I tend to write off slower price action. I took one trade today. The entry in hindsight wasn't the best but I thought price built up pretty well around the 50 level. I was tempted to close out my trade 1 pip early but decided to stick to the tipping point. I was a bit worried about the 60 barrier acting as resistance.

I try to study Bob's charts during the slower parts of the market so I don't get so easily distracted. I still keep an eye on the current price action (my picture window doesn't cover up the chart window entirely). I'll take a look at one or two of his charts and then shift back the market and force myself to assess the pressure. If I don't notice anything interesting for about 5-10 minutes I go back to studying a couple more charts. I also take short breaks to exercise but I do it in front of the my computer screen so I don't miss anything. I get restless when I sit for too long.

 

[TraderNico]

Thank you very much to all the people posting here. I am new to Bob Volman but have studied his book and am now starting to put it into practice. I really appreciate to see Bob's charts as it is very good to get an idea of how he did, or could have traded, the same price action.
I find the markets extremely slow at the moment and a real test for patience, a test which unfortunately I often fail!
I am following this thread and will post if I feel that it will be a contribution.
Thanks again to everyone and please keep it up!

 

[samich1262]

I found a couple examples of bad RBs that we were talking about this weekend. These two RBs turn sideways when price gets close to the barrier and fake out short sellers.



This first one's a terrible RB so it's a pretty easy skip, but the 2nd chart is trickier. With this chart, when price gets close to the barrier, it doesn't put in any lower highs. It just goes sideways. There were a couple similar charts where Bob said not to short a trade like this, because it was essentially looking for continuation at the bottom of a range. That would make sense, because in a normal RB you can see downward momentum by smooth higher lows, but this goes into a sideways range on the barrier which is essentially a pause. That would mean a break of the barrier would be continuation of a trend (or micro trend) so it would most likely be a trap trade.



This one is harder because if you're looking at the chart as a whole, a bearish break looks like a good bet. However, once again price starts going sideways at the barrier: no lower highs before the first break. If you took this and used tipping technique after the ceiling test (2nd arrow) then you would be stopped out. If you took the ceiling test as an ARB you'd also be stopped out. But if you took the 3rd arrow (ARB) which does show lower highs before the break, you'd make 10 pips.

I think the trick here is that a good RB shows downward momentum all the way up until the break. This 2nd chart showed downward momentum until the barrier and then it paused. If you waited for a better signal you'd get in on a nice ARB on that 2nd chart.

 

[stehlikpetrmsncom]

I found a couple examples of bad RBs that we were talking about this weekend. These two RBs turn sideways when price gets close to the barrier and fake out short sellers.

View attachment 150686

This first one's a terrible RB so it's a pretty easy skip, but the 2nd chart is trickier. With this chart, when price gets close to the barrier, it doesn't put in any lower highs. It just goes sideways. There were a couple similar charts where Bob said not to short a trade like this, because it was essentially looking for continuation at the bottom of a range. That would make sense, because in a normal RB you can see downward momentum by smooth higher lows, but this goes into a sideways range on the barrier which is essentially a pause. That would mean a break of the barrier would be continuation of a trend (or micro trend) so it would most likely be a trap trade.

View attachment 150688

This one is harder because if you're looking at the chart as a whole, a bearish break looks like a good bet. However, once again price starts going sideways at the barrier: no lower highs before the first break. If you took this and used tipping technique after the ceiling test (2nd arrow) then you would be stopped out. If you took the ceiling test as an ARB you'd also be stopped out. But if you took the 3rd arrow (ARB) which does show lower highs before the break, you'd make 10 pips.

I think the trick here is that a good RB shows downward momentum all the way up until the break. This 2nd chart showed downward momentum until the barrier and then it paused. If you waited for a better signal you'd get in on a nice ARB on that 2nd chart.

I see your point, but I think both the first and third arrow on the second chart were valid. The first entry may have not printed beautiful string of arches, but the overall picture is very clearly bearish, it printed lower double top (even though not very explicit) and you have a little momentum (bigger red bar) and little squeeze before the break.

When the price goes sideways before the break, I interpret it that I have to be more picky with my entry because there is a higher danger of tease breaks, but I wouldn't consider the eventuality of proper RB lost. However if the price not only goes sideways but starts to turn the EMA to the other side, I have an open mind for an IRB.

Actually when I think of it as I write this, these situations you describe confuse me a bit, because it seems like there could be either a short RB or long IRB and the fate would be decided by only a couple next bars, instead of the overall picture. It makes me uncomfortable because it leaves a lot of space for emotional interpretation because it has to be done quickly, but I think it's allright, Bob somewhere in his book mentions that sometimes you only need a couple bars to completely reverse the overall picture.

 

[BLS]

Obama is going to be on Bloomberg in about an hour.

 

[samich1262]

I see your point, but I think both the first and third arrow on the second chart were valid. The first entry may have not printed beautiful string of arches, but the overall picture is very clearly bearish, it printed lower double top (even though not very explicit) and you have a little momentum (bigger red bar) and little squeeze before the break.

When the price goes sideways before the break, I interpret it that I have to be more picky with my entry because there is a higher danger of tease breaks, but I wouldn't consider the eventuality of proper RB lost. However if the price not only goes sideways but starts to turn the EMA to the other side, I have an open mind for an IRB.

Actually when I think of it as I write this, these situations you describe confuse me a bit, because it seems like there could be either a short RB or long IRB and the fate would be decided by only a couple next bars, instead of the overall picture. It makes me uncomfortable because it leaves a lot of space for emotional interpretation because it has to be done quickly, but I think it's allright, Bob somewhere in his book mentions that sometimes you only need a couple bars to completely reverse the overall picture.

Yeah, it's a bit of a grey area on that 2nd chart.. I actually took it because of the weight of the rest of the chart and I got stopped out after that ceiling test. I really thought that despite the sideways action here, the overall picture was bearish enough, but nope... I should've waited for a better entry. Could just be bad luck, but I have been burned several times in situations like this and I'm going to avoid those setups. It looks like this could be evidence of countertrend traders trying to long from the bottom, and exiting at the upper barrier. I think it's bulls buying on limit orders at the very bottom of the range. My theory was that if there are lower and lower highs, those buyers won't be able to make a few pips profit and they will stop buying at the bottom, or they will exit once they get in and then see a lower high. That creates more downward momentum and increases the chances of a successful break. It's part speculation on my part, so I don't know for sure but I'm going to try in the future to look for more lower highs because it seems like those breaks are more often successful.

 

[BLS]

I found a couple examples of bad RBs that we were talking about this weekend. These two RBs turn sideways when price gets close to the barrier and fake out short sellers.

...

I kind of get what you are talking about. I noticed a chart from Bob this week that looks like what you described (week 48, chart #19).

I've noticed this a bit myself but didn't really give much conscious thought to it. I think it was partly why I skipped that first entry on your second chart (see my post from Dec. 3, S1). The pressure to me looked mixed because I couldn't see the bulls getting squeezed by the bears; the bulls kept trying to defend the same support level above the 50 level but the bears couldn't print lower and lower highs.

No trades for me today. I had to pass up a good trade because I wasn't really focused or aware of the overall picture (eating breakfast) and that usually leads me to take bad/impulsive trades.

 

[shotgun77]

Ran across this about the low volume in the forex.
SMB blog post

 

[stehlikpetrmsncom]

@BLS

What do you think about IRB few bars before S2?