Bob Volman Price Action Scalping

While Kalp is right that Bob's principles are universal, if you are relatively new to trading like I am it is advised that you stick with one currency pair when trading.

On with today's trades:

S1: Skipped Range Break setup. The overall pressure favors a short trade but the break itself was of the tease variety (prices bounce off the 20EMA and break without much buildup). After prices dropped a bit below the 60 level, sideline bulls entered and deployed their longs. The bears decide to push back the 1.2269 level. The bulls, ever keen to defend the 60 area, buy prices back up at a higher support level than (1). But all they could muster was a lower high (3). We can't count the bulls out yet as they fall back and defend their earlier support level (4). Yet again they are served with a lower high (5). The bears are shorting at lower and lower levels while the bulls are trying to defend the same support level). The mistake the bears made was to break the bottom barrier without buildup; they are quickly countered by the bulls. I would have liked to see prices test the 20EMA/60 level again before taking a break of the range to the downside; this would have given us a proper squeeze the could lead to double pressure (bulls bail and bears enter, pushing prices down).

E1: Prices continued to range around the 60 area for a good hour after S1. The top and bottom barriers aren't too well defined; the bottom barrier wasn't final until (6) had occurred. The overall pressure supported a short trade. We still have that downtrend on our chart from earlier. We also have a series of lower highs (2, 3, 4,5), leading up to a squeeze (prices bounce off 6, test the 20EMA, then proceed to break). It would have been preferable to see more buildup with prices bouncing between the bottom barrier and 20EMA a bit more but I felt that the big bearish doji that broke the range was enough push me over the edge to take a short. Unfortunately prices have trouble following through with the break and stall a bit before testing the 20EMA again. Prices pierced the 20EMA a bit, which is usually normal, but with a lack of follow through and prices crawling back inside the range, I thought it best to use this as my next tipping point should prices break through the lows of (1). Prices again stall, luring countertrend traders in, and I am stopped out for a 4.1 pip loss (0.7 pip from commission).

S2: Will have to comment on this later

S3: You could think of this as an Advanced Range Break. This was skipped because of unfavorable conditions; there was visible chart resistance from the dotted box to the left.

S4: Possible Block Break setup. The setup stands 3 pip tall but given the recent bearish move, this could be a good setup. But it still suffers from the same chart resistance as S3. If there wasn't visible chart resistance, I probably would've taken S4 if not already in S3.

S5: I could not argue against a more aggressive scalper from taken this DD setup. My only issue is that the pullback did not touch the 20EMA, so it's possible the prices may pullback even more (which would take out my stop)

4.1 pip loss for me today.

Sorry, I don't have time to write up all of my trades but I'll write up the best one from today.

E3: After that tease break at (E1), the bulls took over the show. They did not foolishly try to make a large run upwards. They carefully built a base of support above the 80 level (dotted box), keeping prices above the 20EMA, before trying to move on and attack the upper area of the range. Prices bounced off my initial barrier (lowest dotted line) and printed 12 dojis under the barrier. That's a lot of tension but it wasn't enough to crack the highs of (1). The bulls are to be discounted for they created a second base of support with that group of dojis (orange line). Prices dipped below this support and proceeded to test the first base of support (2). Prices promptly bounced off and hit the second dotted line, leading me to redraw my barrier line one pip higher. Prices drop and test the second base of support (3). From there they printed yet another high so I redraw my barrier line to match the cluster at (1). Prices again test the second base of support (4) and make yet another high, matching the highs of the cluster (1). At this point prices are moving quite fast; there's a lot of action and I can see it in the price bars as their levels fluctuate. The bulls test the new high (1.2194) yet again, which pretty much confirms the newest barrier line. We see a test of the 20EMA and another bounce to the upper barrier, leading to the classic two doji pre-breakout tension. These are all very bullish signs. I immediately take the break of the range and reach target in less than a minute.

Kalp and BLS,

It's good to find some others pursuing Volman's scalping style.
Your analysis looks a little stronger than mine. Which will be good for me learn along side of you.

I started a blog dedicated to mastering Volman's style. All trades shown are live trades using the smallest size possible. My hope is to show the effort/struggle needed to master any trading style, and the continual learning that takes place whatever you try to learn (learning guitar, soccer, poker, whatever).

My blog is at
Learning To Trade Like Bob Volman
The entire archive is here:
Learning To Trade Like Bob Volman: Archive

I've been surprised how much patience you need to properly trade Volman's style. But you do start to get a better feel for the rhythm and ebb and flow of the 70 tick chart with more and more screentime everyday.

I'm a little bummed to lose Mike from this forum, he had some great posts regarding this scalping style.

UnderstandingContext

Hey UC,

It's good to have you on board! The idea of posting here was to post trades and to connect with others trading Bob's method, so I'll def check out your blog, thanks for the links!

I often chat with BLS on skype during the session to keep up both focussed on price action and ensuring we are patient.

If you want to join us, regularly or just the one off, it'll be good to have another to bounce the Volman method off in real time.

-Kalpesh

Skip/Miss: I was looking for a short trade before the bulls wriggled themselves out of that squeeze (3). After a nice uptrend, the bulls printed a double top (1 and 2) and were getting squeezed (3), but I guess it may have been too early, in hindsight, to even take a countertrend trade. Bob says that we need to see a convincing reversal pattern and if we don’t have it (11.9 I think), that we should wait for more price action to confirm that the indeed the bulls are losing. I was put off by that huge bullish candle (4) because I thought that was a terrible way for the bulls to make a break. I guess I'm still shocked, even after that pullback inside the range, that I hesitate to trade this ARB setup.


E1: Prices found support above the 60 level, right above that previous bulls flag (dotted box). This trade was perhaps a bit aggressive seeing at the test of the 20EMA and that test of the upper barrier occur in the same bar. The bulls were unable to follow through on the break after such a strong candle so I move my tipping point up to the level of the upper barrier after that bounce created a lower higher. I get stopped out for a total loss of 3.8 pip.

E1:

The formation at (1) creates a higher high but the bulls are unable to follow through. We can't count them out yet though as the 00 level is likely to bring in sideline bulls ready to enter at better prices. Price bounces off of the 00 level (2) but can't even test the 20EMA before falling under. Bullish support is faltering but the bulls aren't ready to give up yet as they fight it out with the bears right under the 00 level. It's clear that the bulls lost the 00 level when prices broke out of the dotted box (3).

All the bears have to do now is put the squeeze on the bears to create some double pressure. We can begin to consider a bottom barrier when the lows of (4) and (6) formed but the bottom barrier was rough any way you put it. The bulls find support and manage to test that earlier dotted block (5). All looks well for the bears until the bull print a higher high (7), where the test that dotted box to the pip.

The following drop is prices suggest there was some double pressure here; perhaps I missed the boat on this one. The bulls having tried to break through an earlier defense of the 00 level and failing led many to bail out and led some bears to enter. Prices drop 12 pip, straight through my barrier.

I chose to skip that ARB setup (S1) because the closest technical stop would be 1 pip above that last swing high, which exceeds my maximum 10 pip stop loss. I was also wondering at this point whether I was asking too much of the market to move another 10 pip or so having already moved 12 pip. I ignored this concern when I saw a more superior ARB setup of the clustering variety form. This setup gave me a technical stop within my reach since the bottom barrier held at the test of it.

The bears are unable to follow through past the 79 level so I move my tipping point 2 pip down when prices pulled back 1 pip beyond the 20EMA and proceed to break back down. I was stopped out shortly (9) for a loss of 3.2 pip.

S1: A rather aggressive BB setup but given that strong down move it was ok to take this trade. The problem I had with this was that the nearest technical stop would put your stop at about 9 pip away from entry. Given the speedy price action at the time I was likely to experience some negative slippage, which would have made managing my stop a bit harder.

DD: DD here could have been taken here but I find it rather aggressive on account of that disorderly pullback.

M1: Prices pulled back into support turned resistance and formed a BB setup. I was not expecting a break at the time so I missed this move. We don't even get a signal line until the second to last bar. Prices test the 20EMA and break out at the same bar. I wanted to see at least one doji before the break but I guess given the strength of the trend I should have been more alert.

E2: Classic DD setup. After that missed BB trade prices pulled back into the 20EMA in a mostly diagonal fashion and tested some former support at the lows of (1), formed two dojis, and broke to the downside. Prices found some support at the 1.2205 level which formed a BB setup. I am a bit emotional at this point because I am so close to my target (bad, I know) and I breath a sigh of relief when I hit target after the break of the block.

The lesson here today is that you should exercise some aggression in the face of a strong trend. There will be times when you get stopped out but the rewards for your aggression will outweigh them. I didn't really understand or accept this lesson until today.

E1: I got caught in an obvious tease break. According to Bob, a trader's main concern is to avoid the most classic and costliest mistakes because those are the biggest threats to profitability. I think I am ready to accept that now.